As Chancellor Angela Merkel examined the devastation of flood-ravaged Germany this week, where at least 184 people are dead and dozens still missing, she might have pondered whether Europe’s newly announced climate policies are “too little too late”.
A few days earlier the European Commission adopted a package of proposals called “Fit for 55” to make the EU’s climate, energy, land use, transport and taxation policies help reduce net greenhouse gas emissions by at least 55 per cent by 2030 compared to 1990 levels – making the European Green Deal a reality.
President of the European Commission, Ursula von der Leyen, said: “The fossil fuel economy has reached its limits. We want to leave the next generation a healthy planet as well as good jobs and growth that does not hurt our nature. The European Green Deal is our growth strategy that is moving towards a decarbonised economy.”
The proposed legislative tools combine:
- emissions trading for new sectors and a tightening of the existing EU Emissions Trading System
- increased use of renewable energy
- greater energy efficiency
- a faster roll-out of low emission transport, infrastructure and fuels
- an alignment of tax policies with Green Deal objectives
- measures to prevent carbon border leakage
- targets to preserve and grow natural carbon sinks
Fit for 55 especially targets auto, oil, aviation and shipping industries, and immediately came under attack from all sides – par for the course with European legislation proposals.
“Sectors that generate the greatest emissions and pollution, such as heavy industry and agriculture, are still excluded from the effort required to contribute to climate neutrality by using all the options already available today,” said Barbara Mariani, EEB policy manager for climate (the largest network of environmental citizens’ organisations in Europe).
Unfortunately, the new Renewable Energy Directive includes the flaws of previous versions, supporting unsustainable biofuel crops palm and soy, discriminating against electricity and setting tough blending requirements for advanced biofuels and hydrogen based fuels, say critics.
It stands accused of “sacrificing forests” because the proposals would allow trees to continue to be burned for fuel.
Lina Burnelius, project leader at Protect the Forest Sweden, said the commission had failed to address one of the key drivers of forest degradation – counting forest biomass as renewable energy. “Fit for 55 is harmful to forests and insufficient to tackle climate change. We are in desperate need of honest policies that include all our emissions in the statistics.”
A report from the commission’s scientific advisers shows that 49 per cent of EU woody bioenergy comes from residues and wastes from logging and timber processing, 37 per cent from “low-quality” trunks and immature trees cut for forest management, but the remaining 14 per cent from an unknown source – suspected to be trees, rather than waste wood.
Greenpeace’s Sini Eräjää said demand for biomass had been driving wood extraction, and the Commission’s proposals will protect a small part of EU forestland, but “allow the industry to extract more wood from any of the other forests”.
The aim is to is to plant an extra 3 billion trees. But where will they go, wondered farmers?
EU Agriculture Commissioner Janusz Wojciechowski wants to link the proposal to the Common Agricultural Policy that subsidises farmers in Europe, paying them to practice agroforestry on the 90 per cent of European grassland area that he believes could integrate trees, forage, and pasture. He says that more than 99 per cent of the European arable land would be suitable for such practices.
But the European Agroforestry Federation points out that “agroforestry” is completely missing from the Commission’s recommendations to 16 member states.
“Carbon farming” – sequestering CO2 emissions while regenerating degraded agricultural soil – is part of the Fit for 55 package, included in the Farm to Fork strategy with a certification scheme for carbon removals.
The OECD and FAO’s agricultural outlook for 2021–2030, published last week, predicts a 14 per cent growth in global consumption of meat proteins of by 2030.
The revised Energy Efficiency Directive will double the binding annual target for reducing energy use at EU level and almost double the annual energy saving obligation for Member States.
The public sector will also be required to renovate 3 per cent of its buildings each year to drive the renovation wave, create jobs and bring down energy use and costs to the taxpayer.
The European Alliance to Save Energy lamented the lack of binding national targets on energy efficiency; and the lack of alignment of the EU-wide energy efficiency target with the EU decarbonisation pathway (36 per cent target for final energy consumption), which it points out “does not catch the cost-effective opportunities stemming of at least 40 per cent energy efficiency target by 2030”.
The taxation reform proposed will tax fuel based on energy content rather than volume, seeking to end incentives for petrol and diesel, and support the uptake of green biofuels, renewable hydrogen and synthetic fuels.
It will also end perverse tax exemptions and rebates for farmers, small pleasure planes, business jets and private yachts.
“Conventional fossil fuels such as gas oil and petrol will be taxed at the highest rate, while natural gas, LPG and hydrogen of fossil origin are offered a transitional period of 10 years, after which the full rate will apply,” a senior EU official said.
These proposals were all welcomed by environmentalists.
Carbon border levy
The proposal to replace free emission allowances under the EU carbon market with the “carbon border adjustment mechanism” is broadly welcomed, e.g. by the French, but not by German industry.
“The border adjustment is still untested and involves considerable risks,” warned Hans Jürgen Kerkhoff, president of the German steel industry association, who bemoaned that free CO2 credits for industry will be “massively melted down” past 2030.
The carbon border levy, the first of its kind worldwide, would apply to six sectors: electricity, iron and steel, aluminium, fertilisers, and cement.
“An EU lab experiment with border taxes is dangerous and already doomed to failure,” warned Wolfgang Große Entrup, chief executive of VCI, Germany’s chemical industry association, adding that the proposal would fail to protect the exports of European firms to international markets.
