Fit for 55%: what is expected, and what is WWF calling for?
Posted on 09 July 2021
The impacts of climate change are worsening; from droughts and crop failure to floods, wildfires and nature destruction.
We are all impacted by the climate crisis, and we will all be impacted by the action needed to tackle it. But if it’s planned and managed properly, and takes people’s lives and needs into account, climate action can offer huge changes for the better.
On 14 July, the EU has a chance to do just this. It will propose a set of laws meant to turn its overall 55% net emissions reductions target into reality: the ‘Fit for 55%’ package.
This is an opportunity to go beyond the too low 55% net target - according to science, a 65% gross emissions cut is needed by 2030 - and usher in a fundamental systemic change, towards societies which are climate-neutral and sustainable, with people and their wellbeing at the centre.
The EU has already set the wheels in motion with its Green Deal, which aims to achieve climate neutrality and restore nature. The Fit for 55% proposals will show whether the ambitions of the Green Deal will be translated into science-based actions.
So what is expected, and what is WWF calling for? The Fit for 55% package is made up of about twelve files, and WWF focuses on five of them.
The current ETS is not fit for purpose and does not drive the decarbonisation of industry. Currently covering 45% of the EU’s emissions reduction, the ETS puts a price on each tonne of carbon emitted in the power and manufacturing sectors, as well as on intra-EU aviation. But not all polluters must ‘pay to pollute’ - instead, they receive emissions allowances for free. Those emissions allowances auctioned provide revenue to EU Member States. Member States are encouraged to spend at least 50% of the revenues on climate projects.
The EU ETS needs to be made more effective at decarbonisation by:
Lowering the maximum amount of emissions allowances, to bring it closer to real emissions levels and avoid the creation of a surplus in the 2020s. We support the removal of 350 million emissions allowances from 2023.
Increasing the ETS target for 2030 to 70% emissions reductions in those sectors. The annual reduction in allowances should be 3.6% from 2023.
Reviewing the mechanism set up to withhold extra allowances from the market - the ‘Market Stability Reserve’ . This is crucial to absorb the historical surplus of allowances (and a potential new surplus due to the COVID crisis). We need to take more allowances off the market (at a 24% rate after 2023, not 12% as planned), lower thresholds, and continuously cancelling allowances which are taken off the market.
Auctioning revenues should be invested in the Modernisation and Innovation Funds, to support industry decarbonisation.
Member States should make better use of ETS revenues and spend them on climate action entirely. The ETS directive should include a clear definition of what counts as ‘climate action’, in line with ‘do no significant harm’ criteria and social safeguards.
Member States have to drastically improve the quality and transparency of their ETS reporting, which has been clearly lacking.
The Carbon Border Adjustment Mechanism (CBAM) proposal, which may only be released later this year, will set out how a system of taxes or levies on certain goods imported into the EU from regions with less strict climate rules would work.
The CBAM must be designed and implemented as an alternative to the free allocation of allowances under the ETS. In addition to being double subsidies to industry, it is also unclear and doubtful that both provisions (CBAM and free allocation) would be compatible with WTO rules.
It must ensure fairness and equity, for example by ensuring any revenues are redistributed in a fair way, and avoiding any negative impact on the economies of developing countries.
It must be part of a wider set of policies to enable and promote investment in low carbon industrial processes, energy efficiency measures and renewable energies to achieve the decarbonisation of industry.
Effort sharing regulation revision
The EU Effort Sharing Regulation law sets national targets for all emissions from road transport, buildings, waste, agriculture and small industry. These sectors together account for 60% of the EU’s emissions.
The Effort Sharing Regulation and the national binding emissions reduction targets it sets on non-ETS sectors must be maintained and brought in line with the 1.5C target in the Paris Agreement.
The existing offsetting arrangements between the ESR and the land use and forestry sectors (referred to by the Commission as ‘flexibility’) should be scrapped.
Renewable energy directive revision
The EU Renewable Energy Directive (RED) currently sets a target of 32% of renewables for 2030. While some parts of the directive can already make an important contribution to the energy transition, provided they are implemented properly - for example the section on energy communities - others require updating and further improvement to align with the 2030 objective and ensure that EU policies are all aligned with the climate neutrality objective.
The revised RED must include:
An increased renewable energy target of at least 50% by 2030
An end to incentives for burning trees and dedicated biofuel or energy crops for energy
The subsidies that Member States currently spend on harmful bioenergy to be redirected to the clean technologies that are part of the climate solution, including wind and solar.
An end to new hydropower plants in the EU, on the grounds that it would make a trivial contribution to cutting GHG emissions but have a huge impact on freshwater biodiversity - see this joint NGO manifesto for further details.
The EU’s regulation on land use and forestry (‘LULUCF’) currently says these sectors which have to ensure that the carbon emitted is balanced by the same amount removed from the atmosphere.
The EU should aim to increase net removals to 600 Mt CO 2 -eq per year, to be met through the rapid expansion of nature restoration and sustainable agricultural and forestry practices that are a win-win for the climate and biodiversity.
The accounting rules for the various different land use categories covered by the LULUCF Regulation must be changed. Right now, these ‘bake-in’ historical levels of emissions and/or harvesting and do not accurately reflect the emissions and removals that are ‘seen’ by the atmosphere.
There should also be clear separation between emissions and removals in the land use sector and emissions in other sectors: net removals in the land use sector are hard to measure and not necessarily stable, so should not be treated as tonne-for-tonne equivalent to fossil fuel emissions, or used to offset and hence delay climate action elsewhere.
Read the full paper: Buildings blocks for a fair “Fit for 55%” package that keeps us within 1.5°C