Developments in European climate law

A lot is being said and written about the new climate act. But what does it mean for your company in concrete terms?

On 14 July 2021, the European Commission released a package of proposals. Also called the 'fit for 55' package. With the ambition to reduce the reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990. The package consists of legislative instruments to achieve the goal of the European Climate Change Act.

The big goal of the European Green Deal, which was presented on 11 December 2019, is to make the European Union (EU) climate neutral and circular. These positions are now enshrined in a European climate law that was officially adopted on 24 June 2021. In short, the goal of a climate-neutral EU by 2050 is now enshrined in legislation.

Good behaviour is rewarded with climate law

The targets in the new (proposed) legislation should stimulate government and industry to work on reducing the use of fossil fuels (gas, oil) and stimulating the use of sustainable energy. This requires investments and the government wants to stimulate this through concessions for 'good behaviour' and higher taxes for 'bad behaviour'.

For example, fossil fuels will gradually become more expensive and no petrol cars will be allowed to be manufactured from 2035 onwards. The average emissions of new cars should be with 55% from 2030 and from new vans  by 50% and from 2035 by 100% compared to the 2021 level. The European Emissions Trading System (ETS) will also be expanded and strengthened. The measures must still be approved by EU countries and the European Parliament.

European climate law has socio-economic goals

The additional costs this entails may weigh heavily on the global market economically. The OECD (Organisation for Economic Cooperation and Development), for example, has already reacted negatively to the proposals, calling the 'fit for 55' package a trade barrier. However, as China is now also working on a similar measure and the United States is also considering it, this criticism will not last long. In the European Climate Change Act, there is not only talk of climate targets, but also of socio-economic targets.

However, the European Climate Act has been adopted and then, roughly speaking, it is not a question of IF you invest in climate neutrality, but WHEN and HOW. Better to anticipate than to ignore.

The tax on fossil fuels will soon be regulated at European level. In the Netherlands, this tax is already significantly higher than in the rest of Europe. It may be that with the arrival of the European Climate Act, this tax will be equalised. But then again, another (additional) tax will follow. The fact remains that the polluter will pay the bill. The idea is also that the investments for a climate-neutral company will pay for themselves in time.

A social climate fund will be set up to enable the European Commission's Member States to help citizens with investments in energy savings, new heating and cooling systems and cleaner cars, among other things. This fund will be financed from the EU budget using part of the revenue from the new emissions trading scheme for the construction sector and part of the revenue from road transport. The 'polluting' companies will therefore pay it and this amount will only increase with time. It is therefore important to take steps now.

Measurable climate law targets are needed

Many professional companies are already working on measurable objectives for a more climate-neutral climate. Because, as we are already used to with HACCP, measuring = knowing. It is sensible to record the energy consumption each year and check whether certain adjustments in the company are producing results. The EU wants to reduce energy consumption by 9% by 2030. It is good if you, as a company, work towards this goal. There are entrepreneurs who energetically respond to this and earn money by (demonstrably) achieving sustainability and communicating this in advertising. The trick is to implement sustainability and also, at the end of the day, save money. The biggest savings can be made by replacing equipment, lighting and vehicles when they are due for replacement.

Think about new investments:

  • Energy-efficient equipment
  • Sustainable packaging (not produced on the basis of fossil fuels such as oil for plastic)
  • Electric vehicles (for trucks this is still a difficult point, but these run on biogas from (own) waste and then you are already well on your way to a circular economy.
  • Heat pumps instead of gas
  • Extra insulation (less energy consumption)
  • Solar panels
  • Renewable energy (e.g. wind energy)
  • CO2 capture and storage (lower CO2 emissions)
  • Efficient use of energy and raw materials (recovery and reuse of residues)
  • Turning biological waste into raw materials
  • Fossil fuels will eventually be replaced by sustainably generated electricity

Frans Timmermans' advice is to start with energy efficiency. Because if you don't use it, you don't have to make it sustainable.

Published in Vleesmagazine and Vismagazine, August 2021

Yvon Bemelman