Recently, the European Commission adopted a package of proposals to correlate the EU’s climate, energy, land use, transport, and taxation policies with a goal of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. Previously, this figure was set at 40%. Achieving these emission reductions in the next decade will ensure that Europe becomes the world’s first climate-neutral continent by 2050.
These measures will copper fasten the European Green Deal, which was inaugurated by the EU Commission in December 2019, and which set a goal of making Europe the first climate-neutral continent by 2050. As a result of the EU’s existing climate and energy legislation, the EU’s greenhouse gas emissions have already fallen by 24% compared to 1990, while the EU economy has grown by around 60% in the same period, demonstrating a strong decoupling of growth from emissions.
Ireland’s better-than-expected economic growth will make the EU’s latest climate plan – ‘Fit for 55’ much more difficult to achieve notwithstanding the recent enactment of the Climate Action and Low Carbon Development (Amendment) Act 2021, which legally binds Ireland to net-Zero emissions no later than 2050, and to a 51% reduction in emissions by the end of this decade.
Key highlights of the EU’s proposals are as follows:
- Application of emissions trading to new sectors and a tightening of the existing EU Emissions Trading System; The EU Emissions Trading System (ETS) puts a price on carbon and lowers the cap on emissions from certain economic sectors every year. It has successfully brought down emissions from power generation and energy-intensive industries by over 42% in the last 15 years. The Commission is proposing to lower the overall emission cap even further and increase its annual rate of reduction. The Commission is also proposing to phase out free emission allowances for the aviation sector and include shipping emissions for the first time in the EU ETS. To address the lack of emissions reductions in road transport and buildings, a separate new emissions trading system is being set up for fuel distribution for road transport and buildings.
- The Effort Sharing Regulation assigns strengthened emissions reduction targets to each Member State for buildings, road and domestic maritime transport, agriculture, waste and small industries. These reduction targets are based on each Member State’s GDP per capita, with adjustments made to take cost-efficiency into account.
- The Regulation on Land Use, Forestry, and Agriculture sets an overall EU target for carbon removals by natural sinks, equivalent to 310 million tonnes of CO2 emissions by 2030. The EU Forest Strategy sets out to improve the quality, quantity, and resilience of EU forests and aims to plant three billion trees across Europe by 2030.
- Member States must spend all of their emissions trading revenues on climate and energy-related projects.
- The Energy Efficiency Directive has set a more ambitious mandatory annual target for reducing energy use at EU level. It determines how national contributions are established and doubles the annual energy saving obligation for Member States. The public sector is required to renovate 3% of its buildings each year from an energy-saving perspective.
- The revised Alternative Fuels Infrastructure Regulation requires Member States to expand charging capacity in line with zero-emission car sales, and to install charging and fuelling points at regular intervals on major routes. Average CO2 emissions of new cars will be required to come down by 55% from 2030 and 100% from 2035 compared to 2021 levels. All new cars registered as of 2035 will be zero-emission.
- The Alternative Fuels Infrastructure Regulation stipulates that aircraft and ships must have access to clean electricity in major ports and airports. The ReFuelEU Aviation Initiative will oblige fuel suppliers to blend increasing levels of sustainable aviation fuels in jet fuel taken on-board at EU airports. Similarly, the FuelEU Maritime Initiative sets a maximum limit on the greenhouse gas content of energy used by ships calling at European ports.
- A revision to the Energy Taxation Directive proposes to align the taxation of energy products with EU energy and climate policies.
- A new Carbon Border Adjustment Mechanism will apply a carbon price on imports of a selection of products to ensure that proactive climate action in Europe does not lead to ‘carbon leakage’. This will ensure that European emission reductions contribute to a global emissions decline, instead of encouraging carbon-intensive production to move outside of Europe.
- A new Social Climate Fund will provide dedicated funding to Member States, which will be part-funded by the sale of carbon permits to help citizens buy cleaner cars, install solar panels in their homes or pay for public transport. The Social Climate Fund will be financed by the EU budget, using an amount equivalent to 25% of the expected revenues of emissions trading for building and road transport fuels.