Cutting emissions by 55% in 9 years – European Commission presents the biggest transformational operation in living memory
The European Commission this week unveiled an ambitious package of energy and climate legalisation designed to put the EU on track to hitting its goal of zero net emissions by 2050. The EU’s hope is to reduce average emissions by 55% by 2030, compared with 1990 levels.
The “Fit for 55” climate package will be a topic of some contested political bargaining, with many Eastern European countries saying it will affect them disproportionately due to their reliance on fossil fuels.
In fact, the initiative presents a challenge and an opportunity for all of us, governments, industry and citizens. When France proposed increasing petrol taxes back in 2018, it led to weeks of “gilet jaunes” protests that the French government struggled to control. The package that the Commission is proposing makes those changes look minuscule.
What “Fit for 55” means in practice?
It will revamp several of the existing legislative acts and create new ones:
- Revision of the EU emission trading scheme (EU ETS)
- Revision of the regulation on land use, land use change and forestry (LULUCF)
- Revision of the effort sharing regulation (ESR)
- Amendment to the renewable energy directive (RED)
- Amendment to the energy efficiency directive (EED)
- Revision of the alternative fuels infrastructure directive (AFID)
- Amendment of the regulation setting CO2 emission standards for cars and vans
- Revision of the energy taxation directive
- New: EU forest strategy
- New: A carbon border adjustment mechanism (CBAM)
- New: A Climate Action Social Facility
- New: ReFuelEU Aviation – on sustainable aviation fuels
- New: FuelEU Maritime – on greening Europe’s maritime space
Each of these pieces of legislation on its own represents a sometimes Herculean effort to adapt and implement. Packed all together their potential impact cannot be overstated enough.
The future is electric
The European seems to be putting almost all its eggs in the electric vehicles basket. The ambition to eliminate diesel cars and switch all vehicle traffic to electric propulsion seems to permeate its thinking. Little thought though is given to the sustainability of the electric batteries itself and the energy source of all the electric sockets to power the electric vehicles.
The EU’s strategy is to drive down the cost of electric vehicles and make cleaner cars more accessible. In 2020 they accounted for only 11% of new EU car registrations. Some of it is due to poor electric charging infrastructure, which the European Commission addresses in its proposals. Member States will be required to install charging and fuelling points at regular intervals on major highways: every 60 kilometres for electric charging and every 150 kilometres for hydrogen refuelling.
Decarbonising the EU economy
The Commission is also proposing changes to some of its previous flagship initiatives, the Europe Trading Scheme, Effort Sharing Regulation (covering the sectors left out by the ETS) and the Regulation on Land Use, Land Use Change and Forestry (LULUCF).
The ETS is a mechanism that puts a price on each tonne of carbon emitted in the power sector and manufacturing industry, as well as intra-EU flights. The system works by setting a cap of total emissions. Companies can buy and trade emission permits. The current cap was designed to enable emissions reductions of 40% by 2030.
The Commission proposes to increase the target to 55% and expand it to new sectors such as maritime (for all intra-EU and 50% of outside the EU shipping).
The Commission is also proposing to phase out free emission allowances for aviation and align with the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). To address the lack of emissions reductions in road transport and buildings, a separate new emissions trading system is set up for fuel distribution for road transport and buildings. The Commission also proposes to increase the size of the Innovation and Modernisation Funds.
Among many proposals is a deadline for the combustion engine phaseout and a carbon price charge for carmakers.
The CO2 emissions standards for new cars will be tightened, reduction by 55 per cent for 2030 and 100 per cent in 2035 (compared to 2021 levels).
Decarbonising the world
One of the new proposals is the Carbon Border Adjustment Mechanism (CBAM) intended to disincentivise business from moving factories outside the EU where production costs are lower and environmental standards might be poorer. The proposed regulation covers several sectors: cement, fertiliser, iron and steel, aluminium.
The proposal has raised concern among third countries such as US and China. It also remains to be seen if the World Trade Organisation rules will allow for it.
However, the European Commission enjoys the support of the European Parliament, which indicated in the past that a mechanism should be in place by 2023 already.
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