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Everything you need to know about the EU's “Fit for 55” package

EcologyPolicy

Level

Ines Gendre

updated Sep 29, 2022

Copywriter specializing in environmental thematics at Greenly

The European Union's "Fit for 55" package marks important progress in its climate action strategy, targeting a substantial reduction in greenhouse gas emissions of 55% by 2030. This wide-ranging initiative touches multiple sectors, including energy, transportation, and industry, indicating a shift towards a more sustainable approach across the entire EU economy. More than just meeting environmental targets, Fit for 55 is about embedding sustainability into the EU's legislative and economic policies, positioning the EU as a leader in global climate action and setting a benchmark for others to follow.

👉This article delves into the EU's "Fit for 55" initiative, examining its comprehensive approach to reducing emissions and fostering sustainability.

Background of the Fit for 55 package

What is the Fit for 55 package?

The Fit for 55 initiative is the European Union's plan to align its legislation and policy actions with its ambitious climate targets. This initiative encompasses a series of updated legislative proposals and fresh strategies intended to achieve a significant reduction in greenhouse gas emissions - targeting a minimum 55% reduction by 2030.

Fit for 55 has a dual focus: firstly, it aims to ensure that the EU's climate actions are consistent and effective in meeting the EU’s agreed-upon climate goals, and secondly, it aims to foster a just and equitable transition across society and industry.

👉 Ultimately, Fit for 55 is a strategic effort by the EU to cement its role as a global leader in combating climate change, demonstrating a commitment to sustainable development and environmental responsibility.

Historical context

The Fit for 55 package is the culmination of the European Union's long-standing commitment to environmental sustainability and climate action. This commitment has evolved significantly over the years, marked by key developments that helped lay the foundations for the Fit for 55 initiative.

In the early 2000s for example, the EU established itself as a leader in climate policy with the introduction of the 20-20-20 targets in 2007, which aimed for a 20% reduction in greenhouse gas emissions, a 20% improvement in energy efficiency, and for 20% of EU energy consumption to come from renewable sources by 2020. These ambitions were further strengthened by the 2030 Climate and Energy Framework and the 2015 Paris Agreement, where the EU committed to substantial global efforts to limit global warming.

While these ambitious commitments from the EU may set the context for the Fit for 55 initiative, it was the alarming scientific reports on climate change and the commitments made under the 2015 Paris Agreement that accelerated the EU's efforts. There was a strong consensus among EU member states that more aggressive action was needed, leading to the development of the Fit for 55 package.

Legal framework

The Fit for 55 package was officially introduced by the European Commission in July 2021 as a direct response to the European Climate Law, which was adopted in June 2021. The law legally binds the EU to its ambitious goal of achieving climate neutrality by 2050 and incorporates a specific interim target of reducing greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels.

This package represents a concerted effort from EU bodies, including the European Parliament and the Council of the European Union, to align existing legislation and policy frameworks with these ambitious climate targets. It involves a comprehensive overhaul of the EU's climate, energy, and transport legislation and introduces new initiatives to ensure a coordinated approach across various sectors.

“ The law and the subsequent Fit for 55 package are landmark steps, showcasing the EU's commitment to transforming its climate goals into tangible, enforceable actions and setting a new standard in international climate governance. ”

What is the current status of the Fit for 55 package?

The European Union has made significant strides in advancing the Fit for 55 package - an important part of the broader European Green Deal (EGD) framework. While the EGD outlines a comprehensive action plan for combating climate change, Fit for 55 serves as a targeted roadmap to actualise the EGD's ambitious goals. Specifically, Fit for 55 focuses on key areas that demand a more robust green transition, providing detailed legislative proposals and amendments essential for reducing emissions

In October 2023, the European Commission celebrated a major milestone with the adoption of two final pillars of the Fit for 55 legislative package, marking a pivotal step towards meeting and potentially exceeding the EU's 2030 climate targets.

Commission President Ursula von der Leyen praised the completion of this legislative framework, underscoring its alignment with the objectives of the European Green Deal. The package now encompasses legally binding climate targets across all major sectors of the economy. This includes updated targets for renewable energy and energy efficiency, a revised emissions trading system, and the phasing out of polluting vehicles by 2035, among other measures. Notably, the Carbon Border Adjustment Mechanism has been established to ensure fair competition and address carbon costs on imported goods.

The final legislative package is projected to exceed targets and reduce EU net greenhouse gas emissions by 57% by 2030 (the initial target was 55%). Despite this progress, the Fit for 55 journey is ongoing. The completion of the Energy Taxation Directive remains pending, and the EU continues to work on other legislative proposals and the implementation of these laws in member states.

What is included in the Fit for 55 package?

The Fit for 55 package, as part of the EU’s overarching goal for climate neutrality by 2050, encompasses a broad range of measures across various sectors. Here's a breakdown of the key measures introduced by the initiative:

Emissions Trading System (ETS)

The EU Emissions Trading System (ETS), established in 2005, is a central pillar of the EU's policy to combat climate change by reducing greenhouse gas emissions. Operating on a 'cap and trade' principle, it sets a limit on emissions from high-emitting sectors like power generation and manufacturing, with companies trading emission allowances within this cap. Over the years, the ETS has been instrumental in incentivising emission reductions, and its role is now expanding and evolving under the Fit for 55 package to meet more ambitious climate goals.

