What Changes for Europe After the Approval of the Climate Law and the Fit for 55 Package?

After declaring a climate emergency in 2019, the European Parliament endorsed the Climate Law on the 24th June 2021. The bill turns the European Green Deal’s objectives of the bloc’s climate neutrality by 2050 and emission reduction of 55 percent by 2030 into a binding obligation.

Key Changes

The law increases the EU’s target of greenhouse gas (GHG) emission reduction by 2030 from 40% to at least 55%, compared to 1990 levels.
The Commission proposes the adoption of a 2030-2050 EU-wide trajectory for greenhouse gas emission reductions, to measure progress and give predictability to businesses, so that they can plan for this green and digital transition.
By September 2023, and every five years thereafter, the Commission will assess the consistency of EU and national measures with the climate-neutrality objective and the 2030-2050 trajectory.
The Commission will make a proposal for a 2040 climate target at the latest 6 months after the first global review of the Paris Agreement in 2023. The EU ‘GHG budget’ will be one of the criteria to define the EU’s 2040 target.

Next Steps

In the “Fit for 55 Package” presented on the 14th of July, the Commission has outlined how the block will reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

Extreme Make-Over of Buildings & Transport.
Buildings use around 40 percent of the EU’s energy: the new package requires nearly half of that energy is renewable by 2030. EU countries will also need to increase the share of renewable energy used in heating or cooling buildings by 1.1 percent each year. Plus, the Commission wants countries to renovate public buildings at all levels at a rate of 3 percent each year.
When it comes to transport, the Commission pulls the trigger on phasing out the combustion engine. The new package is mandating a 55 percent fleetwide CO2 emissions cut from 2030 on the way to a 100 percent target five years later. In the aviation sector, all but the smallest EU airports will have to provide greener jet fuel to airlines by 2025. To preserve Europe’s competitiveness, the Commission also wants to apply emissions trading to maritime transport, covering all emissions from trips between EU ports and half of the trips beyond Europe.
Adoption of a new social fund.
To soften the blow to pockets of European citizens, it is planned to direct 25 percent of revenues from the ETS and funds from the EU budget to help drivers buy zero-emissions vehicles or homeowners insulate their homes. The fund is expected to surge to €72.2 billion.
Strengthen the EU Emissions Trading System.
The number of permits issued will be tightened as well as the requirements for the aviation industry, while the scheme to hit shipping will be expanded. The Commission will propose to create a second ETS that covers fuels used for road transport and building heating.
Apply CO2 price on imports to prevent carbon leakage from Europe.
The Carbon Border Adjustment Mechanism will put a tax on the imports of iron and steel, cement, aluminum, fertilizers, and electricity, lumping them with a tariff equivalent to what EU producers pay under the home carbon market. If other countries have similar measures, their companies will not get hit.
Increase the share of renewables.
The Renewable Energy Directive increases the current bloc-wide target from having 32 percent of energy come from renewables to 40 percent by 2030. Since renewables account only for around 20 percent of energy consumption, Member States need to double their capacity by the end of the decade.
Take advantage of Europe’s forests.
The package sets an overall EU target of removing 310 million tons of CO2 equivalent in 2030. To that end, a proposed revision to its land use, land-use change, and forestry regulation (LULUCF) will set binding annual national targets for CO2 removals for 2026 to 2030.