Filenews 26 September 2021 - by Angelos Nikolaou
To achieve the goal of a climate-neutral European Union by 2050, in line with the goals of the Paris Agreement, the EU needs to increase its ambition for the next decade and update its climate and energy policy framework.
To this end, the Commission has adopted a package of proposals through which the EU's climate, energy, land use, transport and taxation policies will be adapted to achieve a reduction in net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
This is a new development strategy aimed at transforming the EU into a fair and prosperous society with a modern, competitive and resource-efficient economy, in which net greenhouse gas emissions have been reduced to zero by 2050 and where economic growth has been decoupled from resource use.
It also aims to protect, conserve and strengthen the EU's natural capital, as well as to protect the health and well-being of citizens from risks and impacts related to the environment.
At the same time, this transition must be fair and inclusive. It must put people first and look after the regions, sectors and workers who will face the greatest challenges. As it will bring about substantial changes, active public participation and confidence in the transition are of paramount importance for the effectiveness and acceptance of policies.
Therefore, in Cyprus, it is necessary to review the policies for the supply of clean energy to the whole economy, for industry, production and consumption, large-scale infrastructure, transport, food and agriculture, construction, taxation and social benefits. In order to achieve these objectives, it is necessary to increase the value attached to the protection and restoration of natural ecosystems, the sustainable use of resources and the improvement of human health. This is where transformation is most necessary and that can bring greater benefits to the EU's economy, society and natural environment. The EU should also promote and invest in the necessary digital transformation and digital tools, as they are important drivers of change.
The general starting point of the package is the European Green Deal, whilst taking into account the European Climate Law (Regulation 1119/2021).
The Fit for 55% package is a series of proposals to review and update EU legislation and to implement new initiatives to ensure that EU policies are in line with the climate targets agreed by the Council and the European Parliament.
The package aims to define a coherent and balanced framework for achieving the EU's climate objectives, characterised by equity and social justice, maintaining and enhancing innovation and the competitiveness of EU industry, while ensuring a level playing field vis-à-vis third-country economic operators, and supporting the EU's position as a world leader in the fight against climate change.
The overall package consists of eight regulations, five directives, a forestry strategy and two decisions that form part of the two directives of the Emissions Trading System (ETS), in particular the general directive and the more specific directive on aviation emissions.
Achieving a socially just transition by 2030 will be achieved through:
a) climate change social fund (2025-2032)
b) to promote investments and measures to support citizens
(c) the allocation of part of the revenue from entitlements to the buildings and transport sectors;
d) the maintenance of the principle of solidarity in a Effort Sharing Regulation and a ETS;
(e) the redistribution of rights;
(f) the combination of GNP criteria and cost-effectiveness;
(g) the reinforced modernisation fund;
(h) the reinforced innovation fund.
The competitive transition also includes:
1. promoting industrial transformation
2. carbon pricing
3. increasing binding targets in the energy sector
4. promoting clean mobility and fuels
5. the revision of the CO2 standards for vehicles and vans
6. the revision of the regulatory framework for alternative fuels infrastructure
7. the promotion of sustainable fuels
Finally, the green transition is intended to:
a) the promotion of actions in the fields of land use, forestry and agriculture;
b) the introduction of ambitious targets for the EU's natural sinks
(c) strengthening the sustainability criteria for bioenergy;
(d) to incentivising of good practices for biomass;
(e) the new union forest strategy.
The expected benefits of the package for both the EU and Cyprus are:
- Reduction of emissions
- Promoting research and innovation
- Change production and consumption patterns
- Creation of new jobs
- Tackling Energy Poverty
- Reducing external energy dependence
- Improving health and well-being
- Promotion of the environmental profile with multiple cumulative benefits including tourism.
- Strengthening competitiveness
Zero pollutants for new vehicles
The Commission announced that stricter CO2 emission standards for cars and trucks will accelerate the transition to zero-emission mobility, requiring a 55% reduction in average emissions of new cars from 2030 and 100% from 2035 compared to 2021 levels and by 50% and 100% for new vans respectively. As a result, all new cars and vans registered from 2035 will have zero emissions.
The ETS addresses the decarbonisation of the existing vehicle fleet while vehicle standards are the driving force for the de-emissions of new cars.
In addition, the proposal for a Regulation on alternative fuels infrastructure (SSS) will accelerate and act as a catalyst in the promotion of vehicles and in ensuring the possibilities of charging depending on the sales of zero-emission cars. Member States will be obliged to establish charging and refuelling points at regular intervals on major motorways: every 60 km for electric charging and every 150 km for hydrogen refuelling.
The following could be described as significant benefits of this legislation: (a) the reduction of CO2 emissions from vehicles and vans by 55-56% in 2035 and 83-89% in 2040 compared to 2005, (b) the improvement of air quality and the reduction of air pollution in mainly urban areas (it is estimated that €50-60 billion will be saved between 2030-2040 from the improvement of air), (c) the reduction of the cost of using vehicles (average net savings for the first owner around €300-600 per year in 2030 and around €1000-2000 for a new vehicle to be purchased in 2035), (d) new jobs will be created, (e) the reduction of oil imports (estimated at 900-1100Mtoe for 2030-2050).
