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What ‘Fit for 55’ will do for climate action

By 2030, the goal is to reduce greenhouse gas emissions by 55% compared to 1990 levels – with the help of a comprehensive package of measures.

‘Fit for 55’ is the name of the package that is more than 1,000 pages long and was presented to the public by the President of the European Commission, Ursula von der Leyen, and five of the EU Commissioners in Brussels on 14 July 2021. A big stage for a legislative package that is expected to deliver big time: it is to demonstrate that climate action and competitiveness are not mutually exclusive and to align the EU’s Climate and Energy Framework with the objectives of the Green Deal. To this end, it provides for a specific framework for the more abstract climate targets.

The EU wants to use Fit for 55 to lower Member States’ greenhouse gas emissions by 55% by 2030 (compared to the levels recorded in 1990), to make the EU greenhouse gas neutral by 2050, and to position itself at the global forefront of climate action. At the same time, business’ competitiveness is to be retained and strengthened, including in energy-intensive industries.

“We know that we have to move on to a new model – one that is powered by innovation, that has clean energy, that is moving towards a circular economy…Our Package aims to combine the reduction of emissions, with measures to preserve nature, and to put jobs and social balance at the heart of this transformation”, said Ursula von der Leyen during her presentation of the package of measures. The package comprises 13 legislative proposals that are interlinked and designed to complement each other.

Plans for tightened and expanded emissions trading

Among the measures proposed by the European Commission is a tightening of emissions trading, which is also to be expanded to include maritime shipping, road transport, and buildings. The Commission wants to establish another ETS (Emissions Trading Scheme) covering buildings and road traffic, similar to Germany’s separate ETS system for fuels that launched at the beginning of 2021. In addition to mitigating climate change, the new system is to provide incentives for a switchover to environmentally-friendly heating and motor fuels, and for investments in clean technology. The existing ETS covers electricity generation and industrial installations, which account for approx. 40% of carbon emissions within the EU. The Commission wants to reduce the number of certificates more swiftly than originally planned and to limit the amount of certificates allocated for free.

Carbon border adjustment for imports from third countries

The Commission is also planning to introduce a new carbon border adjustment mechanism. This is to ensure that importers of aluminium, steel, fertilisers and electricity from non-EU countries also pay a carbon price. The Commission intends to replace existing instruments against carbon leakage with this new mechanism. The Federal Ministry for Economic Affairs and Energy will play a constructive and active part in its implementation. We are advocating that the level of protection against carbon leakage be adjusted so as to reflect the more ambitious climate targets. This is the only way to prevent an exodus of industrial companies to countries whose environmental regimes are less strict. Any such development would not only be problematic in terms of economic policy, but would also have a negative impact on the climate.

ETS revenue is to partly accrue to social funds

A new Social Climate Fund is also part of the proposed package of measures. Some of the revenue from the new ETS for buildings and transport is to be used to cushion the rise in consumers’ energy costs via this new fund. This would benefit low-income households.

New targets for a clean energy system

Reaching the climate targets requires updating a number of different targets, including the EU energy efficiency and renewables targets for 2030. This is to be done as part of the ongoing revisions of the Energy Efficiency Directive and the Renewable Energy Directive, the legislation stipulating these targets. Higher, binding energy conservation targets at EU level are to deliver a 9% reduction in the bloc’s final energy and primary energy consumption (measured against a projection for 2030 dating back to 2020). The binding renewables target for the EU’s energy mix in 2030 is to be increased to 40% and the sub-targets for the heating and transport sectors are to be rendered more ambitious. Under the proposals, there would also be new sub-targets designed to promote the take-up of renewable fuels, e.g. hydrogen for use in the industrial sector and in transport.

The Commission also wants to update the Energy Tax Directive, with a view to ensuring that energy taxation will be conducive to achieving the climate targets.

Beyond this, three more legislative proposals have been announced, envisaged for December, on decarbonisation and on the transformation of the European energy system to make it more sustainable: the Commission is planning legislative proposals designed to limit methane emissions from the energy sector and to decarbonise the internal gas market (with a prominent role given to hydrogen); also, the EU Directive on energy efficiency in buildings is to be revised.

As of 2035, no more new cars with a combustion engine

Stricter carbon emissions standards for cars and light commercial vehicles and new targets for the expansion of alternative fuels infrastructure are also to be ushered in by the Fit for 55 package. The carbon emissions caused by new vehicles in 2030 are to be 55% lower than the ones in 2021, whilst emissions from new light commercial vehicles are to be cut by 50% over the same period. As of 2035, there are to be no more sales of cars with a combustion engine in the EU. The European Commission wants all new cars to be electric by this time. A revision of the 2014 Directive on the deployment of alternative fuels infrastructure will play a key role in this. Under the Commission’s proposal, this Directive is to be turned into a Regulation. Also, a minimum of 3 million electric charging points and at least 1,000 hydrogen charging points are to be accessible in the EU come 2030.

More sustainable aviation and shipping fuels

Demand for sustainable shipping fuel is also to be fostered. As soon as a vessel calls at a port in the EU, anchors there or departs from an EU port, binding emissions rules are to apply for the energy used on board. As of 2030, an obligation to use shore-side power might come into force for container and passenger ships, which would serve to reduce the use of environmentally harmful fuels for the duration of the vessel’s call at European ports.

Aviation is also to become more climate-friendly. To this end, the European Commission is proposing, among other measures, that fuel providers at EU airports ought to mix in growing amounts of sustainable fuel. In this way, 63% of the aviation fuels used in 2050 are to be sustainable. Synthetic fuels could account for 28% of this 63%.

At present, the 13 legislative proposals under the Fit for 55 package are being deliberated by the 27 Member States and the European Parliament.