In our recent blog we informed you about the European Climate Law, which will lay down in law the goal of a climate-neutral Europe by 2050. Included in this discussion was the provisional agreement on the Climate Law that the European Parliament and the Council reached on 21 April 2021. Recent developments gave rise to write this update: the European Parliament has ratified the Climate Law and confirmed the goal of the European Union on climate neutrality by 2050. In addition, the European Commission has unveiled the ambitious “Fit for 55” climate package. This means we can not only inform you on the goal of a climate neutral Europe, but we can also inform you about the manner in which the goal should be reached. In this blog post, we will briefly discuss these two developments.
European Climate Change Law ratification
The front page news on 24 June 2021 was that the European Parliament had confirmed the European Climate Law. The informal agreement of April (see our earlier blog post about this in detail) has thus been ratified by the European Parliament. With this ratification, the goal of a climate neutral Europe by 2050 becomes a legal requirement in the European Climate Law. This Climate Law increases the ambition for 2030 by setting a more ambitious interim target: the greenhouse gas reduction target for 2030 becomes 55% compared to 1990, instead of the previously applicable target of 40%. To achieve this reduction, efforts are being made to use what are termed “carbon sinks,” which are systems that absorb more CO2 than they emit, such as forests. In addition, a greenhouse budget will be established and a target for 2040 will also be proposed. A European Scientific Advisory Board on Climate Change will also be established.
This Climate Act will be approved by the Council within a short period of time, after which this regulation will appear in the Official Journal. Twenty days thereafter, the regulation will enter into force.
Climate package ‘Fit for 55’
On 14 July 2021, the European Commission unveiled the ambitious ‘Fit for 55’ climate package, which includes progressive intentions to tackle climate change and drastically reduce CO2 emissions. The goal of the package is to achieve a net greenhouse gas reduction of 55% by 2030.
The Fit for 55 package consists of a series of interrelated proposals, all pursuing the same goal: ensuring a fair, competitive and green transition by 2030 and beyond. In total, the package strengthens eight existing pieces of legislation and presents five new initiatives, covering a range of policy areas and economic sectors: climate, energy and fuels, transport, buildings, land use and forestry. The chosen policy mix is a careful balance between pricing, targets, standards and supporting measures. We briefly outline the proposals below.
- A review of the Emissions Trading System (“ETS“). This will become stricter for aviation by phasing out the allocation of free allowances. Furthermore, the ETS will be extended to other sectors, including maritime, road transport and buildings.
- There will be a new Carbon Border Adjustment Mechanism (CBAM): a carbon tax at the border, which will raise prices on certain imported products.
- There will be stricter CO2 emissions standards for cars and vans. The use of cleaner cars and the switch to electric driving will be stimulated. With stricter CO2 emissions standards, the European Commission wants to ensure that, by 2035, new cars will no longer emit CO2.
- A new infrastructure is being built for alternative fuels, including the necessary charging stations.
- A new rule from ReFuelEU regarding more sustainable jet fuels.
- A new rule from FuelEU regarding cleaner marine fuels.
- There will be a new Social Climate Fund and strengthened modernisation and innovation funds.
In addition, on July 14, the European Commission directly submitted a number of legislative proposals to update and revise the following directives and regulations, as also explained in Fit for 55:
- Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity;
- Regulation 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action;
- Regulation 2018/841 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework;
- Directive 2018/2001 II on the promotion of the use of energy from renewable sources;
- Directive 2018/2002 on energy efficiency.
The European Parliament and the European Council are still considering the Commission’s proposal, so the European Commission should still expect some resistance. The climate package is very progressive and can be seen as the most ambitious plan the EU has published so far. We will follow these developments closely.