ZEI Monitor: EU Progress 2019-2024

EU Emissions Trading System (ETS)

• Proposal for a Directive on the Revision of the EU Emissions Trading System (ETS), including maritime, aviation and CORSIA as well as a proposal for ETS as own resource (legislative, incl. impact assessment, 14th of July 2021)

• Problem: A large volume of pollution allowances have been allocated to the aviation sector for free since 2012. In 2020, the Communication on a European Green Deal committed to presenting a proposal for reducing the  free  allowances  allocated  to  airlines. As  free  allocation  is  a  derogation  from  the ‘polluter pays’ principle, the EU Emissions Trading System (ETS) uses auctions as a standard method to secure that emissions get a price tag. 

  Goals: This proposal for a Directive introduces amendments to the EU Emissions Trading System (EU ETS) legislation in relation to its application to aviation to ensure that: (1) aviation contributes to  the  2030  emissions  reduction target in accordance with the European Green Deal plan; (2) the  EU  ETS  is  amended as  appropriate in respect of the International Civil Aviation Organization’s (ICAO) Carbon Offset and Reduction Scheme for International Aviation; and (3) allocation  of  emission  allowances in respect of aviation is revised to increase auctioning.

  The key amendments are:

  (1) to  consolidate  the  total  quantity  of  aviation  allowances  at  current  levels,  and  apply the linear reduction factor in accordance with Article 9 of the ETS Directive;

  (2) to increase auctioning of aviation allowances;

  (3) to  continue  intra-European  application  of  the  EU  ETS  while  applying  CORSIA as appropriate to extra-European flights;

  (4) to  ensure  that  airlines  are  treated  equally  on  the  same  routes  with  regard  to  their obligations with economic impacts.

  Legal basis: The legal  basis for  the  EU  ETS  Directive  2003/87/EC,  as  well  as  all  subsequent  legislation amending  it  and  other  legislation  regulating  GHG  emissions,  is  Article  192  of  the  Treaty on the  Functioning  of  the  European  Union.

  Derogations:

• a. A time-limited  derogation until the 31st of December 2023  from  the  EU  ETS  is  proposed  for  emissions  from  flights  between an aerodrome located in an outermost region of a Member State and an aerodrome located in the same Member State.

  b. CO2 emissions from the following types of flights shall not be taken into account:  (i) state flights; (ii) humanitarian flights;  (iii) medical flights;  (iv) military flights;  (v) firefighting flights.’

  Entry into Force: This  Directive  shall  enter  into  force  on  the  twentieth  day  following  that  of  its  publication in the Official Journal of the European Union.

   

Establishing a Carbon Border Adjustment Mechanism (CBAM)

• Proposal for a Regulation on Establishing a Carbon Border Adjustment Mechanism (CBAM)
  

  Goal: The goal of this legislative proposal is to succeed in reducing greenhouse gas emissions in the EU and avoiding that these emissions reduction efforts are offset by emissions increases outside the EU. Differences in levels of climate ambition and the resulting risk of carbon leakage are to persist worldwide. Such leakage is caused by the relocation of production of energy-intensive products from the EU to other countries with lower environmental compliance costs, and of these same EU products being replaced by more carbon-intensive imports from these countries.

  Subject matter: This Proposal for Regulation shall establish a carbon border adjustment mechanism (the ‘CBAM’) for addressing greenhouse gas emissions (GHG). The CBAM complements the system established for GHG emission allowance trading within the Union by Directive 2003/87/EC by applying an equivalent set of rules to imports into the customs territory of the Union of goods referred to in Article 2.  

• Fields of application: In order to prevent carbon leakage, it applies to the following goods originating in a third country, when those goods, or processed products from those goods as resulting from the inward processing procedure are imported into the customs territory of the Union: cement, electricity, fertilizers, iron and steel as well as aluminium.
  

  Legal bases: The Treaty on the Functioning of the European Union (‘TFEU’) confers to the European institutions the competence to lay down appropriate provisions intended, inter alia, to preserve and protect the environment (Article  192(1) TFEU), including, in particular, measures combating climate change at global level. Article 113 of the TFEU permits the EU to lay down harmonized rules in order to ensure the proper functioning of the internal market. Depending on the nature of the instrument proposed the legal basis may be Article 192 or Article 113 of the TFEU.

  I. Obligations and rights of authorized declarants of goods

  Importation of goods: Goods shall only be imported into the customs territory of the Union by a declarant that is authorized by the competent authority in accordance with Article 17 (‘authorized declarant’).

  Application for an authorization: Any declarant shall, prior to importing goods as referred to in Article 2, apply to the competent authority at the place where it is established, for an authorization to import those goods into the customs territory of the Union.

  Content of the CBAM declaration: By the 31st of May of each year, each authorized declarant shall submit a declaration (‘CBAM  declaration’), for the calendar year preceding the declaration, to the competent authority. The CBAM declaration shall contain the following:

  (a) the total quantity of each type of goods imported during the calendar year preceding the declaration, expressed in megawatt hours for electricity and in tonnes for other goods;

  (b) the total embedded emissions, expressed in tonnes of CO2e emissions per megawatt-hour of electricity or for other goods per tonne of CO2e emissions per tonne of each type of goods, calculated in accordance with Article 7;

  (c) the  total  number of CBAM certificates  corresponding  to  the  total  embedded emissions, to be surrendered, after the reduction due on the account of the carbon price paid in a country of origin in accordance with Article 9 and the adjustment necessary of  the extent to which EU ETS allowances are allocated free of charge in accordance with Article 31.

  Where the imported goods are processed products resulting from the inward processing procedure, the authorized declarant shall report in the CBAM declaration the total emissions embedded in the goods placed under the inward processing procedure. Where the imported goods are processed products resulting from the outward processing procedure as referred to in Article 259 of Regulation (EU) No 952/2013, the authorized declarant shall report in the CBAM declaration only the emissions of the  processing operation  undertaken outside the customs territory of the Union.

