Fit for 55 developments in 2021 – the launch year in review

As 2021 is coming to an end, Dr2 Consultants is providing a retrospective of the key Fit for 55 developments and highlights in 2021, and a preview of what to expect in 2022. For a more detailed analysis, please read our policy updates, published regularly since the publication of the package.

With the presentation of the Fit for 55 package on 14 July 2021, the EU took on a role as a frontrunner in the field of climate change with impactful policies, paving the way to become the world’s first climate-neutral continent by 2050. With this move, the EU has encouraged other states to adopt similar plans, including China and the US. As such, the EU’s commitment to both the Paris Agreement and European Green Deal are translated into concrete legislative proposals, revising the entire EU climate and energy framework to reach the EU’s 2030 objective of reducing emissions by 55%.

Understandably, Fit for 55 dominates the policy agenda as its proposals address a wide range of policy areas, including transport, energy and international trade. Ultimately, the package will impact the life of all EU citizens and businesses, but will also have a global impact, notably through the Carbon Border Adjustment Mechanism.

14 July: publication of the Fit for 55 package

On 14 July, the Commission presented the Fit for 55 package, containing a set of legislative proposals to make the EU’s climate, energy, land use, transport and taxation policies fit for reaching the European Green Deal’s objective of reducing net greenhouse gas emissions by at least 55% by 2030. The package encompasses revisions of key legislation, including a proposal to extend the scope of the EU Emissions Trading System, increased national emissions targets under the Effort Sharing Directive, a review of renewable energy and energy efficiency targets, a new Energy Taxation Directive and more stringent CO2 emission standards for new cars and vans. Furthermore, new legislation was proposed especially to combat carbon leakage by a Carbon Border Adjustment, as well as to stimulate the fuel transition in the maritime and aviation sectors.

Mixed reviews

The presentation of the Fit for 55 package received mixed reviews from industry stakeholders and politicians, with many welcoming the ambition of the Commission but at the same time worrying about the implementation and the too high costs put on consumers. Industry stakeholders also raised the question of the availability of sufficient low-carbon energy to meet EU needs. On the other hand, actors of the energy transition, such as the electric vehicle charging industry or the wind energy industry welcomed the package.

On the European Parliamentary groups’ side, reactions also varied. The Europeans People’s Party (EPP) underlined the need for a credible social instrument in order to make sure “low-income families, middle class homeowners or car owners in rural areas without public transport” do not have to pay the highest bill. Meanwhile, the Socialists & Democrats (S&D) group welcomed the “ambitious and bold” commitments of the Commission and Renew Europe called the package “the most important legislative initiative of the decade”. The Greens, however, regretted the lack of ambition of some of the measures.

Climate organizations such as Greenpeace responded with disappointment. Greenpeace considers the 55% emissions reduction target too low, and the measures proposed not sufficient to prevent the destruction of the planet’s life-support systems. The European Environmental Bureau, the EU’s largest network of environmental organizations, called the package unfit and unfair. Friends of the Earth Europe criticized the extension of EU’s emissions trading scheme (ETS) to building and transport, fearing it will push millions of European households into energy poverty.

Fit for 55 developments in the Council and the EU Parliament in 2021

Following the publication of the package, the files were sent to the Council of the EU and the European Parliament for discussion.

Social concerns among Member States

Within the Council of the EU, Member States mostly worried about social impact of the transition, and the political unrest it could lead to, with higher transport and energy prices fuelling social movements similar to the ‘Yellow Jackets’ in France. Despite the package being accompanied by a proposal for a Social Climate Fund, especially Eastern Member States worried that it would not be sufficient to mitigate the impact of the transition for vulnerable households and businesses.

All throughout autumn, Council working parties, in charge of the technical work on legislative proposals, examined the Fit for 55 files, which were distributed among the different Council configurations, notably the Transport Council, the Environment Council and the Economic and Social Affairs (ECOFIN) Council. According to the Slovenian Council Presidency, which published a progress report on 6 December, EU Member States have been seeking clarifications from the Commission on the proposals and their impact, both at the EU and national level.

