Significant reforms to energy & climate law imminent as Member States agree positions on Fit for 55 proposals
The Council of the European Union this week agreed its positions on several legislative proposals for driving greenhouse gas emissions reduction by 55% in 2030 compared to 1990 (known as the Fit for 55 package of proposals). We previously outlined the main tranche of proposals in our briefing here.
This signals strong political will among Member States to enact these ambitious proposals soon. Swift delivery of the European Green Deal has always been a top EU priority but the events of this year make it increasingly critical to security of energy supply. Also before the Council will have been last month’s REPowerEU proposals, aimed at speeding up energy transition in the wake of the invasion of Ukraine. We looked at the REPowerEU proposals in our briefing here. These proposals appear so far to have been integrated to a limited extent.
Here’s a snapshot of some of the main developments:
- Emissions Reduction: The Council agreed its negotiating position on the Fit for 55 expansion and strengthening of the EU Emissions Trading System; establishment of a new emissions trading system for fuels used in buildings and road transport; phasing out of free emissions allowances for aviation; strengthening of the Effort Sharing Regulation on Member States’ contributions to emissions reduction; amendments to the Regulation on emissions and removals from Land Use Land-use Change and Forestry; and revised emissions performance standards for cars and vans. The Council endorsed the establishment of a Social Climate Fund of up to €59 billion to address the impact of carbon pricing on vulnerable citizens. Earlier this year, the Council agreed its general approach to the Carbon Border Adjustment Mechanism to prevent carbon leakage (which is the import of carbon-intensive products to the EU undermining the effectiveness of emissions reduction within the EU). The Parliament has also agreed its positions on these proposals.
- Renewable Energy: The Council agreed its negotiating position for a proposal to amend the Renewable Energy Directive, adopting the Fit for 55 target of meeting 40% of gross final energy consumption from renewable sources by 2030, along with targets specific to transport and heating & cooling, and a target of at least 49% renewable energy share in buildings. Notably, the Council states that it has included the REPowerEU proposals on accelerated permitting procedures for renewable projects, which we looked at here. The Council’s compromise text indicates that some of the REPowerEU proposals have been included: the presumption that delivery of renewables projects would be in the ‘overriding public interest’ is addressed; however, elaboration of the full concept of ‘renewables go-to areas’ does not yet appear in the text. It is anticipated that Parliament will vote its position in the Industry and Energy Committee in July and in plenary in September, with final negotiations potentially beginning in Autumn.
- Energy Efficiency: The Council agreed its negotiating position for a proposal to amend the Energy Efficiency Directive, adopting the Fit for 55 proposal of reducing energy consumption at EU level by 36% for final energy consumption and 39% for primary energy consumption by 2030 (as against 2007 consumption projections for 2030). It is anticipated that Parliament will vote its position in the Industry and Energy Committee in July and in plenary in September, with final negotiations potentially beginning in Autumn.
- Energy Performance of Buildings: Work is ongoing on preparing the Council’s position on the proposal to amend the Energy Performance of Buildings Directive, as reported here.
- Transport: The Council agreed its general approach on the proposal to revise the Alternative Fuels Infrastructure Regulation as well as the ReFuelEU Aviation and FuelEU Maritime initiatives. The Council endorses the target of reducing emissions in the transport sector by 90% by 2030 compared to 1990 levels and highlights the intent to ensure that the public has access to sufficient recharging and refuelling infrastructure. The Parliament adopted its draft negotiating position on ReFuelEU aviation for voting in the July plenary session.
Once the Council and Parliament agree their positions on proposed texts, they enter into negotiations to agree final texts. Many expect current momentum to continue with the prospect of a significant volume of new legislation coming into force, if not by the end of this year, early in 2023.
Ireland’s success story is that renewables already meet around 40% of energy consumption. However, much more is needed for decarbonisation of other sectors of the economy and the Irish Government’s 2030 target is to meet 80% of energy demand from renewable sources. One of the real challenges now is to make the necessary changes to market rules and regulatory instruments to faithfully implement these changes, including by creating the necessary economic signals and incentives to deliver the infrastructure needed for the energy transition. This is, unfortunately, an area where Ireland has been sadly lagging with regulatory authorities facing a number of legal challenges for failure to comply with EU law, a distraction that we can ill afford at this critical juncture.