| Emissions reduction
are needed to ensure a transition which makes Europe fair, green and competitive, sharing responsibility evenly across different sectors and member states, and providing additional support where appropriate.
A socially fair transition While in the medium- to long-term, the benefits of EU climate policies clearly outweigh the costs of the transition, climate policies risk putting extra pressure on vulnerable households, micro- enterprises and transport users in the short run. The design of the policies in the package therefore aim to fairly spread the costs of tackling and adapting to climate change. In addition, carbon pricing instruments raise revenues that can be reinvested to spur innovation, economic growth, and investments in clean technologies. A new Social Climate Fund is thus proposed to provide dedicated funding to member states to help citizens finance investments in energy efficiency, new heating and cooling systems, and cleaner mobility. The plan is to finance the Social Climate Fund via the EU budget, using an amount equivalent to 25% of the expected revenues from emissions trading for building and road transport fuels. It will provide an estimated €72.2 billion of funding to member states over the period 2025-2032. With a proposal to draw on matching member state funding, the fund would mobilise €144.4 billion for a socially fair transition, says the Commission. The benefits of acting now to protect people and the planet are clear, says the Commission: cleaner air, cooler and greener towns and cities, healthier citizens, lower energy use and bills, European jobs, technologies and industrial opportunities, more space for nature, and a healthier planet to hand over to future generations. “The challenge at the heart of Europe’s green transition is to make sure the benefits and opportunities that come with it are available to all, as quickly and as fairly as possible. By using the different policy tools available at EU level we can make sure that the pace of change is sufficient, but not overly disruptive.”
Background
The European Green Deal, presented by the Commission on 11 December 2019, sets the goal of making Europe the first climate-neutral continent by 2050. The European Climate Law, which entered into force in July 2021, enshrines in binding legislation the EU’s commitment to
climate neutrality and the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. The EU’s commitment to reduce its net greenhouse gas emissions by at least 55% by 2030 was communicated to the UNFCCC in December 2020 as the EU’s contribution to meeting the goals of the Paris Agreement.
As a result of the EU’s existing climate and energy legislation, the EU’s greenhouse gas emissions have already fallen by 24% compared to 1990, while the EU economy has grown by around 60% in the same period, decoupling growth from emissions. This “tested and proven legislative framework” forms the basis of the new package of proposals.
The Commission says it conducted extensive impact assessments before presenting these new proposals to measure the opportunities and costs of the green transition and in September 2020 “a comprehensive impact assessment underpinned the Commission’s proposal to increase the EU’s 2030 net emissions reduction target to at least 55%, compared to 1990 levels.” It showed that this target is both achievable and beneficial. Today’s legislative proposals are supported by detailed impact assessments, taking into account the interconnection with other parts of the package, the Commission asserts. The EU’s long-term budget for the next seven years will provide support to the green transition, according to the Commission, with around 30% of programmes under the €2 trillion 2021-2027 Multiannual Financial Framework and NextGenerationEU dedicated to supporting climate action. Some 37% of the €723.8 billion (in current prices) Recovery and Resilience Facility, which will finance member states’ national recovery programmes under NextGenerationEU, is allocated to climate action, the Commission notes.
Next steps
To become EU law the proposals must be adopted by the EU parliament and the Council of the EU. “Considering the highly controversial nature of at least some of the proposals and the expected social and economic impact, we can expect fierce negotiations stretching until 2023”, suggest Alice Boldis and Christian Lütkehaus of Pinsent Masons. “So while the package gives an indication of the expected regulatory changes, it remains to be seen what the final legal framework will look like.”
From left to right:
President of the European Commission,
URSULA VON DER LEYEN
The fossil fuel economy has reached its limits…Europe walks the talk on climate policies through innovation, investment and social compensation.
Executive vice-president for the European Green Deal, FRANS TIMMERMANS
This is the make-or-break decade in the fight against the climate and biodiversity crises…our proposals will spur the necessary changes, enable all citizens to experience the benefits of climate action as soon as possible, and provide support to the most vulnerable households. Europe’s transition will be fair, green and competitive.
Commissioner for economy, PAOLO GENTILONI
We are updating our two-decades old energy taxation rules to encourage the use of greener fuels and reduce harmful energy tax competition. And we are proposing a carbon border adjustment mechanism that will align the carbon price on imports with that applicable within the EU. In full respect of our WTO commitments, this will ensure that our climate ambition is not undermined by foreign firms subject to more lax environmental requirements. It will also encourage greener standards outside our borders. This is the ultimate now or never moment. With every passing year the terrible reality of climate change becomes more apparent…we confirm our determination to act before it is really too late.
Commissioner for energy, KADRI SIMSON
Reaching the Green Deal goals will not be possible without reshaping our energy system – this is where most of our emissions are generated.
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