Is the EU Fit For 55?

The European Union has announced a raft of climate change proposals aimed at pushing it towards its goal of becoming carbon neutral by 2050.

The document has been named "Fit for 55" and it explains how Europe's block federation of 27 states intends to achieve its climate goals.

Let’s have a closer look at some of these new regulations, even though it is important to highlight that the proposals, could face years of negotiations:

1. Intensive emissions trading will likely lead to a higher carbon price

The price of emission rights, which today mainly affects around 10,000 companies and producers, is to rise as the European Commission now proposes for the first time extending the emission trading scheme to cover the shipping industry. Furthermore, the number of available pollution rights is to fall. (These pollution rights are traded on financial markets and have helped to drive the cost of polluting to a recent high of more than €55 per tonne of carbon.)

2. Building a carbon border

Companies in the aluminum, steel, cement, and fertilizer industries, as well as electricity producers, have to be protected from competitors from third countries, where they have to meet less stringent climate requirements. It is also intended to prevent companies from outsourcing their production from the highly regulated EU to less regulated third countries, thus preventing a "CO2 leak".

3. “Fossil” and “Green” taxes

Taxes should be established to make it more expensive for consumers to use fossil energies, while electricity, which is needed en masse as an energy source for electric mobility, may become cheaper.

4. Green Automotives - a turning point for the auto industry?

By 2035, new cars will no longer be allowed to emit carbon dioxide. By 2030, carmakers will have to reduce the CO2 emissions of vehicles in the European fleet by 55% from today's 95 grams CO2/kilometer. In addition, a CO2 price surcharge is to be levied on conventional fuel in future. According to the current technology, this can only be achieved by switching to electric motors. By 2050, there should be no more emissions from vehicles at all. EU emissions rules are due to come into force as soon as 2025 are likely to make petrol cars less profitable than electric models, marking a landmark moment for the auto industry.

5. Reducing incentives for Intra-European flights

Sustainable or "green" substitute fuels will gradually become mandatory on European flights. By 2050, they should be at 60% share. Since they are currently 5x as expensive as the usual fuel planes use, prices for Intra-European flights are likely to rise sharply.

6. Easy access to green electricity

The expansion of a pump system for electric vehicles and refuelling with hydrogen must be made mandatory in the EU states. By 2030, there should be three million publicly accessible filling stations.

"By acting now we can do things another way... and choose a better, healthier and more prosperous way for the future." - European Commission President Ursula von der Leyen.

But corporate lobby BusinessEurope denounced the plan, reporting that it "risks destabilizing the investment outlook" for sectors such as steel, cement, aluminum, fertilizers, and electric power "enormously".

And Willie Walsh, head of the International Air Transport Association, said: "Aviation is committed to decarbonization as a global industry. We don't need persuading or punitive measures like taxes to motivate change."

"The principle is simple: emission of CO2 must have a price, a price on CO2 that incentivizes consumers, producers and innovators to choose the clean technologies, to go toward the clean and sustainable products," - European Commission President Ursula von der Leyen.

World leaders agreed six years ago in Paris to work to keep global temperatures from increasing more than 2 degrees Celsius (3.6 degrees Fahrenheit), and ideally no more than 1.5 degrees C (2.7 F) by the end of the century. Scientists say both goals will be missed by a wide margin unless drastic steps are taken to reduce emissions.

The aim of the "Fit for 55" legislation, commission officials say, is to ween the continent off fossil fuels and take better care of the environment by policy design, rather than be forced into desperate measures at some future climatic tipping point, when it's all but too late.

The Takeaway

Even before these regulations were published, it was clear that the road to a greener economy would not be an easy road. The commission has been criticized for interfering in people’s lives and controlling and regulating everything, but we have to keep in mind that the Commission only implements what it has decided together with the member states and the EU Parliament beforehand. And, in fact, it is the first authority to name a concrete package of measures on how to achieve the necessary reduction of greenhouse gases. Only in the future, we will see whether these measures will achieve their goals, but we have to remember that no goal can be met if it isn't targeted.

The measures are likely to push up household heating bills, as well as increase the cost of flights in the EU. Financial assistance will be available for people to install insulation and make other long-term changes to their homes.

This plan will likely have an impact on every citizen of Europe in almost every aspect of their lives.

From 1990 to 2019 the EU cut carbon emissions by 24% - now it proposes to slash CO2 by another 31% in just 9 years. That's what's needed if the 2050 net-zero target is to be achieved.

The ambitious package will now face months of negotiations with member states, with poorer countries wary of new policies that could raise costs for consumers.

The commission is betting that instead of hordes of yellow-vest protesters taking to the streets, citizens will be willing to pay a price for cleaner air, lower emissions, and more sustainable lifestyles.

The rest of the world will watch this huge gamble with interest.