Fit for 55 Package – Synopses

As part of the European Green Deal, the EU has set itself the binding goal of achieving climate neutrality by 2050. As an intermediate step towards climate neutrality, the EU has committed to reducing emissions until the year 2030 by at least 55% compared to the year 1990.

In order to harmonize current legislation with the 2030 and 2050 targets, the EU is working on reforming its climate, energy, and transport-related legislation as part of the so-called “Fit-for-55-Package”. On 14 July 2021, the European Commission published drafts of legislative acts forming part of the package  which have been discussed and amended over the last two years in the European Council and the European Parliament. Since then, some of them have been adopted. We have prepared synopses for you to highlight the changes that have been made.

In summary, the European legal acts now stipulate more ambitious goals and cover a broader scope of (industrial) areas, while their structural approach builds on what has proven successful so far:

• EU Emissions trading system (EU-ETS)
  • The target for emission reduction in EU-ETS sectors is raised to 62% by 2030 relative to 2005 levels.
  • Maritime transport emissions will be included in the scope of the EU-ETS for the first time.
  • Free emission allowances for the aviation sector will be gradually phased out by 2026.
  • The EU-ETS will apply to flights within the European Union, while the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will apply to flights to and from third countries participating in CORSIA.
  • The new Carbon Border Adjustment Mechanism (CBAM) will aim to prevent an increase in imports of CO2-intensive goods from third countries as a reaction to the EU-ETS.
  • A Social Climate fund will be used to support vulnerable households and micro-enterprises and help them cope with the price impacts of the EU-ETS.
• Market stability reserve (MSR)
  • The increased annual intake rate of allowances is prolonged beyond 2023.
• Effort Sharing
  • The sectors falling under the regulation must now reduce their greenhouse gas emissions at EU level by 40% (previously 30%) by 2030 relative to 2005 levels.

In the following we provided an overview of the amended legal acts. The synopses will prove helpful in understanding the exact changes that have been made and the implications those changes have for industry and business.

List of amended legal acts (synopses are available for download below):

• EU-ETS Directive - 2003/87/EC
• Market Stability Reserve Decision - (EU) 2015/1814
• Effort Sharing Regulation - (EU) 2018/842

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We would like to thank Navid Sattorov and Moritz Wiechert for their valuable support in the compilation of these synopses.