China too has expressed “grave concern”, saying it would be “discriminatory” and contravene UN principles affirming the historical responsibility of rich nations in causing global warming while Pascal Lamy, a former head of the World Trade Organisation, said the free allocation system combined with the new EU carbon border tariff, risked contravening international trade rules.
There’ll be a pilot phase for steel, aluminium, cement and some other products. “Green” steel may be up to 40 per cent more expensive than polluting steel, which is why it needs the border tax, said Peter Altmaier, the German economy minister.
German industry also doesn’t like the de facto ban on the manufacturing of new petrol and diesel cars, which the European Commission wants to introduce by saying all new cars built after 1 January 2035 should emit zero CO2.
Hildegard Müller, president of Germany’s auto manufacturer association VDA, called it “hostile to innovation and the opposite of open to technology”.
Volkswagen has already announced it will stop producing diesel and petrol cars by 2035.
But Peter Liese of the centre-right EPP group in the European Parliament said he was “very concerned. Electric vehicles are not really carbon neutral – even though they are the best in my view to reduce emissions in road transport – because the electricity is not carbon neutral”.
Road transport was to have been brought into the EU Emissions Trading Scheme. Instead, a modest, separate carbon price will be phased in between 2026-2028, with a low entry price of around €20/tonne, which may increase fuel prices by 5 cents per litre.
William Todts, executive director at Transport & Environment, warned: “The problem is carmakers will only have to start selling those cleaner cars in 2030. Our planet cannot afford another nine years of big talk but little action from the auto industry.”
Oliver Zipse, president of the ACEA lobby group and chief executive of BMW, stressed that the plan would “only be successful with mandatory targets for the ramp-up of charging and refuelling infrastructure in all member states to charge the millions of electric vehicles that European automakers will be bringing to market”.
The French protested that rural dwellers not supported by public transport would be hit hardest, raising the spectre of more “yellow vest” protests that met the last attempts to lap an eco-tax on fuel.
“France has reservations about the relevance of this measure and its consequences on households and small businesses. It will continue discussions to ensure that social justice and solidarity remain at the heart of climate action,” France’s ecological transition ministry warned.
The conservative EPP group in the European Parliament also attacked a plan to cushion the blow for the poor with a Climate Action Social Fund, that’s expected to be worth €72.2 billion in the period 2025-2032 – 25 per cent of the expected revenues from the new ETS.
“The European Commission seems to forget that it is the middle classes who, in France as in Europe, will bear the brunt of an increase in fuel prices,” MEP Agnès Evren carped.
“Do not make the mistake of extending the carbon market to heating and fuel. We experienced it in France, it gave us the Yellow Vests,” warned Pascal Canfin, the chair of the European Parliament’s environment committee, who called the proposed reform “politically suicidal”.
“How can you ensure that the Social Climate Fund will also reach the most vulnerable households,” asked Jytte Guteland, a Swedish Socialist and Democrat MEP. She said the new ETS will hit hardest those who have no means to buy an electric vehicle or insulate their homes.
The Socialist and Democrats and the Greens both wanted a 65 per cent reduction in greenhouse gas emissions by 2030.
It also wants to phase out free CO2 permits by 2026 for airlines whose flights within Europe are covered by the Emissions Trading scheme.
Green jet fuels are presently prohibitively expensive. They include bio-fuels from recycled cooking oil or other non-oil sources and (in its infancy) hydrogen-based synthetic or e-fuels.
“They are making up for decades of inaction to regulate aviation emissions, but don’t go far enough,” said Andrew Murphy, aviation director at Transport & Environment.
For shipping, the FuelEU Maritime regulation sets a limit on the greenhouse gas content of the energy used by ships that land at European ports by -2 per cent in 2025, -6 per cent in 2030 and eventually -75 per cent in 2050, compared with 2020 levels. It also wants to add shipping to the bloc’s carbon market for the first time.
Shipping doesn’t like this. Guy Platten, secretary general of the International Chamber of Shipping association, described it as “an ideological revenue raising exercise, which will greatly upset the EU’s trading partners”.
Countries told how much to cut emissions
European countries are being told how much to curb emissions in specific sectors – including transport and heating buildings – relative to their per capita economic output, in a way that’s adjusted to ensure that carbon is cut in a cost-effective way.
Richer countries therefore have tougher targets than poorer ones. The Commission proposes that Sweden, Finland, Germany, Denmark and Luxembourg all cut relevant emissions by 50 per cent by 2030, from 2005 levels. Their current targets range from 38 per cent to 40 per cent.
Poorer central and eastern European countries must also try harder.
Bulgaria, whose existing target is simply no emissions increase by 2030, must instead aim for a 10 per cent cut. Romania’s 2 per cent target ups to 12.7 per cent.
Will it happen?
Visiting the site of the floods, which she called “surreal, eerie”, Angela Merkel said she thought Germany ought to try harder to beat climate change.
But she won’t be in power by the time the final version of all these laws come to be agreed by EU governments and members of the European parliament, at the end of a process that could take up to two years. It only takes one country to object and a proposal fails.
Countries then often have to implement the laws in their national legislation, which sometimes also does not happen with great speed.
The EU’s long-term budget for the next seven years will meanwhile provide support to the green transition. 30 per cent of programmes under the €2 trillion 2021-2027 Multiannual Financial Framework and NextGenerationEU are dedicated to supporting climate action; 37 per cent 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.