Wednesday, February 21

Fit for 55: on the road to decarbonization

Almost three years ago, the European Parliament declared -in a political resolution- the climate emergency, and the European Commission published the European Green Deal, its roadmap to achieve a climate-neutral Europe by 2050, which had its first legal translation in the approval of the European Climate Law last year.

To achieve the long-term goal of climate neutrality, the Climate Law includes the obligation for the EU to reduce its emissions by 55% by 2030 compared to 1990. The “Objective 55 Package” or “Fit for 55”, which is as it is commonly known and was presented in July 2021, it is the set of legislative proposals and reforms necessary to achieve that goal by 2030 and its main mission is to turn the 2020s into a decade of transformation for climate action. Without this new package, under current EU climate legislation, Europe would only achieve a 60% emission reduction by 2050.

In the June plenary sessions, the European Parliament, after almost a year of long and arduous negotiations, gave the green light to most of the dossiers that make up this legislative package, which mark the entry of climate policy into everyone’s daily life citizens and businesses. Among the multiple dossiers, the reform of the EU emissions trading system (ETS) stands out, which encompasses highly polluting industrial sectors and whose regulations are reinforced to achieve a 63.2% reduction in their emissions in 2030 compared to the previous ones. 2005 levels. This figure is higher than 61% of the Commission’s original proposal.

The creation of a carbon border adjustment mechanism or CBAM, which will tax the carbon content of imports from various sectors at risk of carbon leakage, is another of the key dossiers. This new mechanism will guarantee a level playing field for EU companies that could be at a competitive disadvantage as Europe deepens its decarbonisation, and will be applied progressively from 2027 to 2032, the year in which it will completely replace free emission rights. enjoyed by these sectors.

Transportation also occupies a prominent place in the reforms. As well as approving ambitious CO2 emission targets for new passenger cars and light duty vehicles by 2030, Parliament has endorsed the Commission proposal’s target for all new cars and vans to be zero emission by 2035, which facto means the end of the internal combustion engine for this type of vehicle, and that the conservative groups tried to dilute. In turn, maritime transport has been incorporated into the ETS, and the free allocations for the aviation sector will disappear in 2025, compared to the 2027 date of the Commission’s proposal, although a number of emission rights are maintained for operators that use sustainable aviation fuels or SAF for its acronym in English.

A workhorse has been the Commission’s proposal to extend the ETS to road transport and construction in a kind of ETS2, which after the vote in Parliament will apply from 2025 to commercial operators and, only in 2029 , to non-commercial operators, after evaluation and a new legislative proposal from the Commission in which the improvement or not of the situation of mobility and energy poverty in the EU must be taken into account. We Social Democrats in the European Parliament have been decisive in preventing ETS2 from coming into force in the current energy price crisis, through this emergency pause that will postpone ETS2 for households until prices are lower.

The European Commission, aware of the inevitable social repercussions of this extension, proposed creating a Social Fund for the Climate linked to the existence of the ETS2, in an attempt to cushion the impact of the system on citizens due to the increase in fuel prices in transportation and heating bills. Given that as decarbonisation spreads throughout the economy, social equity will be crucial, we Social Democrats have managed to secure a strong Social Climate Fund despite the delay in introducing the system to households, which will substantially support households more vulnerable long before they have to pay more for CO2.

On the other hand, beyond emissions, removals are also regulated in this regulatory package through the revision of the regulation that regulates land use, land use change and forestry, which sets a goal of binding EU removals of 310 million tonnes of CO2 with corresponding national targets that have been endorsed by Parliament.

Although other measures are still under discussion, such as the increase in the objectives of renewable energy and energy efficiency, the reform of energy taxation, or the dossiers that regulate alternative fuel infrastructures and the use of renewable fuels by the maritime and aviation sectors , the measures recently approved in June make up the bulk of emissions and make the EU the first major global economy to begin translating the goal of climate neutrality into real policies.

After the plenary approval of these dossiers, negotiations begin with the European Commission and the Council, where we hope that the two guiding pillars are climate ambition and just transition, which are also the most important elements for the measures to be successful. expected long-term environmental and social