Fit for 55, the EU’s plan to reduce its 27 members’ greenhouse gas emissions 55% from 1990 levels by 2030, was adopted by the EU Commission yesterday. While the “jumbo package” is indeed comprehensive (as shown in the schema below), at core it ramps up lessons learned from the Emissions Trading System (ETS) in place since the early 2000s to transform the EU to a carbon neutral economy that much faster.
Key elements include:
- a new ETS for road transport (currently 22% of EU GHGs) and buildings (35%) starting in 2026, that adds to the existing ETS’s focus on electricity and industrial sectors;
- new regulation on land use, forestry, and agriculture that sets an overall EU target for carbon removals by natural sinks; aims for climate neutrality in the land use, forestry and agriculture sectors (including methane); and plans to plant three billion trees across Europe by 2030;
- energy taxation in Europe restructured on the principle that energy products and electricity should be taxed on their energy content and environmental performance;
- increased renewable energy and energy efficiency targets that aim to produce 40% of total energy from renewable sources by 2030;
- a carbon border adjustment mechanism (CBAM) that initially targets carbon intensive products like cement, iron and steel, aluminium, fertilizers and electricity, and is phased in over three years beginning in 2023; and
- revised CO2 emissions standards for new cars that will cut CO2 emissions 55% by 2030 and 100% by 2035, essentially banning new internal combustion engine cars in only 14 years.
EU watchers expect contentious negotiations as the EU Parliament negotiates with member countries, who must approve the plan. Pascal Canfin, chair of the Parliament’s Committee on Environment, Public Health and Food Safety, sees an ETS for buildings and road transport as “politically suicidal,” possibly triggering social unrest across Europe akin to the gilets jaunes movement that began as fuel price protests in France. Anticipating social impacts resulting from these mitigation measures, the EC proposes earmarking 25% of new ETS revenues for a Social Climate Fund. This fund would support building renovations and clean car buying by vulnerable families and small businesses, as well as temporary lump-sum payments to compensate for increased road transport and heating costs.
Yet many see the revised car emissions standards as relatively uncontroversial. The average lifespan of a car is 15 years; with full conversion taking place in 2035-2050, electric cars will only be that much more affordable. Several European carmakers have already announced their plans to end production of combustion engine cars by 2030.
Taking a step back, while Europe’s climate target is more ambitious than those of the U.S. and China, our friends at Climate Action Tracker (CAT) have determined that it is nonetheless “insufficient” to keep global warming below 2º C by the end of the century. CAT concludes that pledging a 65% reduction by 2030 and funding climate action abroad “would make the EU the first region with commitments compatible with the Paris Agreement.”