  Carbon price paid in a country of origin: An authorized declarant may claim in its CBAM declaration a reduction in the number of CBAM certificates to be surrendered in order for the carbon price paid in the country of origin for the declared embedded emissions to be taken into account.

  II. Competent Authorities:

  Competent Authorities: Each member state shall designate the competent authority to carry out the obligations under this Regulation and inform the Commission thereof.

  Central administrator: The European Commission shall act as central administrator to maintain an independent transaction log recording the purchase of CBAM certificates, their holding, surrender, re-purchase and cancellation and ensure coordination of national registries.

  III. CBAM certificates:

  Sale of CBAM certificates: The competent authority of each  member  state shall sell CBAM certificates to declarants authorized in that member state at the price calculated in accordance with Article 21.

  Re-purchase of CBAM certificates: The competent authority of each member state shall, on request by a declarant authorized in that member state, re-purchase the excess of CBAM certificates remaining on the account of the declarant in the national registry after the certificates have been surrendered.

  Cancellation of CBAM certificates: By the 30th of June of each year, the competent authority of each member state shall  cancel any CBAM certificates that were purchased during the year before the previous calendar year and that  remained  in  the accounts in the national registry of the declarants authorized in that member state.

  IV. Enforcement:

  An authorized declarant who fails to surrender, by the 31st of May of each year, a number of CBAM certificates corresponding to the emissions embedded in goods imported during the previous year shall be liable to a penalty identical to the excess emissions penalty set out in Article 16(3) of Directive 2003/87/EC.

  Countries outside the scope this Regulation: Iceland, Liechtenstein, Norway, Switzerland

  Territories outside the scope this Regulation: Büsingen, Heligoland, Livigno, Ceuta, Melilla

  V. Entry into force:

  This  Regulation shall enter into force on the twentieth day  following that of ist publication in the Official Journal of the European Union. It shall apply from the 1st of January 2023.

Binding annual greenhouse gas emission reductions for member states (Effort Sharing Regulation)

• Regulation on binding annual greenhouse gas emission reductions by member states from 2021 to 2030 (Effort Sharing Regulation) (legislative, incl. impact assessment, Article 192(1) TFEU, 14th of July 2021)

Goal: This Proposal for a Regulation aims to revise and update the national and collective emission reduction targets covered by the European Effort Sharing Regulation (ESR) from 2018. To be in line with the binding Climate Law objectives (domestic reduction of net greenhouse gas emissions by at least 55 per cent compared to 1990 levels by 2030), the overall amount of the annual greenhouse gas emission reduction targets must be increased by ten percentage points. This proposal aims to bring national targets in line with an EU-wide reduction of 40 per cent in the ESR sectors compared to 2005 levels by 2030. Every member state will make its individual contribution to the overall EU reduction by 2030 with targets between -10 per cent and -50 per cent below 2005 levels.

Proposed individual reduction targets for member states to be achieved in 2030 in per cent:

Belgium minus (-) 47
Bulgaria -10
Czechia -26
Denmark -50
Germany -50
Estonia -24
Ireland -42
Greece -22.7
Spain -37.7
France -47.5
Croatia -16.7
Italy -43.7
Cyprus -32
Latvia -17
Lithuania -21
Luxembourg -50
Hungary -18.7
Malta -19
Netherlands -48
Austria -48
Poland -17.7
Portugal -28.7
Romania -12.7
Slovenia -27
Slovakia -22.7
Finland -50
Sweden -50

Implementation:

a. More Flexibility: For effective achievement of the targets, to allow member states to obtain more flexibility through the five-year compliance periods of the Land use, land-use change, and forestry (LULUCF)-Regulation and to transfer flexibility from the ESR sector to the LULUCF sectors and to allow limited flexibility vice versa. The establishment of an additional mechanism in the form of a reserve will allow unused LULUCF credits to be transferred at the end of the second compliance period to the member states that need them. However, the use of this reserve will depend on the over-achievement in the LULUCF sector and is not obligatory for the member states through an opt-out function.

b. Monitoring and evaluation: This initiative retains the compliance regime of the ESR and continues to rely on the robust monitoring, reporting, and review framework provided in the governance regulation. Within 6 months of a global stocktake, the Commission is required to submit a report on the application of the Regulation to the Council and Parliament.

c. Contribution of the member states: Emission allocations for the years 2023, 2024, and 2025 are calculated based on greenhouse gas emission data for the years 2005 and 2016 to 2018. For greater accuracy, the calculation of annual emission allocations for the years 2026 to 2030 will be based on the average of each member state's greenhouse gas emissions in 2021, 2022 and 2023 following a comprehensive review of national inventory data.

Entry into force: This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Establishing a Social Climate Fund

• Proposal for a Regulation establishing a Social Climate Fund, 14th of July 2021

Problem: The European climate ambitions and the associated carbon pricing also go hand in hand with major social and distributional impacts that may disproportionately affect vulnerable households, vulnerable micro-enterprises and vulnerable transport users who spend a larger part of their incomes on energy and transport.

Goal: The Social Climate Fund  (“the Fund”) aims to mitigate the social and distributional impact on the most vulnerable arising from the Emissions Trading System (ETS) for the sectors of buildings and road transport that were not included in the ETS before. This is supposed to be achieved through temporary income support and measures and investments intended to reduce the reliance on fossil fuels in the medium to long term by increasing the energy efficiency of buildings, promoting the decarbonization of heating and cooling as well as by granting access to zero- and low-emission mobility and transport.

Subject matter: The Fund shall provide support to member states for the financing of the measures and investments included in their Social Climate Plans (“the Plans’”).

