“Ambitious, achievable and beneficial for Europe” is how European Commission President, Ursula von der Leyen, characterized her updated EU climate plans. She unveiled her proposal to cut CO2 emissions by 55% by 2030 during her first State of the Union Speech on 16 September 2020. New measures to reach the objective will affect all sectors of the economy from transport, construction to energy. It accelerates the transition to a climate-neutral Europe by 2050, as laid down in the overarching European Green Deal. Therefore, the European Commission is also calling on Member States to step up their efforts. The updated climate targets on a European level provide a unique framework and opportunity for businesses to shape and be part of the green transition at national level.
Stepping up our climate efforts: “We can do it!”
The Commission based the increased 55% target on an assessment of the National Energy and Climate Plans for 2021-2030 (NECPs). The NECPs are ten-year plans, in which EU Member States outline how they will address climate-related issues such as energy efficiency, taking up renewables, reducing greenhouse gas emissions, interconnections and research & innovation. The evaluation of these national climate plans on EU-level showed that the EU is to surpass the current 40% reduction target, enabling the increase of the target to 55% by 2030. Or in Von der Leyen’s words: “we can do it!” As this demands a further increase of energy efficiency and the share of renewable energy, the Commission will present new proposals by June 2021:
- The Renovation Wave: the renovation of public and private buildings to improve their energy efficiency;
- Revision of the Energy Efficiency Directive: the alignment of the binding measures that limit energy consumption with the new climate targets;
- Guidance for the Energy Efficiency First Principle: ensuring energy saving is a priority in policy-making and investment.
In addition to the EU-level evaluation of the National Energy and Climate Plans, the Commission will carry out an assessment of Member States’ individual plans in October 2020, as part of the State of the Energy Union Report, expected by the end of the year. The assessment will evaluate if Member States are on track to achieve the current 40% and proposed 55% emission reduction targets, looking at areas such as energy efficiency and the share of renewables in the national energy mix as mentioned above.
Opportunities to shape the national green recovery
Member States will have to bring their National Energy and Climate Plans in line with the new emission reduction target. Although the new objective may look challenging, combined with the Recovery and Resilience Facility, it offers a unique opportunity for businesses to become part of the green recovery in their countries. The Recovery and Resilience Facility is at the core of the Next Generation EU plan and offers an unprecedented €672.5 billion of loans and grants to Member States to emerge from the COVID-19 crisis. The budget is to be spent in line with the (increased) European climate ambitions. In order to benefit from the budget, Member States draft their national recovery plans outlining how these will contribute to criteria including environmental sustainability.
As a result, a momentum arises for businesses to help national governments shape a sustainable recovery. Additionally, companies can benefit from European investment in the green ‘flagship areas’ that are to be included in the national plans. These focus areas include the development of renewables, energy efficiency of buildings and sustainable charging and refueling technologies for transport. With the Member States’ national recovery plans being submitted to the European Commission, now is the moment to roll up the sleeves and profit from the business opportunities stemming from the application of the plans.
The Climate Law Regulation was proposed by the European Commission in March 2020. In a timely manner with the submission of the national recovery plans of the Member States, on 21 April 2021, the European Parliament and the Council reached a provisional agreement that increases the overall EU climate ambition and endorses a collective net greenhouse gas emissions reduction target of at least 55% by 2030 compared to 1990 – a substantial increase from the previous target of 40% reduction. The agreement prioritizes the emissions reductions over carbon removals for the 2030 target and calls on the Commission to set an intermediate climate target for 2040.
The agreement has yet to be officially approved by the Council and Parliament, before final adoption. The Commission will also follow up with a package of proposals aiming to revise and update all pieces of EU legislation related to climate and energy in order to ensure consistency and compliance with the new target. Next to that, the Commission will assess the 27 national recovery plans within the next two months, making sure that the Member States will earmark 37% of their funding to sustainable policies, setting the scene for achieving the Climate Law’s targets. Therefore, it is important to identify which business opportunities are embedded in the national plans and the overall EU climate strategy for companies. If you would like more information on the EU climate plans, or other files that could impact your business, contact Dr2 Consultants. Also, visit our Sustainability webpage for more information.