EU Commission presents legislative package to meet climate ambition

16 July 2021

On Wednesday, European Commission President Ursula von der Leyen, First Executive Vice-President in charge of the Green Deal, Frans Timmermans, and five Commissioners presented an ambitious and comprehensive legislative package to reach the EU’s climate goal of carbon neutrality by 2050. Sectors that are strongly affected are, for example, forestry, automotive, aviation and the energy industry.

In addition to a range of laws designed to transform transportation, the package includes several energy laws aimed at improving renewable energy and energy efficiency in the EU. When presenting the proposals, Commissioner for Energy, Kadri Simson, said that reaching the Green Deal goals will not be possible without reshaping our energy system – this is where most of our emissions are generated. To achieve climate-neutrality by 2050, we need to turn the renewables evolution into a revolution and make sure no energy is wasted along the way. Today’s proposals set more ambitious targets, remove barriers and add incentives so that we move even faster towards a net-zero energy system.”

As a cornerstone of the plans, the Commission aims to revise the EU Emissions Trading System (ETS) to reduce the number of permits issued, while also extending it to the aviation and maritime industries. Another aspect that could become controversial is the Commission’s proposal to create an ETS for fuels used in building heating systems or transport, directly impacting many consumers. According to the Commission, this method has brought down emissions from power generation and energy-intensive industries by 42.8% in the last 16 years.

A new €72.2 billion Social Climate Fund is proposed to alleviate the possible financial losses that some could encounter and distribute the money to more affected Member States. 25% of the fund will be financed by the ETS, while the rest will come from the EU budget. In concrete terms, the Social Fund will, for example, help Member States to build up a network of electric vehicle charging stations. At the same time, low-income households in EU countries will be supported when they renovate their homes or plan to switch to electric vehicles. Member States spending plans will have to be approved by the Commission, which could also spark debate.  

Finally, the Commission amended the Renewable Energy Directive (REDII). The significant strengthening of renewable energy is a cornerstone of the EU mechanism. The Directive wants to reach 40% of renewable sources by 2030. To achieve that, the Commission is proposing to increase the targets for renewable energy sources like wind and solar in transport, heating and cooling, buildings and the industry in all Member States. At present, only 20% of the energy we consume is renewable. According to the Commission, this figure will be doubled in ten years. To achieve this ambitious goal, the EU relies on the currently up-and-coming offshore industry and increased cooperation between the Member States.

These proposals and the rest of the legislation is now being discussed. There is already criticism on individual points. For example, it was said that the ETS could place an additional financial burden on ordinary households and drivers. At the same time, the Social Climate Fund was deemed too complicated to support disadvantaged people effectively. In the end, the European Parliament, the Commission and Member States have to debate and reach an agreement, which will probably take months, if not years.