Legal basis: The legal bases for the Proposal of this Regulation to establish the Social Climate Fund are Article 91(1)(d), Article 192(1) and Article 194(1)(c) of the Treaty on the Functioning of the European Union (‘TFEU’).

The Social Climate Plans: Each member state shall submit to the Commission a Social Climate Plan together with the update to the integrated national energy and climate plan by the end of June 2024. The Plan shall contain a set of measures and investments to address the impact of carbon pricing on vulnerable households, vulnerable micro-enterprises and vulnerable transport users.

Procedure: After submitting a social climate plan, the Commission will assess the relevance, effectiveness, efficiency and coherence of the Plan within six months. Upon positive assessment, the Commission and the member state will reach an agreement to establish an individual legal commitment. If a Plan does not comply with the provided criteria, no financial allocation shall be made until amendments of the Plan have been made.

Financial impact: The Fund envelopes 23.7 billion euro for the years 2025-2027 and 48.5 billion euro for the years 2028-2032, which represents 25 per cent of the expected revenues from the sales of the emission trading allowance. 50 per cent of the national Plan is to be financed by the member states themselves.

Entry into force: This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Renewable Energy Directive

• Amendment to the Renewable Energy Directive to implement the ambition of the new 2030 climate target (legislative, incl. impact assessment, Article 194 TFEU, 14th of July 2021)

Goal: The goal of the proposed amendments to the Renewable Energy Directive is to reconcile its goals with the Climate Target Plan (CTP) that is codified in the European Climate Law. Therefore, the current target of at least 32 per cent renewable energy by 2030 is to be increased to 38-40 per cent.

Legal basis: The proposal is primarily based on Article 194(2) of the Treaty on the Functioning of the European Union (TFEU).

Key amendments include:

(1) Joint projects: Member states are to be required to establish at least one joint renewable energy generation project with one or more member states by the 31st of December 2025.

(2) Increased transparency: Transmission and distribution system operators are to disclose information on the share of renewable energy and the content of greenhouse gas emissions in each bidding zone. In addition, manufacturers of household and industrial batteries are to provide basic information of the battery management system. The same applies to car manufacturers.

(3) Enforcement of Renewable Energy in buildings: The share of renewable energies in the building sector is to be increased to 49 per cent by 2030.

(4) Enforcement of Renewable Energy use in industry: Member states should strive to increase the share of renewables in the industrial sector by an indicative annual minimum average increase of 1.1 percentage points by 2030. By 2030, member states shall ensure that the contribution of renewable fuels of non-biological origin used for final energy and non-energy purposes shall be 50 per cent of the hydrogen used for final energy and non-energy purposes in industry by 2030. To promote renewable energy in the heating and cooling sector, the share of renewable energy shall increase by at least 1.1 percentage points on an annual average basis for the periods 2021-2025 and 2026 -2030.

(5) Greenhouse gas reduction in the transport sector: The use of renewable energy should lead to a reduction in greenhouse gas emissions of at least 13 per cent by 2030.

(6) Union database: A union database shall be established to track liquid and gaseous fuels, as well as recycled carbon fuel.

Transposition: Member states are to be obligated to bring into force laws, regulations and administrative provisions necessary to comply with this Directive by the 31st of December 2024 at the latest.

Entry into force: This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Energy Efficiency Directive

• Amendment of the Energy Efficiency Directive to implement the ambition of the new 2030 climate target (legislative, incl. impact assessment, Article 194 TFEU, Q2 2021)

Goal: The goal of the proposed changes to the Energy Efficiency Directive  is to strengthen the different provisions of the Directive to ensure that it contributes optimally to the higher climate target of at least 55 per cent emissions reduction ambition for 2030.

Legal basis: The Proposal is based on Article 194(2) of the Treaty on the Functioning of the European Union, which is the legal basis for measures on energy.

Subject Matter: The proposed Directive lays down rules for the member states to implement energy efficiency as a priority across all sectors, removing barriers in the energy market and to create an energy efficiency first principle.

Energy efficiency target: Member states are to work together to achieve a reduction in energy consumption of at least 9 per cent in 2030 compared to the 2020 Reference Scenario projections, so that the Union's final energy consumption does not exceed 787 Mtoe and the Union's primary energy consumption does not exceed 1023 Mtoe in 2030.

Key amendments:

1. Energy Efficiency First principle: Member states should ensure that energy efficiency solutions are taken into account in planning, policy and key investment decisions in energy systems sectors as well as in non-energy sectors where these have an indirect impact on energy consumption and energy efficiency. In the course of a report to the Commission as part of the integrated national energy and climate progress reports, member states should provide information on how the energy efficiency first principle has been taken into account in planning, policy and major investments.

2. Role of the public sector: Member states shall ensure that the total final energy consumption of all public establishments is reduced by at least 1.7 per cent each year compared to the year in which this Directive enters into force. Therefore, member states are to include their contribution in their national energy and climate plans, as well as a list of public entities that are to contribute to the fulfilment of the commitment.

2.1. Public buildings: Each member state shall ensure that at least 3 per cent of the total useful floor area of heated and/or cooled buildings (from a size of more than 250m2) owned by public bodies are renovated each year to be at least transformed into nearly zero-energy buildings.

2.2. Public procurement: Member states are to purchase only products, services, buildings and works with high energy-efficiency performance and take into account Union green public procurement criteria

3. New energy savings obligations: The target of 0.8 per cent savings in annual energy consumption is not to be achieved by 2030 but by 2023, with savings of 0.24 per cent for Malta and Cyprus. Beginning in 2024 and continuing through 2030, new savings of 1.5 per cent of annual final energy consumption shall apply.

