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“Fit for 55”: the Green Deal begins to take shape

Without an updated package of measures, Europe would only achieve a 60 percent emissions reduction by 2050; these measures are needed to advance the Union's decarbonization and make it cross-cutting across multiple sectors of the economy.

by Margherita Bianchi (IAI)
26 August 2021
6 min read
by Margherita Bianchi (IAI)
26 August 2021
6 min read

To align the European Union (EU) with its climate ambitions, the European Commission has published the long-awaited "Fit-for-55" package, thirteen cross-cutting legislative proposals comprising eight revisions of existing regulations or directives and five new proposals. This large adjustment package is designed to give the Union the tools and rules to cut its CO2 emissions by 55 percent by 2030 and then properly set the path to climate neutrality by 2050. The European Climate Law, passed a few weeks earlier, made these goals binding.

The main purpose of "Fit for 55”" is to advance decarbonization in the Union and make it cross-cutting across multiple sectors of the European economy, in order to chart an effective and orderly course over these three decades. In fact, without an updated package of measures, Europe would only achieve a 60 percent reduction in emissions by 2050, according to the Commission's analysis. While 75 percent of the world's GDP is now covered by some kind of climate neutrality target, the EU is the first to translate this vision into truly concrete proposals and policies. The action put forward by the Commission is very ambitious and essentially touches on all the main European policy areas (budget, industry, economy, social affairs) - and for this reason has provoked quite a few discussions even within the Commission itself. It will take time to see in what form and how soon these measures will be approved after passage through Parliament and the Council - but the EU's message in these exceptional times of pandemic recovery is definitely aimed at sustainability. 

Buildings, transportation, and efficiency at the center, but more than that

One of the most interesting measures is the revision of the Emission Trading System (ETS), the world's first and largest CO2 market: by broadening the application of the ETS and guaranteeing a steadily higher price, the aim is now to encourage more efficient and cleaner energy consumption. The extension covers heavy road transport, marine transport and buildings. These sectors have typically been among the least affected by EU decarbonization policies to date, but account for around 22 percent (transport) and 35 percent (buildings) of EU emissions. The package also includes changes to the Alternative Fuels Infrastructure Directive (AIFD) with the goal of bringing alternative fuel infrastructure deployment rules in line with new climate targets.  An amendment to the regulation on CO2 emission standards for cars and vans is also proposed - aiming to direct the necessary investment in zero-emission vehicles and increase their uptake. The measures propose that automakers reduce emissions from new vehicles by 55 percent from current levels by 2030.

The proposed ReFuelEU Aviation regulation would also require suppliers of aviation fuel that refuel at airports on EU territory to blend with increasing levels of sustainable fuel, while FuelEU Maritime aims to encourage the adoption of sustainable maritime fuels and zero-emission technologies by setting a cap on the greenhouse gas content of energy sources used by ships calling at EU ports. The adjustments also concern the Effort Sharing Regulation (ESR) - for an update of emission reduction targets in sectors not covered by the ETS - and the Energy Tax Directive (ETD) - to harmonize energy taxation within the EU. Also addressed are the Renewable Energy Directive (RED), which aims for 40 percent renewables in final energy consumption by 2030 (compared to 32 percent today) and the Energy Efficiency Directive (EED), which aims for a revised target for 2030 of 36-39 percent for overall energy efficiency improvement, as well as a 9 percent reduction in total energy demand. The Commission also aims to update the Land Use, Land-Use Change and Forestry (LULUFC) regulation to the new EU climate targets, according to which EU member states are required to ensure that greenhouse gas emissions from land use, land use change or forestry are offset by at least an equivalent absorption of CO₂ from the atmosphere in the period 2021-2030. Finally, a highly debated point is the introduction of the Carbon Border Adjustment Mechanism (CBAM), designed to hinder the relocation of polluting industries to third countries with less stringent climate rules. 

A long road ahead

Other “Fit-for-55” revision proposals (one concerning the Hydrogen and Decarbonised Gas Package and the other the Energy Performance of Buildings Directive, EPBD) are still to be presented - by the end of the year according to the European Commission's plans. Now begins the legislative process between the European Parliament and the Council and then inter-institutional negotiations for the definition of the compromise text and its subsequent approval. The journey will be slow and complex: likely the first approvals will arrive in late 2022 and will not come easily. For successful negotiations and successful implementation of the Green Deal over the three decades ahead, it is crucial to ensure that the transition is fair and socially acceptable to all citizens, industries and small businesses in the EU, who will increasingly begin to see the effects. The expansion of the ETS for example, and other measures in the package, have caused quite a stir among civil society and in institutions, as it would risk, according to some, creating an economic burden on the most vulnerable consumers. The "Social Climate Fund" (EUR 72.2 billion from 2025 to 2032), also announced as part of the “Fit for 55” package, is designed to avoid these social externalities as well.

 

The author: Margherita Bianchi

Is in charge of the “Energy,climate and resources” program at the Istituto Affari International (IAI). Previously she worked at the European Parliament, in the Task Force of the Italian Presidency of the G7 and at UN Environment.