Pereira, a member of the European People's Party (EPP), said the EU should be seen as a "pillar of stability" in global climate policymaking, and warned against adopting radical economic shifts that could threaten prosperity.

"If we want to deliver effective climate solutions, they must come through moderate, pragmatic approaches," she said, responding to a presentation by economist Timothée Parrique of HEC Lausanne, who had made the case for degrowth.

Parrique argued that continued economic expansion is incompatible with planetary limits and that it is time to face the scientific reality. "This isn't a political ideology—it's evidence-based," he said. "Growth no longer correlates with well-being. Wealth isn't trickling down, and pollution certainly isn't trickling out."

Degrowth theory, which emerged in the 1970s, advocates for reducing production and consumption to align with environmental limits. Supporters believe that permanent growth is unsustainable and that scaling down the global economy is necessary to avoid ecological collapse. However, critics warn that implementing such a model could trigger widespread job losses, deepen inequality, and destabilize economies that are deeply interconnected.

Parrique emphasized that acting now would be far less costly than continuing on a business-as-usual path. "We need to be honest with people. There are trade-offs, but growth-centric policies come with their own enormous risks down the line."

Pereira countered that Europe's green transition can be achieved without abandoning growth. Instead, she called for a strategic focus on boosting competitiveness through clean technologies. Pointing to the US Inflation Reduction Act (IRA) and China's green subsidies, she said the EU must strengthen its "strategic autonomy" in the clean tech sector.

However, Pereira noted that progress is being held back by the EU's fragmented capital markets. "Without a unified financial system, companies struggle to access the investment needed to scale up and compete globally," she said. Regulatory inconsistencies between member states mean that firms remain heavily reliant on banks, rather than benefiting from robust private investment channels.

The EU's long-term climate objective is to become carbon neutral by 2050, and member states have outlined national pathways to meet this goal. Pereira argued that, far from rejecting growth, the EU can lead by example—demonstrating how environmental action and economic strength can go hand in hand.

Her comments come as the US shifts away from green priorities under President Donald Trump. In January, Trump withdrew the US from the Paris Agreement for a second time, scaled back key elements of the IRA, and renewed support for fossil fuel expansion.

Pereira suggested that in this changing global context, the EU has both the responsibility and the opportunity to show that climate leadership is compatible with innovation, competitiveness, and economic vitality.