Fit for 55

Shaping the path to 2030

These are exciting times. Europe is leading the way as the first major economy embarking on an ambitious, all-encompassing, and urgent societal transition over the next decade and beyond. The world is watching this major effort - the ‘Fit for 55 Package’ - translating into policies the increasing urgency to cut emissions and transform the energy system to tackle the climate crisis.

Eurelectric is a vocal supporter of the accelerated transition, leading the charge in decarbonisation and promoting cost-efficient decarbonisation and electrification across Europe. A sustainable and cost-effective transition will benefit business and citizens, creating jobs and supporting communities across EU Member States.

The Package is a historic opportunity to support the main critical enablers of this transformation. From recognizing electricity as the key catalyst for the transition that many sectors need to creating the right framework for accelerating investments in generation and grids. 

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Overview of all texts

Electrification Alliance joint position on the Package, 2021

The EU Emissions Trading System has come a long way since its establishment in 2005, as a powerful policy tool to curb emissions and encourage fuel switch cost-effectively. Thanks to recent reforms that have addressed the historic oversupply of allowances in the market, prices are currently reaching record-highs in anticipation of a heated Brussels debate on the EU ETS reform.

Some may look at this as the start of a new, more mature phase for the EU ETS, and not only a new trading phase. The instrument will be reshaped to be fit to deliver on a significantly higher level of climate ambition and will shift its focus from the decarbonisation of the power sector to the decarbonisation of industry, putting themes like carbon leakage and distribution of allowances at the forefront of the discussion.

Opening the tool box of the EU ETS for review also means carefully assessing the interactions of its main components as readjusting the cap, changing the linear reduction factor and revising the market stability reserve. Because a tweak to one has consequences for the others, it is important for policy makers to ensure policy coherence when revising the text.

The uptake of renewable energy in different sectors is key to both deliver on a higher EU climate ambition and to achieve an integrated energy system in heating, transport and industry.

The Renewable Energy Directive from 2018 sets a new binding target for the EU for 2030 of at least 32% of renewable energy. It includes rules for self-consumption of renewable energy and an increased 14 % target for the share of renewable fuels in transport by 2030. The text strengthened criteria for ensuring bioenergy sustainability and streamlined rules on permitting to facilitate renewable capacity uptake.

The revised directive would build on these updated elements and will need to set a framework to support direct and indirect electrification, to facilitate permitting procedures as well as cross-country collaboration in the most effective way.

Pricing emissions coming from outside Europe

Carbon Border Adjustment Mechanism or CBAM, 2021

As Europe takes a global leadership role in addressing climate change, European industry must be able to compete while knowing that investing in decarbonisation efforts is a no-regret decision. The power sector itself is already affected as seen in the cases of fossil fuels-based electricity imports along the EU external borders of the Baltic states, Bulgaria, Croatia, Finland, Greece, Poland and Spain.

This imported electricity is not subject to carbon pricing and has in most cases a lower cost (and price) than domestically produced electricity in the importing Member States, resulting in carbon import distorting competition and affecting EU-based generators negatively.

First of its kind, the CBAM is presented to address the issue of carbon leakage and creates a regime for imported goods equivalent to the EU ETS, as an alternative to indirect carbon cost compensation and the allocation of free allowances. The finetuning of the design criteria and compliance with international agreements will be key to getting it right.

Electricity is well on track to be fully decarbonised by 2045. Already today, electrifying means boosting energy efficiency: by switching from another fuel to electricity in the activities we carry out daily, energy is saved and efficiency gained.

To achieve the emission reduction target of at least net 55% by 2030, energy efficiency efforts in the EED need to be significantly stepped up. The current text sets a headline target for 2030 of at least 32.5%, to be achieved collectively across the EU. This means that EU energy consumption should be no more than 1273 Mtoe of primary energy and/or no more than 956 Mtoe of final energy. Member States will have to achieve new energy savings of 0.8% each year of final energy consumption for the 2021-2030 period.

