Fit for 55: What to expect

The European Commission is putting its final touch on the so-called Fit for 55-package, and it will be interesting to see how big an electric focus the package has – and whether the charging infrastructure will get a proper push.


While the Belgians are enjoying football, freedom and moules frites on the sidewalk cafes, politicians and officials are working hard in the Barlaymont building.


In the European Commission headquarters, they are wrapping up the Fit for 55-package – due for 14th of July.


July is often a busy month in Brussels, before the EU institutions close, and the politicians and officials leave for vacation. But this year the summer was extra busy, as the European Commission prepares the enormous legislative package. It will secure that Europe is in top shape for climate battle and the goal of reducing carbon emissions with at least 55 % in 2030 compared to the 1990 level.


Since last year, when the Member States finalized their arm-wrestling contest on the new climate target, it has been clear that the EU will spend a big part of 2021 in the gym. Corona restrictions or not. Because the climate laws need to be fit to keep up with the 2030 climate target and the ambition of becoming the first climate neutral continent in 2050.


Keep an eye out – the race is about to start.


Europe’s green transition is more fundamentally about stopping the use of fossil fuels and promote green power across different sectors. In the IEA report ‘Net Zero by 2050’, they conclude that renewable and green energy are crucial to reach the 1.5-degree target. And the European Commission has made it clear that electrifying energy consumption is pivotal for a green Europe.


It is going to be interesting to see how big of an electric focus Fit for 55 has and whether the plan points toward an independent European electrification strategy. Political guidance is needed to create a more efficient energy consumption by electrifying industry, transport and heating in addition to carbon reduction.


In that regard Fit for 55 will also revise the legislation for transport and infrastructure. Here the crucial point is how big incentives the countries will get to build out charging infrastructure and to what degree electric power is defined in relation to other carbon neutral fuels.


The comprehensive electrification of industry, transport, heating, and other sectors, requires an immense amount of green power from wind and sun. The European Commission will therefore raise its target for the share of renewable energy there will be in the energy consumption. The crucial question is: by how much?


The rumors in Brussels are that the Commission will propose a target of 38-40 %. If the target is going to be coherent with the 55 % reduction in 2030, it should be around 45%.


Another cornerstone of the Fit for 55, you should keep an eye on, is the EU ETS reform. It will be tightened to ensure fossil fuel emissions are reduced further and incentivize green investments.


We will especially keep an eye out for, how ambitious the Commission will be in relation to the Market Stability Reserve that has been contributing to bring down the supply and strengthen the price on CO2-quotas. At the same time, it will be interesting, how the Commission will propose the inclusion of other sectors such as buildings and transport in the ETS.


On top of that, the Commission will also propose a Carbon Border Adjustment Mechanism that will work as a green tax on goods and services outside the EU, so the European industry does not lose its competitiveness because of the EU climate ambitions.


It will be exciting to see, how brave the Commission will be in their proposals. Will it be very concrete, or will it be a softer proposal to feel the mood of the member states?


Climate marathon ahead




You get exhausted thinking about everything the EU has to accomplish to become fit for the 55 percent. Equally breathtaking is all the topics Member States need to shake hands on.


Indeed, countries are not fully aligned on to best way for the EU to reach its carbon reduction targets. Some countries might try to skip a few workouts, while the other Member States must lift a heavier load.


At the summit of the European Council, we got a snapshot of the difficulties to come in converting the green ambitions to concrete policies. Member States had to give up on giving any clear recommendations both for a new EU ETS cap and trade system and for effort sharing in order to get to the 55 % reduction in 2030.


And even though you can spot movement in the countries that used to be more sceptic, there are still big challenges ahead. The EU is standing in front of a long marathon, and it will take dedication and stamina if they want to ensure a successful and inclusive green transition of Europe.


Lars Koch, Director of EU Affairs at Danish Energy

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