4. Ensuring a just and inclusive energy transition: Member states are supposed to take measures to support people experiencing energy poverty, vulnerable customers and, where appropriate, people living in social housing, through energy efficiency obligation programs, programs financed by a national energy efficiency fund or through taxation measures.

5. Energy management system: Member states should ensure that companies with an average annual consumption of more than 100 TJ of energy (consumed in the previous three years, taking all energy sources together) implement an energy management system. If a company concerned does not apply an energy management system, it must undergo an energy audit.

6. Heating and cooling: Each member state shall, as part of its national energy and climate plans, submit to the Commission a comprehensive assessment of heating and cooling. Therefore, member states should encourage regional and local authorities (in municipalities with more than 50.000 inhabitants) to prepare local heating and cooling plans. In a staggered system, the ultimate goal is to use only renewable energy and waste heat by 2050, with at least 60 per cent renewable energy. The first stage target is to use at least 50 per cent renewable energy, 50 per cent waste heat, 75 per cent heat generated by way of Cogeneration / combined heat and power (CHP) or 50 per cent of a combination of such energy and heat by the end of 2025. By the 31st of October 2025, and every four years thereafter, the Commission is to evaluate existing energy efficiency and decarbonization measures in heating and cooling.

7. Energy services market: Member states shall promote the market for energy services by providing access for SMEs through accessible information on financial instruments, incentives and grants to support energy efficiency service projects.

Entry into Force: This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Inclusion of greenhouse gas emissions and removals from land use, land use change and forestry

• Revised Regulation on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry (legislative, incl. impact assessment, Article 192(1) TFEU, 14th of July 2021)

Goal: The proposed amendment to the Regulation 2018/841 aims to strengthen the contribution of the regulatory framework for the land use, land use change and forestry sector (LULUCF) to the increased overall climate ambition for 2030.

Commitments for 2021-2025: Currently member states are committed to ensuring that greenhouse gas emissions do not exceed removals. The “no-debit rule” will be limited only to the first period of the application of the amended Regulation. Member states shall not be able to “bank” surplus removals at the end of the period 2021-2025. However, the amendment aims to ensure the allocation of a share of member states’ surplus removals at the end of the period to an established flexibility mechanism under the second period from 2026 to 2030.

Commitments for 2026-2030: The EU's target is supposed to achieve 310 million tons of greenhouse gas removals by 2030. This target is to be distributed among the member states in order to determine binding annual national targets. For this, each member state has a calculated individual target. In 2025, based on the results of a comprehensive review of the reported greenhouse gas inventory, the Commission will adopt an implementing act determining the annual targets based on the verified emissions and removals from years 2021, 2022 and 2023 for each member state.

National targets of net greenhouse gas removals:
Belgium minus (-) 1 352
Bulgaria -9 718
Czechia -1 228
Denmark 5 338
Germany -30 840
Estonia -2 545
Ireland 3 728
Greece -4 373
Spain -43 635
France -34 046
Croatia -5 527
Italy -35 758
Cyprus -352
Latvia -644
Lithuania -4 633
Luxembourg -403
Hungary -5 724
Malta 2
Netherlands 4 523
Austria -5 650
Poland -38 098
Portugal -1 358
Romania -25 665
Slovenia -146
Slovakia -6 821
Finland -17 754
Sweden -47 321
________________
EU-27  -310 000

Commitments to climate neutrality in 2035: The LULUCF sector shall achieve reducing emissions to net zero by 2035 and generating negative emissions thereafter. In order to collectively reach climate neutrality by 2025, the member states shall be invited to present their updated national energy and climate plans by June 2024. From 2036 onwards, the LULUCF sector should generate further carbon removals to balance remaining emissions in other sectors.

Implementation through the Land Use flexibility mechanism: To help member states achieve these targets, the compliance rules are to be simplified, thus giving member states more flexibility for the implementation. Especially due to the uncertainties of the sector, in particular from natural disasters, the flexibility mechanism extends the scope from forest land to all the land relevant for the target compliance.

Entry into Force: This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union

Energy Tax Directive

• Revised Council Energy Tax Directive (legislative, incl. impact assessment, 14th of July 2021)

Goal: The Directive  aims to ensure that energy taxation aligns with the European climate objectives. The Taxation Directive is to play a direct role in supporting the green transition by sending right price signals, creating incentives for sustainable consumption and production, and remove incentives for fossil fuel consumption.

Subject Matter: This Directive is to create a framework to remove disadvantages for clean technologies and introduce higher levels of taxation for inefficient and polluting fuels, in complement to carbon pricing through emissions trading by switching from volume to energy content-based taxation.

Legal basis: The proposal is based on Article 113 of the Treaty on the Functioning of the European Union (TFEU), which permits the EU to lay down harmonized rules in order to ensure the proper functioning of the internal market. Additionally, appropriate provisions of fiscal nature intended, inter alia, to preserve and protect the environment can be adopted according to Article 192(2), first subparagraph, of the TFEU

Taxation system: This Directive aims to establish a ranking of energy products, which is supposed to simplify the current tax structure by grouping energy products (used as motor or heating fuels) and electricity into categories and by ranking them according to their environmental performance. As the basis, the taxation is to be calculated in Euro/Gigajoules based on net calorific value of the energy products and electricity.

The ranking subdivides into four groups:

1. Conventional fossil fuels such as gas, oil and petrol should be taxed at the highest rate.
2. Fuels that are fossil based but are less harmful and still have some potential to contribute to the decarbonization in the short and medium term.
3. Sustainable but not advanced biofuels
4. The lowest rate shall apply to electricity, regardless of its use, advanced biofuels, bio liquids, biogases and hydrogen of renewable origin

Member states are required to comply with the fixed minimum tax levels for each group. The minimum levels of taxation shall start from zero and increase each year by one tenth of the final minimum rate

Taxation exemptions shall exist for:

1. Taxation on energy products for the intra-EU air navigation of cargo-only flights shall be exempted.
2. Member states may exempt or apply the same levels of taxation applied for intra-EU waterborne navigation to extra-EU waterborne navigation according to the type of activity.
3. In the case of charitable organizations, member states shall confine the reduction to use for the purpose of non-business activities.
4. Products and electricity used by households recognized as vulnerable may be exempt for a maximum period of ten years after the entry into force of this Directive.
5. Taxable products used under fiscal control in the field of pilot projects for the technological development of more environmentally-friendly products or in relation to fuels from renewable resources.

