The European Union recently unveiled its latest climate proposal, known as the Fit for 55 package. This has come in response to the revised Nationally Determined Contribution (NDC) that the EU submitted in December 2020 under the Paris Agreement. The primary goal of this package is to ensure that changes impacting the economy, society, and industry can effectively deliver the NDC and achieve carbon neutrality – a balance between emissions and the absorption or removal of greenhouse gases from the atmosphere.
Key Features of The Fit for 55 Package
The Fit for 55 package includes several significant proposals. First, it suggests an increase in the binding target for renewable sources in the EU’s energy mix to 40%, up from 32%. The package also aims to improve energy efficiency by 36%, compared to the prior target of 32.5%.
The second proposal revolves around decreasing vehicular carbon emissions. The goal here is to reduce these emissions by 55% by 2030, and by 100% by 2035. This would effectively phase out petrol and diesel vehicles by 2035. To encourage electric cars, the proposal also includes the use of public funds to build charging stations every 60 km on major highways.
Establishing an Emissions Trading System
The Fit for 55 package proposes creating a separate Emissions Trading System (ETS) for buildings and road transport, which is planned to be operational from 2026. ETS are market-based instruments designed to create incentives for cost-effective emission reductions.
Introducing a Social Climate Fund
To help low-income citizens and small businesses adapt to the new ETS, the EU wants to establish a Social Climate Fund. The fund will take various forms, such as funding for building renovations, access to low carbon transport, and even direct income support.
Expanding ETS to the Maritime Sector and Instituting a Carbon-Border Adjustment Mechanism
Under the new package, the existing ETS is proposed to be extended to the maritime sector between 2023 and 2025. Additionally, the EU aims to introduce a carbon-border adjustment mechanism, which will impose a price on imports from places with carbon-intensive production processes.
Enhancing Sink Capacity
In pursuit of the carbon neutrality goal, the EU has set a target of enhancing its sink capacity to absorb 310 million tonnes of CO2 equivalent through specific national targets by member countries.
A Comparative Analysis of Climate Goals across Countries
The EU’s target is to slash greenhouse gas emissions by 55% below 1990 levels by 2030 and achieve carbon neutrality by 2050. This is more aggressive than the US commitment but falls behind Britain. While China, the world’s largest emitter, aims for its emissions to peak by 2030, India has planned to reduce emissions intensity of the Gross Domestic Product by about one third by 2030.
Potential Impact and Future Directions
The Fit for 55 Package could make Europe a leader in emerging technologies like electric car batteries and offshore wind generation. However, the transition might increase costs of various goods and services for consumers and companies, and force businesses that manufacture products destined for obsolescence like parts for internal combustion engines, to adapt or shut down.
Going forward, climate justice should guide negotiations over the package. Ensuring a socially fair transition domestically and internationally will be key to successful, long-term implementation.