Delegations have also requested more information on the role and contribution of the individual proposals to the overall economy-wide ambition of achieving net emissions reductions of at least 55% by 2030, as well as on how the proposals interact. Discussions on certain files, especially the transport-related proposals (such as the CO2 standards for cars and vans or the ReFuelEU Aviation and FuelEU Maritime) have advanced well, some are more contentious and little progress has been made, notably on the EU Emissions Trading System or on the Effort Sharing Directive.

Challenging appointment of the key MEPs

One of the Fit for 55 developments in the European Parliament in 2021 was the appointment of the responsible Committees and MEPs that would act as rapporteurs, leading the negotiations on each file. The process of dividing the proposals between Committees went relatively smoothly, while the rapporteur appointment process was rather lengthy and difficult, with all political groups making their claims to the files with the most political weight. The process was only finalized in mid-November. The proposals were distributed among the Environment (ENVI), Transport (TRAN) and Industry, Research and Energy (ITRE) Committees. Both the European People’s Party (EPP) and Socialists & Democrats (S&D) got hold of most positions as rapporteurs, meaning they will be in the driving seat of determining the Parliaments’ position on the files.

Wrapping up 2021

To wrap up its mandate as President of the Council of the EU, which finishes on 31 December, Slovenia presented a series of progress reports, providing a state of play on the Council’s ongoing Fit for 55 work. Although discussions have advanced significantly, the Council of the EU has not been able to adopt its position on any file yet. The Environment Council will also hold a final meeting on 20 December 2021 to take stock of the progress made, the Transport and ECOFIN Councils having held their last sessions on 7 and 9 December. As of January, France will preside the Council of the EU with ambitious plans to achieve a common position on most of the files.

Another Fit for 55 development in 2021 was that, on 15 December, the European Commission presented additional Fit for 55 proposals, including an “energy, climate and nature protection” package, and the revision of the Energy Performance of Buildings Directive. The energy, climate and nature protection package will include a revision of the “third gas package”, comprised of a new Gas Regulation and a new Gas Directive, with the aim to completely overhaul the EU gas market to promote low-carbon and renewable energies instead of fossil gas. It also includes a proposal on Sustainable Carbon Cycles to upscale carbon recycling and removal solutions, especially focusing on carbon farming and industrial carbon capture, and legislation to reduce methane emissions from oil and gas exploration and production sector.

What to expect in 2022

As of 1 January 2022, France will assume the Council of the EU Presidency until July 2022. On 9 December, Emmanuel Macron presented the Presidency’s priorities, which include advancing negotiations on Fit for 55 files and moving ahead as quickly as possible. The Presidency will work to ensure both the availability of sufficient investments and innovations for the transition as well as sufficient support for industries and households in the transition. The Presidency will focus specifically on the conclusion of Council negotiations on the Carbon Border Adjustment Mechanism.

The European Parliament gathered in Strasbourg from 13 to 16 December for the last Plenary session of the year, after which the institution went into recess for the Christmas break, returning to work on 3 January 2022. In 2022, now that all Committees and rapporteurs have been appointed, proposals will be discussed in Committees and rapporteurs will start drafting their reports. Difficult discussions are already foreseen, with an opposition between Greens MEPs wanting more environmental ambition and EPP or Renew Europe MEPs worrying about the social aspects of certain proposals. Less contentious files, such as the Alternative Fuels Infrastructure Regulation or FuelEU Maritime, are nonetheless expected to be voted on between spring and summer 2022. More controversial files such as the EU ETS, ETD and CBAM will likely take longer.

Is your business Fit for 55?

The Fit for 55 Package will shape the legislative landscape for the upcoming decade, trigger the public debate and impact businesses across the different transport modalities. The revised and updated COemission standards might radically impact your day-to-day business operations. More than ever, making your voice heard is crucial.

Fit for 55 services

Over the last years, Dr2 Consultants has built up a track record in advising a broad range of transport clients in navigating the EU ecosystem. Would you like to know more about what the ‘Fit for 55 Package’ means for your organization? Feel free to reach out to us or visit our Fit for 55 webpage. You can also sign up for our weekly Fit for 55 policy updates.