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In today's Morning Brief:

EU climate package “Fit for 55”: an interconnected set of proposals

Yesterday, the European Commission adopted a package of proposals to make the EU’s climate, energy, land use, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. 

A factsheet of the climate package has been uploaded on the Private Area (EU R&I policy > Green Deal)  – log in and click here.

The package is composed of a set of interconnected proposals:

  • The EU Emissions Trading System (ETS) puts a price on carbon and lowers the cap on emissions from certain economic sectors every year. The Commission is proposing to lower the overall emission cap even further and increase its annual rate of reduction.
  • Member States should spend the entirety of their emissions trading revenues on climate and energy-related projects.
  • The Effort Sharing Regulation assigns strengthened emissions reduction targets to each Member State for buildings, road and domestic maritime transport, agriculture, waste and small industries.
  • Member States also share responsibility for removing carbon from the atmosphere, so the Regulation on Land Use, Forestry and Agriculture sets an overall EU target for carbon removals by natural sinks, equivalent to 310 million tonnes of CO2 emissions by 2030.
  • The Renewable Energy Directive will set an increased target to produce 40% of our energy from renewable sources by 2030.
  • To reduce overall energy use, cut emissions and tackle energy poverty, the Energy Efficiency Directive will set a more ambitious binding annual target for reducing energy use at EU level.
  • Stronger CO2 emissions standards for cars and vans will accelerate the transition to zero-emission mobility by requiring average emissions of new cars to come down by 55% from 2030 and 100% from 2035 compared to 2021 levels. As a result, all new cars registered as of 2035 will be zero-emission.
  • The Alternative Fuels Infrastructure Regulation requires that aircraft and ships have access to clean electricity supply in major ports and airports.
  • revision of the Energy Taxation Directive proposes to align the taxation of energy products with EU energy and climate policies, promoting clean technologies and removing outdated exemptions and reduced rates that currently encourage the use of fossil fuels.
  • A new Carbon Border Adjustment Mechanism will put a carbon price on imports of a targeted selection of products to ensure that ambitious climate action in Europe does not lead to ‘carbon leakage’.

new Social Climate Fund is proposed to provide dedicated funding to Member States to help citizens finance investments in energy efficiency, new heating and cooling systems, and cleaner mobility.

For more details about the proposals and about the social impact of the package, read more on the Commission website.

 

Commission presents the new Energy Directive

The European Commission published also a proposal for recasting the EU Directive on Energy Efficiency, aimed at further stimulating EU efforts to promote energy efficiency and achieve energy savings in the fight against climate change. This initiative forms part of the Commission package of proposals “Delivering on the European Green Deal”. It interlinks with a number of today’s other proposals, notably the revised Renewable Energy Directive, the Emission Trading Scheme (ETS) and the new Social Climate Fund, and the revision of the Effort Sharing Regulation.

The directive sets a new energy efficiency target for 2030, with the annual savings requirement raised to 1.5%. Moreover the directive wants to set a new framework for heating and cooling, which accounts for 80% of energy use in buildings, aimed at cutting emissions in buildings. Parts of these measures are expected to be financed via revenues from ETS allowances on building and transport or from the new Social Climate Fund. Read more on the website of the Commission.

 

Commission ambitious climate package stirs reactions

As illustrated above, “Fit for 55” includes several drastic measures, like the raise of the cost of using polluting fuels and the requirement of a massive revamp of how people drive, insulate their homes, produce things like steel and cement, and manage their forests and land. At the centre of the reform is a review of the bloc’s carbon market, the emissions trading scheme (EU ETS), which puts a price on each tonne of CO2 emitted by around 10,000 installations in the power sector, the manufacturing industry, as well as intra-EU flights. Hence, burning fossil fuels is set to become substantially more expensive in all sectors.

As expected, the package triggered reactions from all sides of the political and social landscape, like the ones reported by Politico. Initial responses acknowledged the ambition of the proposals but also drew battle lines over the social cost of the proposals. The European Commission sought to alleviate these concerns by providing more money to the vulnerable groups affected by the new ETS. Another major source of discontent for MEPs is the Commission’s proposal to introduce a separate ETS for transport and heating fuels. Pascal Canfin, a French MEP who chairs the Parliament’s environment committee, called the proposal “politically suicidal,” warning it risks triggering social unrest similar to the 2018 Yellow Vests movement in France, reported Euractiv.

Industry groups broadly welcomed the package, but also made clear the aspects they were preparing to push against. Pierre Gattaz, president of the lobby group BusinessEurope, said the Commission’s plan to cut back slowly on the free pollution credits given to industry under the bloc’s Emissions Trading System “risks destabilizing the investment outlook for these sectors enormously.”

But criticism seems to come also from within the Commission lines. Seven Commission insiders consulted by Euractiv said that almost one-third of the Commissioners had expressed some concerns about the package or how it was pushed forward. The same sources also confirmed that Budget Commissioner Johannes Hahn had voted against it. Commissioners unhappy with some aspects of the ‘Fit for 55’ initiative included some of the main sectors affected by the plan (Budget, Industry, Economy, Social Affairs) and came from the main political families (EPP, Socialists, Renew Europe), said a Commission official familiar with the situation.

 

Event “How to manage innovation across Europe” (21 July)

The project InterConnect, led by INESC TEC, “How to manage innovation across Europe – Orchestrating Innovation”. The event will take place on July 21, from 1:00 PM to 2 PM (Portuguese time). InterConnect is the biggest European R&D project ever managed by a Portuguese institution. The event will have the participation of Frank Berkers, Virag Szijjarto and Maurits Butter, from TNO, who will be introducing and discussing on how to manage public-private innovation from early research to mission impact, across Europe, with another guest. David Rua, from INESC TEC, will be the moderator.

Registration is free but mandatory and can be accessed here.

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