Pressure on households and small businesses
While in the medium and long term the benefits of EU climate policies clearly outweigh the costs of this transition, climate policies risk exerting additional pressure on vulnerable households, micro-enterprises and transport users in the short term. That is why the design of the policies in the new package must share fairly the costs of tackling and adapting to climate change.
In addition, carbon pricing instruments increase revenues that can be reinvested to stimulate innovation, economic growth and investment in clean technologies. A new Social Climate Fund is proposed, providing specific funding to Member States to help citizens finance investments in energy efficiency, new heating and cooling systems and cleaner travel. The Social Climate Fund will be financed from the EU budget, using an amount equivalent to 25% of the expected revenues from emissions trading from buildings and road transport fuels. It will provide €72.2 billion in funding to member states (for Cyprus an allocation of approximately €150 million is proposed) for the period 2025-2032, based on a targeted amendment of the multiannual financial framework. With a proposal to raise funds from the corresponding funding of the Member States, the Fund will mobilise €144.4 billion for a socially just transition.
The benefits of direct action to protect people and the planet are clear: cleaner air, cooler and greener cities, healthier citizens, lower energy use and bills, European jobs, technologies and industrial opportunities, more space for nature and a healthier planet for future generations. The challenge at the heart of Europe's green transition is to ensure that the benefits and opportunities arising from it are available to all, as quickly and fairly as possible. Using the various policy tools available at EU level, we can ensure that the pace of change is adequate, but does not cause excessive shocks.
Targets adjusted due to pandemic
The revision of the Effort Sharing Regulation (ESR) aims to increase the target of reducing emissions in non-ETS sectors by 40% compared to the current 30% by 2030 compared to 2005. This also means more ambitious targets for Member States (MS). The new targets of the Member States range from 10% to 50% compared to 2005 emissions. In a previous regulation, the targets of the Member States ranged from 0 (for Bulgaria) to 40%. For Cyprus, this target is 32% compared to a previous one of 24%.
It is noted that GDP criteria were used to set the target in combination with the principle of cost-effectiveness in order to achieve greater convergence between the per capita emissions of the MS.
The basic scope and architecture of the Regulation is maintained, i.e. the ability of Member States to decide how to achieve the objective is maintained on the basis of the principle of accountability and subsidiarity, the existing scope is maintained in buildings (direct use of fuels, not electricity), small industries, agriculture (non-CO2 emissions), waste management and transport (except aviation and international shipping).
It is noted that these sectors, which were not hitherto included in ETS, were responsible for 60% of the EU's greenhouse gas emissions. In a revised proposal, the regulation will continue to cover the road transport and buildings sectors, while including them in ETS.
The existing system's well-being is also maintained to a significant extent, i.e. Member States can 'save and borrow' emission allowances.
Member States may also benefit from a safety reserve under certain conditions, and provided that the OVERALL EU emission reduction target is met.
A new proposal also proposes the creation of an additional reserve for all Member States based on the "unused" absorption of greenhouse gases produced in the EU. At the same time, the progress towards achieving the targets for the years 2023-2025 and 2026-2030 is adjusted to take into account the uncertainties caused by the pandemic.
It is noted that in order to achieve the targets in each Member State, the contribution of the revised proposals on energy efficiency, RES, CO2 standards for vehicles and vans, the ETS as well as the proposal for a regulation on alternative fuels infrastructure are expected to be significant.
Land use and forestry change
The revision of the Regulation on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry activities (LULUCF) aims to incentivise Member States to develop and improve natural carbon sinks, while seeking a more general simplification of the regulatory framework.
The main benefits of the amendment of the regulation will be: (a) the promotion of sustainable crops with the help of digital solutions, (b) the promotion of agroforestry and agroecology, (c) the afforestation of 3 billion trees through the forest strategy, (d) the re-drying of drained peatlands, (e) the sustainable use of biomass, (f) extensive livestock farming in grasslands; (g) the promotion of healthy eating patterns.
The revision of the LULUCF Regulation sets a comprehensive EU target for the removal of carbon from natural sinks, equivalent to 310 million tonnes of CO2 emissions by 2030. This is an increase of 15%, compared to the current annual removals of about -268 Mt.
An important innovation is the Commission's effort to promote, after 2030, the transition to a more comprehensive policy framework covering activities related to agriculture, forestry and land use (AFOLU), as part of a single post-2030 climate policy tool.
In particular, with regard to the objectives, a three-step approach is proposed: (a) the existing rules will apply until 2025, (b) the new targets will apply in 2026-2030. (c) achieving climate neutrality in the land use, forestry and agriculture sector by 2035 by calculating revised targets for Ms. At the same time, primary food and biomass production should become climate neutral by 2035, putting the EU on the path to climate neutrality in 2050.
The target for Cyprus is to contribute 352 thousand tons of emissions to removals by 2030. For the post-2030 period, Member States have an obligation to explain how they intend to contribute to the collective objective of climate neutrality in 2035 through the NECAs, which will be updated by mid-2024.
A new important element in the Regulation is the inclusion of natural disturbances (forest fires, wood-eating insects, beetles) in the compliance of Member States with the targets beyond 2026.
In addition, two additional facilitation measures are expected, namely the Coal Mining Initiative and the certification of coal removals.
