To slow down climate change, the European economy needs to be overhauled. On Wednesday, the European Commission presented a package of legislation to ensure that the EU reduces CO by 55 percent by 20302 emissions.
1. A price tag for emissions from houses and cars
Just like industry and power producers, COuitstoot emissions are also2 a price tag by motorists and households. That does not mean that CO2rights must be purchased before the tank is filled, or before the house is comfortably heated. In practice, these emission rights are purchased by the petrol companies and energy companies. But the price of natural gas for the central heating boiler and also for the full tank is definitely going up.
Also read: Green Deal affects all facets of the European economy
“It is a misunderstanding to think that it is a completely new system,” said European Commissioner Frans Timmermans (Climate) on Wednesday in an explanation of the plans to involve individual citizens in the European emissions trading ETS. “Electricity producers are already obliged to use CO2purchase rights”. And so “households are already paying” for the CO2rights of coal and gas-fired power stations, according to Timmermans.
According to the European Commission, there is a clear reason for the expansion of the pricing of emissions. Traffic in Europe is responsible for 30 percent of emissions and pollution has only increased in recent years, while other sectors showed a declining trend. Heating houses in Europe accounts for 40 percent of energy consumption, while there is no reduction in emissions.
Brussels wants an import tax on iron, steel and fertilizer
More expensive fuels can easily lead to resistance, making the expansion of ETS a daring undertaking. For example, President Emmanuel Macron can talk about this with the resistance of the yellow vests in France. The many protests since 2018 were a direct result of higher diesel prices. Via a ‘social climate fund’, paid from the proceeds of the CO2rights, Member States can limit the impact on people with low pockets. At the moment, Brussels assumes a size of 144 billion euros. The revenues from the more expensive natural gas also partly end up with the homeowner, for example in the form of subsidies for making the home more energy-efficient.
The European plans come at a time when the sustainability of Dutch homes is stagnating. The national climate agreement, which leads to a CO2reduction of 49 percent, aims to make 1.5 million homes gas-free and to heat them before 2030 via, for example, a heat network (district heating) or an electric heat pump. The stagnation has many causes. Many citizens are waiting because they lack a clear perspective and promised legislation is not yet in order. The national plans also provide for a higher natural gas price (more tax) to stimulate sustainability.
The industrial companies that have been using CO . for about fifteen years2-have to buy allowances for their emissions, see the bill increase further with the new plans. The amount of allowances decreases faster now that the CO2emissions should be reduced more quickly. Partly due to previous tightening (fewer free allowances and fewer available allowances), the CO2-price has risen sharply. Compared to a year ago, this is even a doubling (now 52 euros for every ton of CO2) which ultimately ends up on the consumer’s plate. There is a good chance that the price will continue to rise. In the coming years, the number of rights will be limited by 4.2 percent each time, compared to 2.2 percent this year. The advantage of this system is that the reduction – due to the reduction of allowances – is certainly achieved.
Also read: Huge package of climate legislation will affect all EU Member States and all citizens
2. Also air traffic and sea shipping have to contribute
The European Commission’s climate plans must put an end to the luxury position of aviation and shipping in Europe. Airlines and shipowners have to pay tax on their fuel. They don’t now. They will be obliged to fly and sail on more sustainable fuels. That hardly happens now. And they have to buy emission rights to be allowed to emit greenhouse gases, just like other polluting sectors. At the moment, airlines receive their emission rights for free and shipping does not participate at all in the ETS emissions trading system.
The Commission is removing “obsolete exemptions and discounts that currently only encourage the use of fossil fuels,” the statement said.
While greenhouse gas emissions are already declining in some sectors, they are rising in aviation and shipping, according to the Commission. Aviation, for example, has 5 percent more CO . annually between 2013 and 2018.2 expelled.
For example, three European proposals could in the long run make the price of a plane ticket, the rental of a sea container and a ticket for the ferry to England more expensive: the obligation to use more sustainable fuel, the tax on kerosene and heating oil and the emissions trading system for air and seafaring.
All airlines departing from the EU, regardless of the color of their tail, must eventually have refueled with a certain percentage of sustainable aviation fuel. The Commission’s proposal focuses on the ‘most innovative and sustainable’ fuels. What those should be is still unclear. The Commission itself mentions synthetic fuels and ‘advanced’ biofuels, which are not made from plants. Flying on hydrogen or electricity is not yet an option, according to the Commission. In the long run, this will only work for short flights and no earlier than 2040.
The Commission wants to introduce a ‘mixing obligation’ of 5 percent in 2030. That means that 5 percent of jet fuel must be more sustainable. That seems little. Last year, Minister Cora van Nieuwenhuizen (Infrastructure and Water Management, VVD) argued for a Dutch obligation of 14 percent. By 2050, the admixture percentage in Europe must have risen to 63 percent.