The Fit for 55 package introduces significant reforms to the ETS, enhancing its scope and effectiveness. A critical development is the extension of the system to include maritime transport, acknowledging the sector's considerable emissions. This expansion aligns with the broader goal of encompassing more sectors under the EU's carbon reduction framework. The package also accelerates the reduction of emissions allowances, ensuring a steeper decline in overall emissions.

Another notable reform is the gradual phase-out of free allowances for specific sectors, a move designed to encourage industries to adopt cleaner technologies. Additionally, the integration of the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) into the EU ETS marks a significant step in aligning the EU's aviation sector with its climate objectives.

👉 To learn more about the EU ETS head over to our article.

Social Climate Fund

The Social Climate Fund is an integral part of the Fit for 55 package, designed to cushion the socio-economic impacts of the EU's transition to a greener economy. Recognising that stricter environmental policies, like the revamped Emissions Trading System, can disproportionately affect some communities, the fund aims to support households, micro-enterprises, and transport users facing financial challenges during this transition.

With a budget of €72.2 billion, the fund will provide targeted assistance, such as direct income support and investments in energy-efficient solutions. This initiative ensures an equitable transition, aiding those at risk of economic hardship and fostering an inclusive approach to achieving the EU’s climate goals.

Carbon Border Adjustment Mechanism (CBAM)

The Carbon Border Adjustment Mechanism (CBAM) is a central part of the EU's Fit for 55 package, aimed at tackling the challenge of carbon leakage. Carbon leakage refers to the risk that companies might relocate their production to countries with less strict climate policies, or that EU products might be replaced by more carbon-intensive imports.

CBAM addresses this by ensuring that imports of certain high-carbon products into the EU bear a similar carbon cost to those produced within the EU. This mechanism applies to sectors at high risk of carbon leakage, such as cement, electricity, fertilizers, iron, steel, and aluminum. By doing so, CBAM seeks to level the playing field for EU industries, encouraging global partners to strengthen their climate actions and ensuring that the EU's climate efforts are not undermined by carbon-intensive imports.

CBAM is designed to function alongside the EU Emissions Trading System (ETS), creating a complementary system that extends the EU's carbon pricing to the borders. Over time, it will gradually replace the free allocation of ETS allowances for sectors covered by CBAM.

Importantly, the mechanism is structured to comply with World Trade Organization rules and aims to motivate international trade partners to pursue similar carbon reduction strategies. By imposing a carbon price on imports, CBAM not only protects European industries from unfair competition but also drives global emission reductions, contributing to the worldwide effort against climate change.

👉 Find out more about CBAM and how it operates in our article.

Member states emission reduction targets

The Fit for 55 package updates the EU's effort-sharing regulation, extending its scope to cover greenhouse gas emissions from sectors not included in the EU Emissions Trading System (ETS). This regulation imposes binding annual emissions reduction targets on member states for sectors like road and maritime transport, buildings, agriculture, waste management, and smaller industries. These sectors are significant contributors to the EU's overall emissions profile, and the regulation ensures a comprehensive approach to emission reductions across various economic activities.

With this update, the EU has increased its collective emissions reduction target for these sectors to 40% by 2030, compared to 2005 levels, up from the previous 29% target. This heightened ambition reflects the EU's commitment to a broader and more aggressive climate action strategy.

National targets are tailored to each member state, considering their unique capabilities and circumstances, thereby ensuring a balanced distribution of efforts across the Union.

CO2 emissions standards for vehicles

Under the Fit for 55 package, the EU has established progressive targets for reducing CO2 emissions from new cars and vans, crucial for the transition towards more sustainable transportation. These targets aim to significantly lower emissions from vehicles by 2030 and set an ambitious goal for a 100% reduction in CO2 emissions for all new cars and vans by 2035.

This transition supports the development of cleaner vehicle technologies and aligns with the EU's broader commitment to reducing greenhouse gas emissions, ultimately contributing to the goals of the European Green Deal.

Methane emissions in the energy sector

The Fit for 55 package includes plans to reduce methane emissions in the energy sector, targeting the second most impactful greenhouse gas after carbon dioxide. This initiative is particularly significant as methane has a substantial effect on climate change (methane is responsible for around 25% of global warming). The proposal lays out specific strategies for monitoring and decreasing methane emissions, which are particularly prevalent in energy production and distribution.

Key measures in this proposal focus on enhancing leak detection in gas infrastructures, implementing stricter reporting requirements, and reducing venting and flaring activities.

Sustainable aviation fuels

The ReFuelEU Aviation initiative is part of the package to address the environmental footprint of the aviation sector. This proposal aims to increase the demand and supply of sustainable aviation fuels, such as advanced biofuels and electrofuels (also known as e-fuels), to significantly reduce aircraft emissions. It includes mandates for fuel suppliers to blend increasing levels of sustainable aviation fuels into jet fuel.

