European Green Deal

The “Fit for 55 Package”

The EU has adopted a climate law enshrining its new climate targets of at least a 55% reduction in greenhouse gas emissions by 2030 compared to 1990 levels and net zero by 2050. On 14 July 2021, the European Commission published its “Fit for 55” package to enable the EU to meet those targets.

The Fit for 55 Package encompasses a suite of legislative initiatives across various sectors, including energy, transport and buildings, which is intended to fundamentally overhaul the EU’s climate policy framework and put the EU on track to deliver on its 2030 climate target of 55%. For an overview on what is expected, see our blog post here.

Below we set out short summaries of each of the key pieces of legislation which will be updated regularly.

Key legislation

Overview

The European Commission has published the much-anticipated "Fit for 55" package, with a number of legislative and policy proposals to enable the EU to meet its new 2030 target - i.e. a package that is "fit for" delivering a 55% GHG reduction by 2030.

This a significant moment for the European Green Deal and the EU's efforts to lead on global climate diplomacy. What is being proposed will involve very significant changes for all sectors - in particular the energy, transport and buildings sectors.

Read our post for a quick guide on what the package includes.

Implications for clients

Now that the “Fit for 55” package has been released, what are the key implications for corporates and the financial sector – both those based in the EU and those wishing to do business in the EU? What the Commission is proposing is nothing short of transformational change on a scale not seen before for most sectors of the economy – with a particular emphasis on the energy, transport and buildings sectors.

In this post we take a look at those implications and how the package fits with the EU’s sustainable finance agenda.

Carbon Border Adjustment Mechanism (CBAM)

As part of the “Fit for 55” package, the European Commission have set out a proposal for a Carbon Border Adjustment Mechanism to protect the EU’s ambitious decarbonisation initiatives by preventing “carbon leakage” – the risk that companies based in the EU could move carbon-intensive production abroad to take advantage of less stringent climate standards or that EU products could be replaced by more carbon-intensive imports.

In this post, we take a detailed look at the proposal and what it means in practice.

EU Emissions Trading System (EU ETS)

The EU ETS was set up in 2005 and was the world's first international emissions trading system. The EU ETS is now into its fourth trading phase (2021-2030). It is essentially a market-based mechanism for putting a price on carbon. It has also served as inspiration for the launch of emissions trading schemes in other countries and regions – including most recently in the UK and China.

In this post, we take a look at the European Commission’s proposals for change of the EU ETS as part of the wider Fit for 55 package.

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