The ambitious European plan against global warming
“Fit for 55” is not the last protein brand for middle-aged men. It’s a new climate change reform package unveiled by the European Commission last Wednesday. It consists of 13 different policy initiatives that aim to reduce emissions by 55% by 2030 compared to 1990 levels, and then achieve carbon neutrality by 2050. The core of these proposals is carbon pricing.
Credits to Kevin Kallaugher
It is the “biggest transformation operation in history”, said Frans Timmermans, the Commissioner for the Green Deal. And I believe it really is! The little challenge we now face is translating European targets into the European policies needed to encourage 27 member states, 450 million people, and 25 million European companies to adjust their activities accordingly.
Vintage is cool.
At the heart of the plan, is a major revival of the Emissions Trading System (ETS). It was created in 2004 and, while still one of the world's most important emissions markets (“cap and trade”), had been largely snubbed in recent years. Put simply, the ETS capped the emissions of around 11,000 power plants and industries across Europe at an overall maximum. It also created a market to allow these 11,000 entities to trade emissions allowances with each other. If one industry pollutes more it can buy allowances from those that pollute less - always within the pre-set total limit, that decreases from year to year.
Recently, some experts have judged the ETS a failure. Either because member states have approved their own emissions markets or because they have found ways to dilute it. But the Commission is determined to relaunch it by widening its scope. Today only 11,000 highly polluting industries and power stations, which produce about 40% of the EU's emissions, are subject to the ETS. With the new plan, the ETS will cover practically all the EU's emissions. Transport and heating emissions are included too, at the risk of a price increase in these sectors.
STOP - Pay at the border!
The other innovative element of “Fit for 55” is the Carbon Border Adjustment Mechanism (CBAM). This system should force importers of carbon intensive products to pay a similar carbon cost to domestic producers. The sectors involved will be steel, cement, aluminium and fertilizers. Guess what? The CBAM proposal has already drawn international criticism. In practice, the CBAM is a duty imposed to protect European companies from unfair competition of companies operating in countries with lighter environmental requirements.
The programme also entails a tax on shipping fuels, and a set of rules to encourage electrification of the transport system.
New petrol and diesel cars would be phased out by 2035, ushering in a new era of electric vehicle dominance.
On top of these measures, a Climate Social Fund was proposed to mitigate the impacts of carbon pricing on the most vulnerable households. Some experts already argue that we need more to make a real socially fair Package. For example, female population is more at risk to suffer from energy poverty. Why don't set a specific target of women beneficiaries of this fund? It would make the “Fit For 55” more inclusive.
At least on paper, “Fit for 55" is really ambitious. The main risk is that member countries and interest groups will try to dilute or postpone the plan during the long approval and implementation process. The opposition will be very strong, but Timmermans doesn’t pale - all momentous transitions receive strong opposition.
