Fit For 55

Olivier ABULI, advice and analyses consultant, public sector of

October 2, 2021

Anticipating by a few days the alarming findings of the IPCC to the decision-makers ‘attention1, the European Commission published mid-July a very ambitious political and normative "package" about energy and climate.

The aim is to do more by 2030 than in the last three decades in order to meet a target of 55% reduction of greenhouse gas emissions compared to 1990 !

This is a complex trajectory, but one that is intended to be pragmatic by drawing lessons from the CoP 21 assessment : withdrawal of the United States for four years, increase in the production of fossil fuels by 8 other signatory countries that are members of the G20, absence of controls and sanctions.

Two "flagship" measures to try and meet the target.

The extension of the carbon regulated market.

In 2005, the European Union established the Emissions Trading Scheme (ETS), which was the world first carbon market. It is based on the principle of a cap on the amount of emission rights that can be issued by certain economic sectors. Within the allowed limit, actors receive, buy or trade allowances according to their needs. The cap is gradually lowered while the removal of free allowances is planned in advance.

This system currently concerns electricity production, energy-intensive industrial installations (refineries, metallurgy, cement plants, paper and cardboard, chemicals, etc..) as well as commercial aviation within the EU.

The Commission's intention is to significantly accelerate the reduction of emissions in this market by 2030, while creating a second ETS dedicated to road and maritime transport as well as heating of buildings.

Towards a carbon adjustment mechanism at the EU borders.
The second axis will probably raise important diplomatic tensions. But its implementation will make it possible to an essential step towards a healthy and efficient low-carbon economy.
It is a question of establishing a carbon adjustment at the EU's borders to control the risks of so-called "carbon leakage" : relocation and unfair regional competition.
By doing so, Europe also intends to take a certain normative leadership and create a knock-on effect on other regional powers.

Additional proposals to accelerate transitions.

The "July 14, 2021 Package" includes eighteen documents, many of them highly technical, and thousands of pages. Its impact analysis by the Member States, followed by the negotiation and adoption procedures, should take nearly 24 months.

However the general vision and its sectional adaptations are the subject of agreements of intent regarding their broad outlines.

- Non-ETS Sectors.
The Effort Sharing Regulation (ESR) applies here. It leaves it up to the states to decide which measures to implement to meet the European target, on the basis of a distribution key that is partly based on per capita GDP.
In its reconfiguration, it would focus on waste management and small industrial installations, taking into account the creation of a second "transport-buildings" ETS and the inclusion of agriculture in a new "land use and forestry" objective. The Commission proposes to increase GHG emission reductions in the ESR scope from 32% to 40% in 2030, compared to the 2005 baseline.

- Energy Directives.
Although revised in 2018, the Renewable Energy Directive could see its 2030 targets raised from 32% to 40% with a focus on 49% regarding energy used in buildings.
The Energy Taxation Directive is expected to undergo a major overhaul, ending a large number of exemptions and focusing on the most polluting fossil fuels.

- End of heat engine vehicles manufacturing and sale in Europe / alternative fuels for transport.
Very strict standards for reducing CO2 emissions have been put forward in 2021 for new vehicles (objective of a 55% reduction in authorized emissions by 2030, as opposed to the 37.5% presently set). Then the end of heat engine vehicles manufacturing should occur between 2035 and 2040.
As far as this topic is concerned, the European Union is committed to the rapid development of a dense infrastructure of alternative fuels ; at the same time, it intends to support the substitution of sustainable fuels for maritime and air transport.

- Forestry strategy.
Finally by amending the LULUCF Regulation (land use and forestry), the European Commission wishes to adopt a concrete doctrine about the multifunctionality of forests, both as a net carbon sink (land and forests), and as a reservoir of biodiversity and natural resources for the economy (wood material, industry and energy).

This multi-sectional and coherent package provides a strong and consistent framework for achieving regional carbon neutrality between the middle and the end of this century.

This multi-sectional and coherent package provides a strong and consistent framework for achieving regional carbon neutrality between the middle and the end of this century.

By mobilizing significant resources for both investment and research and development, and by providing mechanisms of equity and solidarity, it also proposes a sustainable way to free Europe from its dependence upon fossil fuels.

It is therefore a path of individual and collective responsibility, anticipation and innovation to achieve a peaceful economic and social transition.

1. See our news of 21/ 09/ 21.