2030 climate goals: is Europe ready to accelerate?
The “target alignment – 55%” legislative package presented by the European Commission on 14 July 2021 is the centerpiece of the Union’s Green Deal and a key confidence test for Member States. Unprecedented in its scope, this set of texts aims to align European legislation with the aim of reducing greenhouse gas emissions by 55% by 2030 compared to 1990 levels, thus moving closer to Climate Neutrality in 2050. European climate law adopted in 2021.
A year and a half after its presentation, the negotiations conducted within the European Union (EU) institutions made it possible to make progress towards the adoption of these measures. While the first texts presented in July 2021 have reached the final stage of negotiations between the Member States represented in the European Parliament and the Council, the level of climate ambition has generally been maintained for now.
More importantly, this package is politically fueled by the energy crisis caused by Russia’s aggression in Ukraine and its impact on the price of fossil fuels, particularly natural gas. Accelerating the energy transition, based primarily on the development of renewable energies and energy efficiency, is seen not only as a solution to the climate crisis, but also as a means of strengthening Europe’s energy security in the short term. of Russian hydrocarbons as soon as possible. It is also a way to reduce energy costs for European citizens.
Set the rules of the game
The aim of this legislative package is to set the rules of the game for the low carbon transition for European economic players by the end of the decade. This strengthening of European regulation is necessary to triple the rate of reduction of greenhouse gas emissions in Europe over the last decade (2009-2019) and achieve the 2030 climate target.
To achieve this, the package includes measures affecting all sectors of the European economy to accelerate the decarbonisation of the electricity system, which has been the main part of reducing emissions over the last decade, and to spread it to economic sectors where progress has been made. so far has been very weak: construction, transport and industry. To this end, it contains a triptych of new or strengthened measures: targets and regulations, economic incentives through carbon pricing and an energy tax, as well as the allocation of financial resources derived from carbon pricing.
Setting climate and energy goals also aims to share the responsibility of Member States and economic subjects. Thus, Member States should, for example, contribute to the goal of achieving a 40% use of renewable energy sources through the implementation of national policies.
Setting climate and energy goals also aims to share the responsibility of Member States and economic subjects
Then, this new legislative package, with emblematic measures including a ban on the sale of internal combustion vehicles in 2035, aims to introduce recharging infrastructures used in aviation and maritime transport, and even alternative fuels, to rules equally applicable to European economic sectors. makes corrections. . These goals are equally important because they allow us to confirm the expectations of the players in these sectors and therefore guide the industrial strategies today in all dimensions: research and development, investment, training, social reconstruction, etc.
Reducing carbon emissions at all costs
Economic incentives for energy players are also strengthened with this package. In this regard, the European Union relies on its long experience with the system of emission quotas applied to industrial sectors (Emissions Trading Scheme or ETS in English). The aim is to strengthen its ambition by reducing the number of benefits in circulation faster. This already has a strong impact on the market, on the price of one ton of CO2 today it ranges between 60 and 90 euros, well above the levels of the past decade.
As a result of this stronger ambition, the package includes the establishment of a carbon cap adjustment mechanism. It seeks to capture the carbon price of imports for a limited number of high-emitting industrial products (steel, cement, aluminum, etc.), which would allow an end to the free allocation of import allowances. Which manufacturers on European soil.
Finally, carbon pricing is being extended to new sectors, with international aviation and maritime transport integrated into the industrial ETS, while a second independent ETS is proposed for energy consumption in buildings and road transport. On the other hand, the Commission’s proposals on the energy tax framework, which are mainly aimed at closing tax loopholes in the use of fossil fuels, stand because of the unanimity rule that applies to tax matters between European countries.
Finally, this legislative package includes measures for the allocation of financial resources raised by the Union and Member States from the sale of emission allowances. These funds, which should increase significantly compared to the previous decade, will be welcome to finance the climate transition. They will be divided between the budget of the member states and the financing of the European funds for innovation and the application of new technologies, as well as the new social fund for the climate created with the financial resources of the ETS for construction and transport.
This fund is the next step towards recognizing the need to strengthen social action arising from low-carbon transformations and will be used to finance redistributive measures and support the transition of vulnerable families, especially in Eastern European countries.
Passing this ambitious legislative package now appears to be an important and necessary first step. However, there are a number of challenges to overcome in order to succeed.
First, there will be the commitment of all member states. Their activities are especially important to boost efforts in the construction and transport sectors as the geopolitical and macroeconomic context deteriorates. Rising interest rates raise questions about the ability of nations to generate sufficient resources to finance the private and public investments necessary for the low-carbon transition. They are estimated to total more than €1,000 billion a year between now and 2030, including €300 billion in additional costs compared to current levels.
Reflection at the Twenty-Seven level on means of releasing common resources beyond the European recovery plan to secure these low-carbon investments may be important and may address the fears raised by certain Member States. The first step for France will be to fully integrate the orientations of the European package into its new environmental planning that is being developed. This should lead to a new climate energy strategy in 2023.
The second challenge will be finding the right balance to ensure the support of all European citizens for decarbonisation goals. The energy crisis has led the Union to a configuration of high energy prices, which are much higher than envisaged when the package was proposed, and which should last for at least several years. This involves a short-term reversal of energy prices, and in the long-term the mass deployment of low-carbon solutions, prioritizing transport and housing for the most disadvantaged households.
Finally, the ultimate challenge for the Union will be to transform this package into a tool to strengthen cooperation with other geographical areas to facilitate the achievement of global climate goals, especially in industry, while maintaining Europe’s economic attractiveness.