The European Green Deal was unveiled in 2019 with the aim of transforming the European Union from a high to low carbon economy while improving quality of life and not reducing prosperity. In 2021 the EU unveiled the Fit for 55 legislative plans to align climate, energy and transport-related legislation with its climate targets.
The resulting package of the Fit for 55 proposals provides a framework for reaching the EU climate objectives through a just and socially fair transition. It also seeks to strengthen the innovation and competitiveness of EU industry, while ensuring a level playing field and preventing carbon-intensive production moving outside of the bloc.
EU policymakers have yet to finalise the legislation, but key areas of focus include the reduction and removal of greenhouse gases; increased use of renewables and alternative fuels; greater energy efficiency; funding to ensure an equitable transition; and a carbon border adjustment for certain imports.
What is particularly significant about the proposals is a tightening of previous climate measures to help the EU meet its Paris Agreement commitments.
Among the most notable changes are an increased target of 40% of all energy to come from renewables by 2030; a tightening of EU Emissions Trading System (ETS) rules, including the phasing out of free allowances; and the removal of ‘outdated’ tax exemptions and reduced rates that encourage fossil fuel use.
The Fit for 55 plans also set bolder targets for energy saving, such as a requirement for member states to reduce public sector energy use by 1.7% each year and include a commitment that all new cars will be zero-emission by 2035. In addition, they set national targets to meet an overall EU target for carbon removals by natural sinks, equivalent to 310 million tonnes of CO2 emissions by 2030.
Greenpeace has described the proposals as a “fireworks display over a rubbish dump”, while the European Environment Bureau network of citizens’ environmental groups said the measures shifted the cost of pollution from the polluters to the consumer. On the other hand, many experts argue that proposals are ambitious in scope.
“The package is designed to deliver the 55% emission reduction for 2030, and should in principle be able to do that, it if not watered down in the process,” says Sebastian Oberthür, professor for environment and sustainable development at the Institute for European Studies, Vrije Universiteit Brussel.
“Whether the measures will be sufficient will obviously also depend on uncertain future developments, for example, economic growth and the subsequent implementation by member states in key areas including buildings, transport, agriculture and forestry.”
However, additional measures could be needed to further pave the way towards the 2050 carbon neutrality target, he adds. “Key for the 2050 prospect is that the policies implemented for 2030 prevent long-term ‘carbon lock-in’ – fossil fuel dependent infrastructure, etc – and jump-start longer-term decarbonisation processes, such as deep low carbon renovation of existing buildings.”
Kari Hietanen, Executive Vice President, Corporate Relations and Legal Affairs at Wärtsilä, agrees on the need for future flexibility. “It is also of utmost importance to remember that the end target is one thing, and the pathway and transition is as important,” he says. “It will be critical to focus on concrete measures which bring us towards the target and the impact needs to be measured. We can then adjust and improve.”
Some remain concerned that the EU climate policy will adversely impact industries that are technically difficult or costly to decarbonise, particularly after COVID-19. The fossil fuel, aviation and car-making industries are among those most likely to be badly hit, along with those who have not adequately prepared for the green transition.
“But rather than slowing the change, it may be more appropriate to speed up the transformation and try to smoothen the process by accompanying measures, such as retraining,” Oberthür advises.
There are also concerns that the measures – most notably the proposed ETS for buildings and transport, which is likely to drive up prices – could adversely impact certain member states and communities.
The Social Climate Fund proposals to help support measures and investments in reducing emissions in road transport and building sectors, and provide temporary direct income support to vulnerable households will help mitigate this effect. However, it will eventually be up to states themselves to implement appropriate social measures accompanying the phase-out of fossil fuels, so may require further measures in the future, observes Oberthür.
EU competitiveness is also a matter that needs to be followed closely and, indeed, the plans include measures such as the Carbon Border Adjustment Mechanism to prevent ‘carbon leakage’ by restricting the relocation of carbon-intensive production to non-EU countries. “A competitive European industry is also needed to bring decarbonisation forward and invest in new technologies,” adds Hietanen.
But while there are challenges when it comes to reducing emissions, it is perhaps inaction that poses the greatest threat. “As the world moves towards climate neutrality, the bigger competitiveness danger may lie in trying to protect business models that we know will be uncompetitive in the new climate-neutral world and economy,” says Oberthür.