Sustainable aviation fuels are one of the key short and medium-term tools for decarbonising the aviation industry. The initiative aims to improve the supply of such fuels and to lower their prices making them a more competitive fuel source.

👉 Find out why it’s so difficult to decarbonise the aviation industry on our blog.

Decarbonised shipping

The FuelEU Maritime initiative under Fit for 55 seeks to decarbonise the shipping sector. It aims to reduce the greenhouse gas intensity of energy used onboard ships by up to 80% by 2050. To facilitate this transition, FuelEU Maritime is focusing on the adoption of renewable and low-carbon fuels in the shipping industry. This includes encouraging the use of advanced biofuels and other emerging energy sources.

By promoting cleaner fuels and supporting the necessary technological advancements, the initiative seeks to transform one of the traditionally high-emitting sectors into a more environmentally sustainable one, aligning with the EU's overarching climate goals.

Alternative fuel infrastructure

The regulation on alternative fuels infrastructure (AFIR) is a key part of the package and ensures that a sufficient network of recharging and refueling stations for alternative fuel vehicles is available across the EU.

The regulation mandates the installation of a sufficient number of electric vehicle (EV) charging stations and hydrogen refueling points, ensuring they are conveniently located and evenly distributed. Recharging stations for cars and vans should be installed every 60 km, and hydrogen refueling stations should be available from 2030 onwards in all urban nodes.

The goal is to remove infrastructure-related barriers that currently hinder the wider adoption of electric and hydrogen vehicles. By bolstering the availability of such facilities, AFIR aims to accelerate the transition from traditional fossil fuel-based transportation to cleaner, more sustainable alternatives.

Renewable energy and efficiency

The revised renewable energy directive under Fit for 55 sets an ambitious target of at least 40% of renewable energy sources in the EU's energy mix by 2030. This directive not only raises the overall target but also introduces specific sub-targets and measures tailored for key sectors like transport, buildings, and industry. These sector-specific goals are crucial for ensuring that all areas of the economy contribute to the transition towards renewable energy.

Complementing this, the updated directive on energy efficiency targets a substantial reduction in the EU’s overall energy consumption. The goal is to cut final energy consumption by 11.7% by 2030 compared to projections made in 2020. This directive aims to accelerate the adoption of energy-efficient technologies and practices across member states, enhancing the EU’s overall energy efficiency. This dual focus on both increasing renewable energy use and reducing energy consumption is pivotal for the EU’s strategy to combat climate change.

Energy performance of buildings

💡 Did you know? Buildings account for 40% of energy consumed and 36% of energy-related direct and indirect greenhouse gas emissions in the EU.

The Energy Performance of Buildings directive focuses on enhancing the energy efficiency of buildings across the EU. This directive lays out ambitious measures to improve the energy performance of both new and existing buildings, aiming to significantly reduce their energy consumption and greenhouse gas emissions.

Key initiatives include mandating that all new buildings should be net-zero buildings by 2023 and that all existing buildings should be transformed into zero-emission buildings by 2050.

Energy taxation

The revision of the energy taxation directive within the Fit for 55 package is a key move towards harmonizing the EU's fiscal policies with its ambitious climate and energy goals. This directive revision is aimed at modernizing the way energy products and electricity are taxed across the EU, ensuring that tax policies effectively support and reinforce the Union's environmental objectives.

Key aspects of this revision include broadening the range of energy products covered under the directive, adjusting the structure of tax rates to better reflect their environmental impact, and optimizing the system of tax exemptions and reductions. The goal is to encourage the shift towards cleaner energy sources by making the tax system more consistent with the principles of environmental protection and energy efficiency.

💡 The proposal is currently under discussion by the EU Council.

Hydrogen and decarbonised gas market

The Hydrogen and Decarbonised Gas Market package focuses on transitioning the EU's energy market towards hydrogen and other low-carbon gasses. The package aims to integrate these sustainable energy sources into the existing gas market, supporting the EU's shift away from fossil fuels.

Key aspects of the package include establishing standardized market rules for renewable gasses and hydrogen, promoting competition, and ensuring consumer protection and security of supply.

Emissions and removals from land use, land use change, and forestry

The Fit for 55 package includes crucial measures for managing emissions and removals related to land use, land use change, and forestry (LULUCF). It aims to strengthen the role of natural land resources in the EU's climate mitigation efforts. By setting ambitious targets for CO2 removals and reductions, the directive encourages sustainable land management practices, enhancing carbon sequestration in forests and other natural habitats.

Round up

The "Fit for 55" plan stands as a testament to the European Union's commitment to the fight against climate change. More than just a set of policies, it represents a transformative vision for a sustainable future, reshaping every sector from energy to industry, from transportation to agriculture.

As the EU works towards its ambitious 2030 and 2050 targets, Fit for 55 emerges not only as a blueprint for environmental action but also as a model of holistic, inclusive policy-making. It demonstrates that the path to sustainability is multifaceted, requiring not just technological innovations but also socio-economic considerations, ensuring that the journey towards a greener future is balanced and equitable. Fit for 55 is proof that comprehensive, aggressive climate action is not just necessary but entirely achievable.

What about Greenly?

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If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here.