OPINION: The European Commission has adopted a package of proposals to make the EU's climate, energy, land use, transportation and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels — dealing another blow to fossil fuels industries.

“The fossil fuel economy has reached its limits. We want to leave the next generation a healthy planet as well as good jobs and growth that does not hurt our nature,” said European Commission President Ursula von der Leyen.

"The European Green Deal is our growth strategy that is moving towards a decarbonised economy.”

The ‘Fit for 55’ policy package will make many companies pay much more for the carbon they emit, while new sectors will have to cough up for their emissions for the first time.

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The new carbon border adjustment mechanism will put a carbon price on imports of a targeted selection of products to ensure that ambitious climate action in Europe does not lead to ‘carbon leakage'.

This will ensure that reductions in European greenhouse gases contribute to a global emissions decline, instead of pushing carbon-intensive production outside Europe.

However, the ultimate fate of the commission’s proposals could well depend on whether its carbon border adjustment mechanism proves to be compatible with World Trade Organization rules.

The 'Fit for 55' package of additional policies, which followed the Commission’s earlier announced European Green Deal, was unveiled on 14 July.

Individuals and businesses are expected to be the hardest hit by its tough stance on emissions from transportation and from buildings.

The low-carbon technologies required to meet the EU’s touted emissions targets for these sectors are not all readily available, so consumers will probably find themselves — at least in the shorter term — having to pay for the carbon emissions of fossil fuels-based solutions.

Disproportionate impact

Social Europe warns that such costs disproportionately impact low-income households, for whom fuel and transportation costs eat up a greater percentage of their income.

Also, while low-carbon transport options such as electric vehicles and rooftop solar panels can promise low operating costs they tend to have high upfront capital costs — presenting a hurdle for households with little ready access to cheap capital.

Meanwhile, “a malfunctioning carbon market can be compounded by ill-conceived regulation, such as weight-based emission standards favouring SUVs while penalising small petrol vehicles”, says Social Europe, which aims to help strengthen democratic practice by contributing to public policy discussions.

The European Green Deal has lofty goals.

Firstly, achieving net-zero emissions via strategies to help curb emissions, with a strong focus on energy, which accounts for more than 75% of the bloc’s greenhouse gas emissions. The share of renewables in the EU’s primary energy mix is targeted at 40%.

It also plans to decouple growth from resource exploitation. While reductions in emissions have been achieved in the last decade, Europe remains one of the major contributors of resource consumption in the world, notes the World Economic Forum.

Lastly, is the need to foster an inclusive green transition, which will see up to €75 billion ($88.6 billion) invested through 2027 to alleviate the socio-economic impacts of the transition.

This last aim must be taken very seriously if the Commission’s promise of an in-tandem transformation of the EU’s economy and society is for real. An energy transition that results in more inequality would be a failure, even if people are breathing cleaner air.

(This is an Upstream opinion article.)

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