One year on from the European Commission’s landmark climate package, ‘Fit for 55’, it is now in the hands of the European Parliament (EP). Earlier this month was the first of two legislative steps with the proposals from the EP’s Environment Committee. We outline what was proposed and what is still to come if Europe is to take the right steps to decarbonise a transport sector whose emissions have continued to grow.
While the Environment Committee votes represented a significant win for shipping and aviation, it was a mixed bag for cars. EU lawmakers have backed a 2035 deadline for zero-emissions cars but narrowly voted down plans for a more ambitious emissions reduction trajectory for carmakers which are essential to driving down the costs of electric vehicles earlier. T&E’s longer read explains what this all means.
In an uncharacteristic move, EU parliamentarians moved closer to a greener and fair pricing of aviation. Under the carbon market for aviation – the EU ETS – airlines need to buy allowances to pay for their CO2 emissions. It only applies to flights within Europe. This excludes two thirds of all European aviation emissions. For the most part, these are covered by a flawed UN offsetting scheme. To put it simply, for years now, airlines have largely been able to pollute for free on long-haul flights.
Parliamentarians have decided to put an end to this absurd practice, with all EU departing flights to be included in the carbon market. Allowances that airlines receive for free – another nonsensical provision of the EU ETS – will be phased out by 2025. Revenues generated by the carbon market will be used to finance the purchase of sustainable fuels and help accelerate the transition to green aviation.
Jo Dardenne, aviation director at T&E, supports the results of the vote: “EU legislators have finally decided to take responsibility for aviation’s biggest source of emissions. They are reversing a historic lack of ambition at both EU and international level. Business flyers will now have to pay for their pollution when jetting off to New York or Shanghai.”
The ETS file will be voted in plenary by the Parliament in the first week of June, with trilogues expected to start once national governments agree on their position, possibly at the Environment Council on 28 June.
The European Parliament’s Environment Committee took the continent one step closer to a carbon market (ETS) for shipping in a move that will end shipping’s right to pollute for free. Transport & Environment (T&E) has welcomed the decision but warns that exemptions for ice-class (ships that travel through ice) vessels and voyages to outermost regions would undermine its effectiveness.
“Shipping’s right to pollute for free is finally coming to an end. The ENVI Committee has proposed a climate-ambitious carbon market that works for industry and for the climate. The European Parliament Plenary must now rubber stamp this proposal so that we can start to take advantage of the ETS revenues and begin shipping’s long-delayed voyage towards decarbonisation.” said Jacob Armstrong, sustainable shipping officer at T&E.
T&E’s two-pager provides more detail on what this means and the next steps for the shipping ETS to become law.
The ETS will go to the Plenary between 6 June and 9 June before going to Trilogue negotiations with the EU Council and European Commission.
In the face of a global food crisis, the European Parliament’s ENVI committee voted in favour of limiting food crop biofuels in the EU’s green fuels law (RED). The maximum share of food crop biofuels that member states are allowed to use to meet the RED target has more than halved. Palm and soy oil are also set to be phased-out immediately in a major win for nature, people and the climate.
“In the face of a global food crisis we cannot afford to burn crops in our cars.The ENVI committee has rightly chosen food over fuel. Phasing out palm and soy immediately and further limiting other food crop biofuels are major – albeit overdue – improvements to the EU’s green fuels law, that will reduce Europe’s destructive impact on communities and ecosystems around the world. The vote is not perfect, but we are finally moving in the right direction. Now it’s down to Europe’s elected MEPs to vote in favour of a green fuels law that is truly ‘green’,”said T&E’s Geert De Cock.
T&E has however pointed out a few flaws in the proposed amendments, including a high overall transport target which leaves space for unsustainable fuels, a high target for advanced biofuels without sufficient safeguards and a RED that does not sufficiently reward the efficiency of renewable electricity. T&E’s two-pager explains what needs to be improved.
The next steps for the review of the Renewable Energy Directive are the vote in the ITRE Committee in July and a parliamentary plenary vote in September 2022, followed by trilogue negotiations in the autumn.
New carbon market for transport and buildings
The ENVI committee voted in favor of a new emissions trading scheme for road transport and buildings (the ETS2), applying to all fuels not yet covered by the existing ETS. The EU’s biggest sources of pollution will now be regulated and capped. Unfortunately, only commercial vehicles and buildings will be affected by the scheme, meaning 75% of transport and building emissions are left unaccounted for. In 2026, at the earliest, the Commission will assess if ‘the conditions are right’ for an extension to private vehicles and residential buildings as of 2029.
When private vehicles and buildings finally enter the market, fuel suppliers will have to absorb half of the carbon price. T&E believes the Parliament has found a smart way to include Big Oil in the pricing of their pollution.
Sofie Defour, climate manager at T&E, welcomed the results of the vote, whilst exercising caution on certain provisions: “MEPs voted to make Big Oil pay back to society. This is a strong step towards a just climate transition, at a time when oil and gas majors are making bumper profits off the war in Ukraine. But the integration of commercial vehicles and residential buildings in 2029 is too late and leaves millions of tonnes of carbon unregulated and unpaid for.”
Social Climate Fund
One of the most debated files to be voted on by the Parliament was the Social Climate Fund. With this fund, the EU is ensuring the environmental transition is socially just and will accompany lower-income households in what will be a costly journey. This new fund will protect these households against the impacts of the EU’s new carbon price for road transport and buildings (ETS2). Revenues generated by the ETS2 will go towards the fund and be redistributed between and within member states.
MEPs also created dedicated budgets for community-led projects that will allow vulnerable households to decide themselves how they transition to greener cars and homes. But the size of the Fund was shrunk at the very last minute, thereby weakening its effectiveness.
Sofie Defour, climate manager at T&E says: “EU solidarity prevailed with strong support for a dedicated, redistributive Fund to fight energy and mobility poverty. Unfortunately, MEPs failed to lead the fight for an enlarged Social Climate Fund. They also restricted highly needed income support for low-income households and left the door open for fossil fuel projects to be funded” said Sofie Defour, climate manager at T&E.
The Effort Sharing Regulation
We save the best for last: the Effort Sharing Regulation. Often seen as the forgotten child of EU climate legislation, the law binds governments to reducing their emissions in the sectors of road transport, buildings, waste, small industry and agriculture (~60% of the EU’s GHG emissions).
Through their vote, the ENVI committee decided to reduce the amount of polluting gas released in the atmosphere up to 2030. It cut the equivalent of Italy’s annual emissions from the emissions budget for the next 8 years compared to what the Commission had initially proposed. Countries not doing enough to stay below their annual emissions cap will be penalized for it. In a positive move for European democracy, EU citizens will have the right to bring their government to court if they miss their climate targets.
But legislators have closed an eye on the many loopholes in the regulation that put reaching the 2030 target at risk. It also seems that legislators have forgotten that the climate crisis does not suddenly stop after 2030. There are no 2035 and 2040 ESR targets, meaning that countries will not be bound to do any long term planning to reduce emissions in the ESR sectors.
“The text of the EU’s forgotten child on climate, the ESR, has certainly improved. European citizens can hope to breathe less toxic air in the next few years. Corrective actions to put countries back on track have been given more teeth, so no more slacking allowed. But the Parliament put the future of national climate targets at risk, with no targets for 2035 and 2040. Fighting climate change does not stop at the end of this decade,” explained Chiara Corradi, climate officer at T&E.