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Corporate Leaders Groups

Business leadership for a climate neutral economy
 
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14 July 2021 - Today the European Commission released its flagship ‘Fit for 55’ package of climate and energy legislation to deliver its 2030 targets. CLG Europe has carried out a first evaluation of key areas of the proposals.

Eliot Whittington, Director of the Corporate Leaders Groups said:

“Today is an historic moment. The Commission should be congratulated for unveiling a major package of significant new initiatives and amendments. Today’s announcements come with the explicit recognition that what is good for climate is good for the economy. However, the question remains whether these changes will enable the pace of ambition required and deliver a positive Green Deal and social and economic transformation. Business and government must work together to ensure that the EU seizes the opportunities to advance on the race to zero and modernise our economies while maximising economic and social benefits including job creation.”


Today the European Commission presented its plans for how to ramp up action to reduce net greenhouse gas emissions by 55% by 2030. This new package has the potential to deliver deep transformations across the EU’s energy systems, housing, mobility and industry using the Green Deal as its blueprint.  But it is also clear the adverse impacts of climate change are accelerating at an alarming speed. 

CLG Europe calls on the Council and the Parliament to seize the opportunity to deliver this key legislation as soon as possible and ensure that it remains a coherent and effective set of measures to tackle climate change. In a recent letter to EU leaders, more than 60 businesses and business networks asserted their support for a rigorous package and outlined 10 principles highlighting how action to boost a green, digital and inclusive economic recovery in the wake of the covid-19 pandemic could help develop EU economic strength and jobs in the growing new industries and clean markets of the future.

Building on this package, the EU must also now immediately engage at the international level and support a constructive agenda for global collaborative action at Glasgow that can keep 1.5 degrees alive internationally.  

CLG Europe rapid response to key areas of the package:

Review of the Emissions Trading System and potential separate ETS for buildings and transport

  • The review of the ETS will be a critical component of any successful package. We welcome the aim to deliver increased carbon pricing signals and strengthen the ETS targets in line with the 2030 ambition. We also support requirements that investments via the Modernisation Fund are consistent with the objectives of the European Green Deal and the European Climate Law and eliminate support to investments related to any fossil fuels. It is clear that efforts to bolster investment, competition and innovation should support activities in line with achieving a climate neutral economy, ensuring that funding is well spent on economic activities with a long-term competitive future.
  • The proposed separate ETS that is aimed at buildings and transport will continue to be controversial and must be carefully managed if it is to be successful in supporting long term change in these sectors. To avoid discord and negative distributional effects, adequate and timely efforts must be undertaken to ensure that the new social fund will be adequately resourced and set up in a way that enables it to advance just transition and deliver support for affected communities.

CBAM

  • Another controversial element of today’s announcement is the proposal to establish an EU Carbon Border Adjustment Mechanism (CBAM). This proposal is partly motivated by a desire for it to prompt stronger climate action internationally. However, the proposal in its current form is expected to prompt significant international push back, which could undermine its goals. Clear and effective design of the CBAM in full awareness of these challenges is essential to ensure political credibility, integrity and compatibility with the WTO rules and the Paris Agreement. 

Effort Sharing Regulation, fuels infrastructure, taxation and transport

  • It is positive that the Effort Sharing Regulation has been maintained with an increased target at EU level, and provides clarity on the national targets. This means that Member States will remain accountable and responsible for lowering emissions from the sectors covered and incentivised to take the necessary measures to decarbonise these sectors while remaining accountable. This, alongside policy measures directly aimed at transport, including increasing the CO2 performance standards for road vehicles. The message that only zero emissions cars and vans should be sold by 2035 is an important signal, alongside the new clarity on charging infrastructure that is emerging as the alternative fuels directive shifts to a regulation. We welcome the long overdue revisions to the energy taxation system. It is also positive to see the introduction of fiscal incentives and quotas for the decarbonisation of aviation fuels, extension of the ETS to cover some maritime emissions, and goals for the greenhouse gas intensity of maritime fuels. 

Amendment to the Renewable Energy Directive 

  • The new Union-wide target of 40% for the Renewable Energy Directive is also major step forwards towards accelerating the transition of the EU’s energy system towards zero emissions power. The efforts to set up clearer indicative targets for the share of renewable energy at Member State and EU level could also help provide more clarity on the expected pathway. The proposals to remove barriers are also very positive, including simplified permitting processes for wind and solar installations and a standardization process for guarantees of origin. There are also new provisions to promote the share of renewable energy in district heating and cooling and across the energy system to industry, as well as consider the definition of renewable fuels and sustainability criteria.   

Review of the Energy Efficiency Directive

  • There are major new advances in ambition in the Energy Efficiency directive, including the new overall targets and the new mandatory target of at least 3% annual renovation rate being extended to all public buildings to a higher energy efficiency standard of nearly zero-energy. 

The Net Target and the review of the LULUCF Regulation 

  • Last but not least, and given the urgency to step up action to face the climate challenge, the package should allow for the EU to accelerate beyond the 55% net target. The strengthening of ambition of the LULUCF Regulation provides an opportunity to enable this sector to play a crucial role here by increasing carbon removals.  A clearer sense of direction has been proposed, with an EU target for net greenhouse gas removals, binding national targets and an objective for climate neutrality in the land use sector by 2035, but it will be critical to assess the interaction with the net 55% target.  Removals should come on top of increased climate action across the economy as the LULUCF should not make up for the lack of action in other sectors including agriculture. We welcome the linkages made in the proposal between LULUCF, the Biodiversity Strategy and the Farm to For Strategy as the transition towards climate neutrality should also lead to the creation of a ‘nature positive’ economy – and a push towards the goal of protecting degraded ecosystems and restoring nature.

Read the business letter on the Fit for 55 package here and learn more about the 2030 CEO letter calling for an at least 55% emissions in the EU by 2030 reduction here.

Learn more about CLG Europe’s engagement with policymakers here.

For enquiries, please contact:

Pascale Palmer, Senior Press Advisor

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