Enforcement: Member states shall adopt and publish regulations and administrative provisions necessary to comply with this Directive by (31st of December 2022). The minimum levels of taxation laid down in this Directive shall be adapted every year starting from 1 January 2024 to take account of the changes in the harmonized index of consumer prices excluding energy and unprocessed food as published by Eurostat. This Directive shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.

Deployment of alternative fuels infrastructure

• Regulation on the deployment of alternative fuels infrastructure (legislative, incl. impact assessment, Article 91 TFEU, 14th of July 2021)

Problem: The existing Directive 2014/94/EU on the deployment of alternative fuels infrastructure requires a revision due its shortcomings: no detailed and binding methodology to calculate targets and adopt measures and member states’ ambition in target settings vary greatly.

Goal: This Regulation  aims to create a comprehensive network of recharging refueling infrastructure based on a geographically fair manner to enable the widespread uptake of low- and zero-emission vehicles in all transport modes.

Subject matter: This Proposal for a Regulation sets out mandatory national targets for the deployment of sufficient alternative fuels infrastructure for road vehicles, vessels and stationary aircrafts, specifically ensuring minimum infrastructure to support the required uptake of alternative fuel vehicles across all transport modes and in all member states as well as ensuring the infrastructure’s full interoperability, full user information and adequate payment options.

a. Targets for electric recharging infrastructure: Member states are to be required to ensure publicly accessible recharging pools are deployed for light and heavy-duty vehicles in each direction of travel with a maximum distance of 60 km along the TEN-T core network. Member states shall further ensure that airport managing bodies can provide electricity supply to commercial air transport operations by the beginning of 2025.

b. Targets for hydrogen refueling infrastructure: Member states should ensure that by the end of 2030 hydrogen refueling stations are equipped with a minimum capacity of 2t/day and with at least 700 bars dispenser with a maximum distance of 150 km in-between them along the TEN-T core network.

c. Targets for Liquefied Natural Gas (LNG) infrastructure: Until the beginning of 2025 an appropriate number of refueling points for road transport vehicles (heavy-duty motor vehicles) shall be put in place, where there is demand, unless the costs are disproportionate to the (environmental) benefits, the same shall apply to LNG refueling points in maritime ports.

d. Targets for shore-side electricity supply: By the beginning of 2030, a minimum of shore-side electricity supply for seagoing container and passenger ships shall be provided in maritime ports. By the 1st of January 2030 at least one installation providing shore-side electricity supply to inland waterway vessels shall be deployed at all TEN-T networks.

Implementation: To realize the targets, member states shall create a national policy framework and send the draft to the Commission by the 1st of January 2024. By the 1st of January 2027 the member states shall be obligated to submit a standalone progress report to the Commission.

Entry into force: This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Ensuring a level playing field for sustainable air transport (ReFuelEU-Aviation)

• Regulation on ensuring a level playing field for sustainable air transport (ReFuelEU-Aviation), 14th of July 2021

Problem: Currently aviation fuel prices vary widely across the Union. As a result, many aircraft operators refuel more aviation fuel than necessary to avoid refueling partially or fully at a destination airport where aviation fuel is more expensive. This practice is called “fuel tankering”, which results in higher fuel burn than necessary and undermines fair competition in the Union air transport market. With the Union’s effort to spread the use of sustainable aviation fuels and the resulting increase in costs for the aircraft operators, the practice of “fuel tankering” is expected to increase.

Goal: This Regulation aims to restore and maintain a level playing field in the air transport sector, while avoiding any harmful environmental effects. Therefore, this proposal sets out rules to ensure a gradually increasing share of sustainable aviation fuels without detrimental effects on the competitiveness of the EU aviation internal market.

Use of renewable and low-carbon fuels in maritime transport

• Regulation on the use of renewable and low-carbon fuels in maritime transport and amending Directive 2009/16/EC (FuelEUMaritime), 14th of July 2021

Problem: The fuel consumption in the maritime sector is currently based exclusively on fossil fuels. This is due to the lack of affordable and utilizable technological alternatives to fossil fuel as well as to insufficient incentives for operators to cut emissions.

Aim: This Regulation proposes a common regulatory framework to increase the share of renewable and low-carbon fuels in the fuel mix of international maritime transport, without creating barriers to the single market.

Strengthening CO2 emission performance standards for new passenger cars and for new light commercial vehicles

• Regulation on strengthening CO2 emission performance standards for new passenger cars and for new light commercial vehicles amending Regulation (EU) 2019/631 (legislative, incl. impact assessment, Article 192(1) TFEU, 14th of July 2021)

Problem: The automotive industry is of key importance when it comes to meeting the Union’s climate targets, as transport is the only sector where greenhouse gas emissions have been on the rise.

Objective: This proposal aims to enable the automotive sector to strengthen its ambitions in terms of technological inventions and to direct more investments towards zero-emission technologies. Further, this proposal aims to provide benefits to consumers and citizens of zero-emission vehicles.

