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EC unveils broad roadmap for cutting greenhouse gas emissions by 55% by 2030

Highlights

Legislative proposals cover wide range of sectors

Include reforms of CO2 allowance trading system

Targets 40% share of renewables in EU energy mix

The European Commission on July 14 unveiled one of its most ambitious packages of legislative proposals ever, publishing plans for new legislation across numerous sectors designed to achieve its target of a 55% cut in greenhouse gas emissions by 2030.

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If approved by the European Parliament and EU member states, the so-called "Fit for 55" package would put in place the legislative architecture the EU needs to meet its Green Deal ambitions.

The package covers a wide range of sectors, from EU CO2 allowance trading to the use of alternative fuels in transport and heating, to energy efficiency and taxation.

Its ultimate aim is to bring down greenhouse gas emissions much more quickly than previously envisaged as Brussels looks to take the global lead in tackling climate change.

"The fossil fuel economy has reached its limits," EC President Ursula von der Leyen said.

"Europe was the first continent to declare to be climate neutral in 2050, and now we are the very first ones to put a concrete roadmap on the table," von der Leyen said.

The new set of proposals are interconnected and complementary, the EC said, and would enable the "necessary acceleration" of greenhouse gas emission reductions in the next decade.

The proposals combine:

*application of emissions trading to new sectors and a tightening of the existing EU Emissions Trading System (ETS);
*increased use of renewable energy;
*greater energy efficiency;
*a faster roll-out of low emission transport modes and the infrastructure and fuels to support them;
*an alignment of taxation policies with the European Green Deal objectives;
*measures to prevent carbon leakage through a Carbon Border Adjustment Mechanism (CBAM);
*and tools to preserve and grow the EU's natural carbon sinks.

According to Roman Kramarchuk, Head of Future Energy Analytics at S&P Global Platts Analytics, the package is a "great start" to achieving the EU's ambitious goals, but it is still "far from a done deal."

"Final decisions are well down the road and full implementation will be several years away," Kramarchuk said.

"Previous efforts from the EU -- notably in aviation -- have been tempered by the reality of seeking consensus, and there are plenty of reasons to believe we'll see this package moderated over time as well," he said.

The package needs to be passed by the European Parliament and the EU Council, a process that could take up to two years.

The EU Council has said it hopes to finalize its position by June 2022.

Notable among the EC proposals are a plan to tighten supply of carbon allowances by 4.2%/year out to 2030. That compares with 2.2%/year under the previous 40% emissions target for 2030.

It also proposed to phase out free emission allowances for aviation and align with the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as well as to include shipping emissions for the first time in the ETS.

And to address the lack of emissions reductions in road transport and buildings, a separate new emissions trading system is to be set up for fuel distribution for road transport and buildings, it added.

Renewables target

The EC also said it would set a more ambitious target for the use of renewables in the EU under a revised Renewable Energy Directive (RED).

"The RED will set an increased target to produce 40% of our energy from renewable sources by 2030," it said. This compares with a previous target of just 32%.

"All member states will contribute to this goal, and specific targets are proposed for renewable energy use in transport, heating and cooling, buildings and industry," it said.

Brussels is also targeting energy efficiency in order to reduce overall energy use. "It will guide how national contributions are established and almost double the annual energy saving obligation for member states," the EC said.

Meanwhile, the EC said a combination of measures was required to tackle rising emissions in road transport.

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, it said.

"As a result, all new cars registered as of 2035 will be zero-emission," it said.

Aviation, shipping

In aviation and shipping, the EC said the Alternative Fuels Infrastructure Regulation would require that aircraft and ships have access to clean electricity supply in major ports and airports.

The ReFuelEU Aviation Initiative will oblige fuel suppliers to blend increasing levels of sustainable aviation fuels in jet fuel, including synthetic low carbon fuels, it said.

Similarly, the FuelEU Maritime Initiative will stimulate the uptake of sustainable maritime fuels by setting a maximum limit on the greenhouse gas content of energy used by ships calling at European ports.

The EC also proposed new legislation on energy taxation in order to promote clean technologies and remove outdated exemptions that currently encourage the use of fossil fuels.

Finally, the EC said the CBAM would 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."

"This will ensure that European emission reductions contribute to a global emissions decline, instead of pushing carbon-intensive production outside Europe," it said.

Platts Analytics' Kramarchuk cautioned that with its narrow focus and contentious nature, the CBAM was unlikely to have any impact on carbon emissions in the near term.

"And in sectors like transportation and residential/commercial building emissions, the main barrier will be the fact that capital stock and fleets cannot be changed overnight -- making 2030 targets a very tough reach," he said.