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On the one hand the plan is genuinely ambitious. It includes not just a challenging overall target but also some early indications of how to achieve the -55% goal, even though that has now become a “net” target. The ambition of the car CO2 standards is to go up to -50%, boosting electric vehicle sales to almost half of new cars sold by 2030. Combustion engine-powered cars should be phased out, sometime between 2035 and 2040. For the first time in a decade, the Commission also promises ambitious action on planes and ships where the EU carbon market will be strengthened for aviation and extended to the maritime sector. In addition, these two sectors will need to start using hydrogen-based fuels such as e-fuels or ammonia before 2030.
All of this goes in the right direction, and if implemented well, could be a major step towards the decarbonisation for the transport sector, albeit not by 2050. But, all in all, this is progress so we are pleased. But we are also very worried.
The main purpose of the plan is to solve one of the great political puzzles associated with the -55%. How to get member states to accept -55% without imposing higher targets on those very countries?
As a reminder, in EU climate policy emissions are regulated by the emissions trading system (ETS), which is a European cap-and-trade mechanism for the power and industry sectors covering 40% of emissions. All other emissions (60%) are the responsibility of member states. They have to meet national targets for transport, buildings and agriculture as part of the so-called ‘effort sharing’ law.
The problem is that, even, or in fact especially, ‘ambitious’ EU states such as France, Spain, Germany or the Netherlands are not keen on higher national targets. That’s partially because the current effort sharing law puts most of the burden on northern and western European states, but also because ministers like to boast about how ambitious they are on climate, but don’t like to be held accountable.
So, what to do? The Commission has devised a cunning plan:
The first part is sensible. The EU will do the heavy lifting in the EU ETS, so a big part of the focus is on phasing out coal, boosting renewables and cutting industrial emissions. But fully achieving the 55% through the ETS is almost impossible.
The second, already more dubious idea, is to allow member states to comply by planting trees and “managing” forests and “tree plantations” (not every collection of trees is a forest!). This is a big change because forests were not an integral part of the previous 40% target and the inclusion of forestry means the actual emission cuts could be closer to -50%. Reforestation and nature restoration are undoubtedly good things, but the Commission leaves the door wide open to expanding tree plantations to then burn more wood in power plants, wood stoves, or as an ‘advanced’ road fuel. This is the opposite of what is needed to protect and restore our nature.
The third, and most problematic, idea is to abolish the national climate targets. The Commission proposes the extension of the EU ETS to transport and buildings. It addresses part of T&E’s longstanding concerns about road transport ETS inclusion by simultaneously proposing higher CO2 standards. But it would still remove national accountability for transport and building emissions by “repealing”, or in plain English, scrapping the effort sharing law.
Why would that be a problem? First, the national climate goals actually work. In our space they are a key driver for things like car tax reform, fuel tax increases, lower speed limits and investment in public transport. The recent German climate plan and its national carbon price on road and heating fuel is a good example of the interplay between EU targets and national action. Secondly, the effort sharing law isn’t just talk, it is legally binding. Non-compliance exposes states to court cases, either by the EU Commission, or by their own citizens. Finally, national accountability has been key in getting member state backing for ambitious EU measures such as CO2 standards for cars and trucks.
The good news is that this plan is not final. For example, not all Commissioners, not even Frans Timmermans, are convinced that big ETS-induced heating or fuel price hikes are a brilliant idea – anyone remember the gilets jaunes? Similarly, scrapping the national climate goals may suit ministers but will infuriate civil society and undermine the EU’s credibility globally.
So, what is the alternative?
For starters, the EU needs to do a better job in supporting national action. We can do much better than a -15% CO2 cut for cars in the 2025-2029 period or indeed -50% by 2030. We also need to get smarter about which cars we decarbonise first. Electrifying company cars, fleets and taxi services like Uber by 2025 would create huge carbon savings. And there may well be a role for carbon pricing for road transport. But rather than making the price at the pump subject to the swings in the ETS price, the Commission could propose a toned down, separate system, tailored to the social and economic realities of drivers and the freight industry.
In addition, more flexibility should be granted to member states, for example by creating a carbon credit trading mechanism – we support the creation of a European Project Mechanism – between EU states, or by expanding the existing flexibilities. The key would be to ensure that things like EU forestry credits lead to actual nature restoration and carbon sequestration and aren’t just hot air.
It’s a narrow path but it’s one that would get the EU Commission a lot closer to the aims it so beautifully describes in its climate target plan.