Decision on the market stability reserve for the Union greenhouse gas emission trading scheme until 2030

• Decision on the market stability reserve for the Union greenhouse gas emission trading scheme until
  2030, 14th of July 2021

Problem: To address the structural imbalance between the supply of and demand for allowances in the market and to improve the resilience of the EU ETS to major shocks, Decision (EU) 2015/1814 of the European Parliament and of the Council (the MSR Decision) established a market stability reserve (the MSR) in 2018. The MSR has been operational since 2019. The reserve functions by triggering adjustments to the annual auction volumes. The changes to the EU ETS to increase ambition for 2030, as well as the impact of external factors such as COVID-19 or national measures such as coal phase-outs, mean that the basic rules of the MSR must remain fit to continue tackling structural supply-demand imbalances. The current 24 per cent intake rate of the MSR and the minimum amount to be placed in the reserve of 200 million allowances will expire in 2023. As from 2024, the intake rate would become 12 per cent, which would not be enough to ensure that the objectives of the MSR in terms of reducing the surplus and ensuring market resilience would still be fulfilled.

Goal: The reserve’s review and the expected developments relevant to the carbon market demonstrate that a rate of 12 per cent of the total number of allowances in circulation to be placed in the reserve each year after 2023 is insufficient to prevent a significant increase of the surplus of allowances in the EU ETS. Therefore, after 2023 the percentage figure should continue to be 24 per cent, and the minimum number of allowances to be placed in the reserve should also continue to be 200 million.

Decision notification of offsetting in respect of a global market-based measure for aircraft operators based in the Union

• Decision notification of offsetting in respect of a global market-based measure for aircraft operators based in the Union, 14th of July 2021

Goal: The EU intends to implement the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) of the International Civil Aviation Organization (ICAO) for 2021 despite the Covid-19 pandemic. Therefore, EU-based airlines should surrender credits, as appropriate, to comply with the CORSIA offset for their 2021 emissions.

Implementation: This proposal shall implement a member states’ notification to EU-based airlines of the offsetting for the year 2021 under the CORSIA. The notification is intended minimize the administrative burden of national authorities and airline operators, and provide legal certainty regarding CORSIA offsets by airlines based in member states.

Upcoming initiatives: 

• Revision of the energy performance of Buildings Directive (legislative, incl. impact assessment, Article 194 TFEU, Q4 2021)
  

• Revision of the Third Energy Package for gas (Directive 2009/73/EU and Regulation 715/2009/EU) to regulate competitive decarbonised gas markets (legislative, incl. impact assessment, Article 194 TFEU, Q4 2021)

• Reducing methane emissions in the energy sector (legislative, incl. impact assessment, Articles 192 and 194 TFEU, Q2 2021)

European Climate Law (proposed in 2020)

• After the EU institutions reached informal agreement on the Regulation establishing the framework for achieving climate neutrality (European Climate Law) in the trilogue process on the 21st of April 2021, the Permanent Representatives of the member states endorsed the final compromise text of the Regulation on the 5th of May 2021. Formal confirmation by the European Parliament has been given on the 24th of May. (Press release)

The European Climate Law is based on a proposal by the European Commission from the 4th of March 2020 (check out the ZEI Monitor for 2020 below)

Scope: This Regulation makes the objective of achieving climate neutrality in the EU by 2050 legally binding. Furthermore, it increases EU's 2030 target for reducing net greenhouse gas emissions from 40 per cent to at least 55 percent below 1990 levels. This way, the EU aims to achieve the long-term goal of limiting the temperature increase to 1.5°C, as set out in Art. 2 of the Paris Agreement.

Key elements:

1. Climate net neutrality: The Regulation obligates member states to achieve negative emissions after 2050. This means that in addition to avoiding greenhouse gas emissions, emitters are also required to extract greenhouse gases from the atmosphere that were already being emitted. This provision is intended to help such industries offset their emissions in which reduction is particularly difficult to implement. To ensure, however, that sufficient reductions are achieved by 2030, the contribution of removals to the 2030 climate target is capped at 225 net megatons (Mt) CO2 equivalents.

2. Greenhouse gas budget: At the latest within six months after the first global stocktake as referred to in Art. 14 of the Paris Agreement, the Commission shall make a legislative proposal, as appropriate, based on a detailed impact assessment, to amend this Regulation to include the Union’s 2040 climate target. When making its proposal for the 2040 target, the Commission shall at the same time publish in a separate report the projected indicative Union’s greenhouse gas budget for the period 2030-2050, defined as the indicative total volume of net greenhouse gas emissions.

3. No sector-specific targets: This Regulation does not set sector-specific emission targets. Economic sectors are invited but not obliged by virtue of this Regulation to prepare roadmaps for compliance with the general targets (Art. 8a).

4. Implementation: To implement the Union's new 2030 climate target, the Commission has announced a review of relevant climate and energy legislation to be adopted in a package (“Fit for 2050”) that includes renewable energy, energy efficiency, land use, energy taxation, CO2 emission standards for light-duty vehicles, task sharing, and the emissions trading system.

5. Review: The Commission shall, within six months of the first global stocktaking in 2023 (following a five-year cycle), present, if appropriate, a legislative proposal to amend this Regulation and set up an intermediate climate target for 2040, in accordance with Article 14 of the Paris Agreement. Furthermore, the Commission shall - within one year of the entry into force of this Regulation - establish guidelines for common principles and practices for the identification of significant climate risks in the planning, development, implementation and monitoring of projects. In order to review and monitor the implementation of this Regulation, the Commission shall carry out an assessment of the collective progress of all EU member states in achieving the climate neutrality target as well as the national energy and climate plans on the 23rd of September 2023 and every five years thereafter. 

6. Scientific Advisory Council: A European Scientific Advisory Council is to be established. It shall serve as a reference point for the Union with regard to scientific findings on climate change. 

7. Entry into force: The Regulation will enter into force 20 days after its publication in the Official Journal of the EU.