Seagoing vessels of more than 5,000 tons that want to moor in an EU port are also obliged to sail on sustainable fuel. More than 99 percent now bunkers fossil fuels. From heavy fuel oil to the slightly more sustainable liquefied natural gas (LNG). The port of Rotterdam and a large shipping company such as the French company CMA-CGM are investing heavily in LNG. The Danish shipping company Maersk believes more in ammonia. According to the Brussels environmental organization Transport & Environment (T&E), the Commission is pushing shipping towards gas and biofuels. “Those are still fossil fuels,” says T&E. “The concern is worse than the disease.”
The Royal Association of Dutch Shipowners (KVNR) is afraid of ‘bunker tourism’. Ships will stock up on fuel outside the EU. European climate measures will increase fuel costs for ships by 30 to 50 percent.
The airlines united in Airlines for Europe (A4E) are also afraid that their international competitive position will be endangered by expensive European climate plans. KLM reports that it supports the European goal of becoming the first continent to be climate neutral by 2050. Dutch society supports the plans for more use of more sustainable fuels, but sees no point in a kerosene tax.
3. A ‘level playing field’ thanks to the border charge
Also read: Now that the European climate package is in place, the fear of resistance is growing
When it comes to stricter European standards, there is always criticism that pollution then moves outside the EU. This is also known as carbon leakage. But the Commission wants to prevent this with a new ‘carbon border levy’. Importing certain goods into the EU, including iron, steel, cement and fertilizer, will soon be subject to a tax, depending on how polluting the production was.
The United States and China, among others, have been watching the new tax with suspicion for some time. They fear protectionism and threaten countermeasures. Brussels emphasizes that its proposal complies with the rules of the World Trade Organization.
To do this, the EU will have to cut the ‘free CO2rights’ that European industry still receives in order to defend itself against unfair competition. From 2026, Brussels wants to reduce these rights by 10 percent per year and at the same time increase the border charge by 10 percent. This means that the ‘free emission allowances’ for European industry will only be completely phased out in 2035. In particular, green politicians find it unacceptable, who have fiercely opposed ‘free rights’ for years as ‘gifts’ to the industry.
France, in particular, is a strong proponent of the border charge, which has been given the name ‘Carbon Border Adjustment Mechanism’ (CBAM) in Brussels lingo. It is the ideal combination of ‘green’ and somewhat protectionist trade policy for President Emmanuel Macron, and he hopes to speed it up within the EU in the run-up to the presidential elections in April next year. But then there is still the battle with European industry, which is fiercely opposed to the phasing out of their free rights.
4. Farewell to the car with combustion engine
The advance of the electric car is getting an extra push. If it is up to Brussels, the end is approaching for the combustion engine in cars and vans. New cars must be emission-free by 2035. For a continent that has a large and important car industry, it is one of the most sweeping proposals. The plan was fought over to the very end, including from Germany and France, both of which have a powerful car lobby. Whether they will eventually agree remains highly uncertain.
Nevertheless, the Commission proposes to tighten the standards for new cars in such a way that the ‘classic engine’ will eventually disappear. By 2035, emissions from newly sold cars and vans are to be reduced by 100 percent – equating to a ban on the internal combustion engine. Car manufacturers still get some respite. The reduction target for 2030 will be less strict than Timmermans envisioned: 55 percent for new cars and 50 percent for vans. It is nevertheless higher than the existing 37.5 percent.
The Commission expects that there will be at least 30 million e-cars in Europe by 2030, so the number of charging stations must also increase quickly. From 2030, a charging station must be available every 60 kilometers around highways. Brussels also wants to adjust the tax system in such a way that tax will be higher for diesel, for example, and lower for biofuels.
5. Biomass rules and carbon uptake
The share of renewable energy in the EU must increase considerably in the coming years and the existing target for 2030 of 32% will therefore be increased to 40%. It is certain that one cannot avoid continuing to use biomass: energy generated by the combustion of, for example, wood or other plant material. At present, biomass accounts for approximately 60 percent of renewable energy. Resistance to this has increased rapidly in recent years, including in the Netherlands. But, says Timmermans: “We cannot survive without biomass.”
Timmermans does want to tighten the standards for what counts as ‘sustainable’ biomass, for example by making larger areas of forest off-limits and by discouraging the burning of ‘high-quality wood’. Critics find it insufficient to protect Europe’s forests.
New rules for so-called ‘land use’ should also contribute to this: after all, carbon absorption by forests is crucial for achieving the climate targets. The 2030 target will be increased by 15 percent and countries will also be given national targets for storing CO2. A special ‘forest strategy’ should support this. With this, Brussels wants to ensure that 3 billion trees are planted. To this end, it deploys EU natural funds, and citizens should be able to follow the progress of the operation via a special platform.