Italy is targeting the European Commission’s “Do No Significant Harm” (DNSH) rule in the EU executive’s proposed budget for 2028 to 2034, which has fueled a backlash from governments, business lobbies and the center-right European People’s Party.
Critics are alarmed that these new guidelines will effectively cut out heavy industry and big infrastructure projects from EU funds over environmental concerns — potentially leading to job losses and deindustrialization.
In a set of guidelines approved on Monday to complement its budget proposal, the Commission exempted spending on defense, security and crises — including support to regions bordering Russia — from the DNSH principle in order to soothe national capitals, which had first proposed the carve-outs.
In its draft guidelines, seen by POLITICO, the Commission also suggested exempting projects judged to be “overriding public interest,” potentially opening the door for data centers or critical raw materials to benefit from favorable treatment.
But that’s not enough for Italy, which intends to further undermine the rules during negotiations, said an EU diplomat with knowledge of the discussions, granted anonymity to speak freely. In a sign of discontent, last month Rome abstained in a vote on the broader text that includes the DNSH principle, said the three diplomats.
This sets up tensions between Italy — a long-standing critic of EU green rules — and a rival bloc of Nordic countries like Denmark and Finland, which are pushing in the opposite direction.
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