Just Transition Fund (proposed in 2020)

• On the 1st of July 2021, the Regulation on establishing the Just Transition Fund (JTF) entered into force. After the European Parliament, the Council and the Commission reached a political agreement in December 2020. (Press release)

Purpose: The Regulation establishes a fund to provide special support to people and regions facing the social, employment, economic and environmental impacts of the transition to the EU's 2030 energy and climate policy targets and to a climate-neutral European Union economy by 2050.

Requirements for funding commitments: Member states need to prepare territorial plans on how to make a sustainable and equitable transition with the help of the JTF. Member states that do not commit to implementing the 2050 carbon neutrality target in their plans will receive only 50 per cent of the available funds. The Commission will adopt a decision by implementing act that will break down the annual distribution of available funds by member state. Output and outcome indicators will be used to measure progress made by member states. Support to large enterprises is only allowed subject to a gap analysis showing that the expected loss of jobs would exceed the expected number of jobs created without the investment.

Scope:

a. Investments in SMEs, research and innovation activities, new technologies;
b. Renewable energy, sustainable local mobility, modernization of district heating networks,
c. Digitalization; remediation and decontamination of industrial sectors, promotion of the circular economy,
d. Further qualification and retraining of employees and job seekers and their social inclusion.

Amount of funding: the funds available amount to 7.5 billion euro (at 2018 prices) under the Multiannual Financial Framework (2021-2027). The Recovery Support Instrument following the COVID-19 crisis (NextGenerationEU) provides an additional 10 billion euro (at 2018 prices). If funding is increased after the 31st of December 2024, the amount of financial support will be adjusted based on member countries' greenhouse gas emissions.

Timetable: By the 30th of June 2025, the Commission will review the implementation of the JTF and will submit a report to the European Parliament and Council, with legislative proposals if appropriate.

Circular economy package

• a) Sustainable products policy initiative, including a revision of the Ecodesign Directive (legislative, incl. impact assessment, Article 114 TFEU, Q4 2021)
  
  b) Circular electronics (non-legislative, Q4 2021)

Common Agricultural Policy: Biodiversity and toxic-free environment package

a) Action plan for the Development of Organic Production - on the way to 2030 (non-legislative):  On the 25th of March 2021, the Commission published an Action plan to promote organic products. (Press release)

Goal: With the help of this action plan, at least 25 per cent of the agricultural land in the EU is to be farmed organically by 2030 and a significant increase in organic aquaculture is to be achieved. To accomplish the goal, the Commission wants to encourage more farmers to cultivate sustainably and, as a result, to promote the consumption of organic food. 

Implementation: To achieve the goals, all member states shall develop national strategies. In doing so, member states are expected to explain how they will contribute to achieving the EU-wide goals. Member states will be supported in the process by the Commission and progress will be monitored.

Timeframe: The action plan is set up for the years 2021 to 2027. During this period, 23 measures are to be implemented to achieve the targets. In spring 2021, the Commission aims to present new strategic guidelines for the sustainable development of EU aquaculture.

Origin: The Action Plan was already announced in the May 2020 Farm to Fork-Strategy and the Biodiversity Strategy and is part of the European Green Deal. The action plan is a continuation of the previous Action plan for the period 2014-2020.

The action plan is divided into three main areas:

1. Promotion of consumption

Other Commission initiatives:

b) Minimising the risk of deforestation and forest degradation associated with products placed on the EU market (legislative, incl. impact assessment, Q2 2021)

c) Communication on an "EU Action Plan: Zero pollution for water, air and soil" (non-legislative, 12th of May 2021, press release)

d) New legal framework on the restoration of healthy ecosystems (legislative, incl. impact assessment, Article 192 TFEU, Q4 2021)

Sustainable and smart mobility

• a) Revision of the Directive on Intelligent Transport Systems, including a multimodal ticketing initiative (legislative,incl. impact assessment, Article 91 TFEU, Q3 2021)
  
  b) Revision of the Regulation on the trans-European transport network (TEN-T) (legislative, incl. impact assessment, Article 172 TFEU, Q3 2021)
  
  c) EU 2021 Rail Corridor Initiative, including the revision of theRail Freight Corridor Regulation and actions to boost passenger rail (non-legislative and legislative, incl. impact assessment, Article 91 TFEU, Q3 2021)
  
  d) Development of post-Euro 6/VI emission standards for cars, vans, lorries and buses (legislative, incl. impact assessment, Article 114 TFEU, Q4 2021)

The European Green Deal

• Strategy for Offshore Renewable Energy: On 19th of November 2020, the European Commission presented a Communication for a strategy for offshore renewable energy, proposing to increase Europe's offshore wind capacity from 12 GW at present to at least 60 GW by 2030 and to 300 GW by 2050. The Commission estimates that investments of almost 800 billion euro will be needed by 2050 to achieve the targets it has proposed. The Commission plans to ensure that the revision of the energy and environmental state aid guidelines and the Renewable Energy Directive will facilitate the cost-effective use of offshore renewable energy. (Press release)

• Methane Strategy: On the 14th of October 2020, the European Commission adopted a methane strategy  to reduce greenhouse gas emissions. (Press release)
  

As the second biggest contributor to climate change after carbon dioxide, reducing methane gas emissions is essential for achieving the EU's goal of climate neutrality by 2050. The Commission plans to work with the EU's international partners and industry to cut emissions along the supply chain. Therefore, the EU's methane strategy will focus on more accurate measurement and reporting of methane emissions (1) and the introduction of effective measures to reduce them (2):

(1) Measurement and reporting

• The Commission will propose EU legislation on mandatory measurement, reporting and verification for all methane emissions
• Improving the measurement of reporting of methane emissions by companies (including through sector-specific initiatives)
  
• Satellite-based detection of super emitters by the EU's Copernicus program
  
• Support the establishment of an international methane emissions observatory with the United Nations, including a methane emissions index
  