It is important that the review of the EED is carried out so that it fully recognises the efficiency advantages of electrification, in synergy with the Renovation Wave and the revisions of both the Energy Performance of Buildings Directive and the eco-design and labelling frameworks.

Using electricity to fuel cars, trucks, trains and even ships and planes is already a reality. The potential for direct electrification of transport by 2050 is 60% higher than 2015 levels. The revision of the 2014 version of AFID, in synergy with the TEN-T file, is necessary for manufacturers, corporate buyers, and citizens to have the right signals to go electric.

In its current form AFID defines what alternative fuels are and sets the rules for publicly accessible recharging and refuelling infrastructure. It asks Member States to adopt plans to develop alternative fuels markets and the related infrastructure, it sets minimum requirements for infrastructure roll-out in urban and suburban areas as well as on the TEN-T core network (roads and ports).

Since 2014 the level of ambition in implementing AFID has varied greatly among Member States and de facto no comprehensive network of infrastructure exists across the Union. Revising AFID in line with the benchmarks for zero and low-emission vehicles and considering the power classes of charging points as well as vehicle charging capacities is essential to unlock the e-mobility potential.

After the regulation entered into force in January 2020, every single new car and van arriving in the market must not emit more than the objectives set by the text.

For the period 2020-2024, the target limits emission to 96g CO2/km (cars) and to 147g CO2/km (vans). Then, from 2025, a 15% reduction is expected for both cars and vans. From 2030, a 37,5% reduction is expected for cars and 31% for vans. In addition, an incentive mechanism is set up by the regulation for zero and low-emission vehicles (ZLEV), as well as penalties for excess emissions.

Updating the regulation to be fit for the 55% GHG reduction target by 2030 is crucial to ensure a cost-effective path to transport decarbonisation. The file is important for our sector as we are key enabler in the transport sphere, both investing in e-mobility infrastructure and providing a secure, affordable and sustainable power supply at all times.

EU rules on energy taxation are not anymore delivering the same positive contribution as when they first came into force in 2003 and are not fit for the climate challenge. Current energy prices reflect neither the scarcity nor the environmental impact of the different energy sources and carriers.

This lack of level playing field is one of the most important barriers to accelerating end-use electrification. At the same time, fossil energy carriers are often subject to much lower absolute taxation levels as the environmental effects of their use are not included.

Updating the ETD is a crucial task to address the uneven treatment of energy carriers and will have to set the framework for better allocating the weight of taxes and levies on the different energy carriers, taking into account their climate impact.

60% of GHG emissions in Europe come from transport, buildings, agriculture, non-ETS industry and waste. For industry and energy, the EU has set a cap and trade system (EU ETS), but for the remaining sectors, each Member state must deliver a nationally allocated number of GHG reduction.

To achieve a climate-neutral EU by 2050 and the intermediate target of an at least 55% net reduction in greenhouse gas emissions by 2030, the Commission is proposing to revise the Effort-sharing Regulation.

As the European Commission have announced they want to put a carbon pricing mechanism for buildings and transport sectors, the key for policy makers is to ensure that MS policies and demands remains in place and are even strengthened.

Electrification will be a key tool in reducing emissions, increase energy efficiency and to use more renewable energies in these sectors.

Our most recent positioning

Consultation reply on the ESR, February 2021

The Regulation implements the agreement between EU Member States according to which all sectors should contribute to the EU's 2030 emission reduction target, including the land use sector.

EU Member States must ensure that accounted emissions from land use, land use change or forestry (LULUCF) are balanced by at least an equivalent accounted removal of CO2 from the atmosphere through action in the sector.

To reach the higher climate ambitions, the revision aims to create stronger policy incentives reducing land emissions, enhancing substitution of fossil-based materials and land-based sinks in the land use sector. LULUCF objectives need to be closely reviewed, now more than ever, in accordance with the revisions of the EU ETS, the ESR and the RED.