Since the beginning of 2020, different initiatives have been presented by the European institutions, which have been implemented to transform Europe into a greener and more sustainable continent. So far, these have been making their way through specific sectors, such as the automotive or agricultural sectors, but will any of these measures related to emissions and environmental responsibility affect all companies and sectors?
On July 14, the European Commission launched Fit-for-55, a legislative package that includes new measures on corporate climate emissions to reduce them by 55% by 2030. Together with the changes proposed in the European Green Deal, Fit-for-55 will bring the European Union even closer to its environmental target through noticeable changes in everyday elements: variations in production processes, a transition to clean energy, or modifications to existing heating or transport systems. It will also introduce policies structured in twelve interdependent provisions that revolve around the same core: carbon, its price, and its reduction.
When presenting the package, the Commission announced introducing a “European price” for carbon, which will have a significant presence in the areas of energy and transport. On the one hand, this measure intends to reduce fossil fuel subsidies and increase the European carbon price in the sectors covered by the existing EU ETS (European carbon pricing scheme). On the other hand, these measures will make all sectors in which fossil fuels are burned more expensive.
To address the latter concern, a recurring one among Member States and European companies, the Commission proposes a carbon border adjustment mechanism (CBAM). This would protect European companies against foreign companies due to the extra cost that importers of carbon-intensive producers will have to pay to trade within the European Union. This competition for the highest profit has also been observed internally within the EU bloc following the Fit-for-55 announcement, as the heads of state have sought to ensure the best deal for the other member countries.
On the other hand, although the European Union primarily deals with companies and their members, citizens also play a fundamental role, thus creating a three-dimensional puzzle around the new measures. The revised ETS, which will introduce a new scheme for heating and transport, will increase the cost of bills and imported products due to CBAM. Not only will a change in the price of bills be observed, but this new strategy aims to save energy through insulation for housing and the construction of climate-neutral buildings with more efficient installations. It is expected that, by 2030, 32.5% of infrastructure and housing will meet these requirements, especially public buildings, schools, hospitals, or social housing. In addition, the public sector will have to renovate 3% of its facilities every year to boost the renovation wave, create jobs and reduce energy use and costs for the taxpayer.
All these measures and decisions result from the roadmap consultations launched by the European Commission on November 13, 2020, which have led to establishing the necessary rules to limit the EU’s greenhouse gas emissions. Until September 2021, all stakeholders will have the opportunity to contribute their views and concerns to the Commission through the public consultations:
- Consultation on national emission reduction targets:
- Consultation on land use;
- Consultation on the update of the EU Emissions Trading Scheme;
- Consultation on effort sharing regulation.
During the last quarter of 2021, the Review of the Energy Performance of Buildings Directive (EPBD) and the Review of the Third Energy Package for gas (Directive 2009/73/EC and Regulation 715/2009/EU) to regulate competitive decarbonized gas markets will take place. Consequently, this will close all opportunities for stakeholders to provide their views on the relevant actions of the new Fit-for-55 package.
Ana María Martín Elvira, ATREVIA Bruselas