(2) Emission reduction measures

• Support to accelerate the development of the market for biogas from sustainable sources (including pilot projects for rural and agricultural communities)
• Reducing emissions from agriculture by promoting the best practices and technologies, changes in feed and animal husbandry, and climate-efficient agriculture
  
• A commitment to improve the leak detection and repair (LDAR) in the entire fossil gas infrastructure (in its production, transport and use)
  
• Present possible future legislation on gas, venting and flaring and standards for the entire supply chain and support the World Bank's "Zero Flaring" initiative to eliminate flaring
  
• Review of the directives on landfills, urban wastewater treatment and sewage sludge

• Strategy for the Integration of Energy Systems: On the 8th of July 2020, the European Commission also presented a "Strategy for Energy System Integration". It rests on the following three pillars:

First, a more "cycle-oriented" energy system, of which energy efficiency is a central component. The strategy sets out concrete measures for the practical application of the "energy efficiency first" principle and for more effective use of local energy sources in buildings or communities. Significant potential is offered by the reuse of waste heat from industrial plants, data centers or other sources, and energy recovery from biowaste or sewage treatment plants. The "renovation wave" will be an important part of these reforms.

Second, more direct electrification of the end-use sectors. As the share of renewable energy is highest in the electricity sector, the EU should, if possible, make increasing use of electricity, for example for heat pumps in buildings, electric vehicles in transport or electric stoves in certain industries. A network of one million charging stations for electric vehicles should be among the visible results, along with the expansion of solar and wind power.

Third, for those sectors where electrification is difficult, the strategy proposes the use of 'cleaner fuels' such as renewable hydrogen, sustainable biofuels and biogas. The Commission plans to propose a new classification and certification system for renewable and low-carbon fuels.

• Hydrogen Strategy: On the 8th of July 2020, the European Commission presented a "Hydrogen Strategy for a Climate Neutral Europe". It drafts a three-stage roadmap with expansion targets:
  
  1. from 2020 to 2024 the European Commission wants to support the installation of electrolysers with an electrolysis capacity of at least 6 gigawatts and the production of up to 1 million tons of renewable hydrogen.
  
  2. from 2025 to 2030, hydrogen is to become an essential part of the EU's integrated energy system by installing electrolysers for the production of renewable hydrogen with an electrolysis capacity of at least 40 gigawatts and by producing up to 10 million tons of renewable hydrogen.
  
  3. between 2030 and 2050, renewable hydrogen technologies should be mature and widely deployed in all sectors where decarbonization is difficult.
  
  (Press release)

• Legislative Proposal: On the 4th of March 2020, the European Commission put forward a Regulation Proposal for the first European Climate Law which aims to write into law the goal set out in the European Green Deal – for Europe’s economy and society to become climate-neutral by 2050. Union-wide emissions and removals of greenhouse gases regulated in Union law shall be balanced at the latest by 2050, thus reducing emissions to net zero by that date. The Commission is empowered to adopt delegated acts in accordance with Article 9 of this Regulation to supplement this Regulation by setting out a trajectory at Union level to achieve the climate-neutrality objective set out in Article 2(1) of the Regulation until 2050. (Press release)

• On the 11th of December 2019, the European Commission published a Communication on the European Green Deal with which it aims to provide a Roadmap with actions to boost the efficient use of resources by moving to a clean, circular economy and stop climate change, revert biodiversity loss and cut pollution. It outlines investments needed and financing tools available, and explains how to ensure a just and inclusive transition.

Financing the sustainable transition

• Legislative Proposal: On the 14th of January 2020, the European Commission presented a Proposal for a Regulation establishing the Just Transition Fund (‘JTF’) within the field of cohesion policy to provide support to territories facing serious socio-economic challenges deriving from the transition process towards a climate-neutral economy of the Union by 2050.

Sustainable production and consumption

• a) Communication "A new Circular Economy Action Plan (non-legislative, 11th of March 2020, press release);

• b) Postponed to July 2021: Empowering the consumer for the green transition (legislative, incl. impact assessment, Art. 114 TFEU, Q4 2020)

Environment Action Program

• General Union Environment Action Program: On the 14th of October 2020, the European Commission put forward a Proposal for a Decision on a General Union Environment Action Program to 2030. The Proposal sets out a general action program in the field of the environment for the period up to 31 December 2030 (‘8th  EAP’). The overarching aim of the 8th EAP is to accelerate the Union’s transition to a climate-neutral, resource-efficient clean and circular economy in a just and inclusive way and achieve the environmental objectives of the United Nations’ Agenda 2030 and its Sustainable Development Goals, fully endorsing the environmental and climate objectives of the European Green Deal. The European Parliament and the Council are supposed to adopt the 8th EAP in the course of 2021.

Achieving the priority objectives of the 8th EAP will require an effective integration of environmental and climate sustainability in the European Semester of economic governance, including in the National Reform Programmes and National Recovery and Resilience plans; Phasing out environmentally harmful subsidies at Union and national level, making the best use of market-based instruments and green budgeting tools. The Commission, supported by the European Environment Agency and the European Chemicals Agency,  shall assess and report on the progress of the Union and the member states with regard to achieving the priority objectives.

Sustainable and smart mobility

• Communication on a "Strategy for sustainable and smart mobility" (non-legislative, 9th of December 2020, press release);

• Postponed to July 2021: ReFuelEU Aviation - Sustainable Aviation Fuels (legislative, incl. impact assessment, Art. 100 (2) TFEU and/or Art. 192 (1) TFEU, Q4 2020);

• Postponed to July 2021: FuelEU Maritime-Green European Maritime Space (legislative, incl. impact assessment, Art. 100 (2) TFEU and/or Art. 192(1) TFEU, Q4 2020)