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Fit for 55 Policy Update

No. 49 | 22 September 2022

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Dear reader, 

Welcome back to this week’s edition of Dr2 Consultants Fit for 55 policy update. Dr2 Consultants is pleased to provide you with the latest insights on this package of climate and energy legislation, including updates on the decision-making process and the latest political developments in the EU institutions. Our Fit for 55 policy updates also include the latest developments related to the adoption of EU sanctions on Russia and the impact of the overall energy crisis on the Fit for 55 initiatives. 

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As the negotiations on the Fit for 55 files are entering the final stages of the decision-making procedure and the energy crisis is gaining more political momentum, Dr2 Consultants has decided to broaden the focus of our Fit for 55 policy updates. Therefore, the Fit for 55 policy updates will soon become EU Energy & Climate Newsletter. For this reason, we would like to understand which topics you would like to read about in our new newsletter. This is your last opportunity to vote, so please select in the poll your topics of interest.

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EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EU MEMBER STATES CONTINUE THEIR WINTER PREPARATIONS: Member States are moving forward with new initiatives and steps to secure their winter energy supply. Germany is in talks with Qatar and the United Arab Emirates on liquified natural gas (LNG) deliveries. Moreover, the German government is preparing steps to prevent solvency issues among its major gas suppliers.  In the meantime, France vowed to support Germany with its gas supply, and it is considering localized electricity cuts, but never for households. In Spain, a measure lies on the table that would oblige energy intensive industries to stop operations during consumption peaks if required, in turn for financial compensation. Lastly, Portugal works to diversify its supply, Finland warned for power outages while Denmark is intensifying its efforts to increase Norwegian gas imports. 

JOINT RESEARCH CENTER PUBLISHES POLICY REPORT ON GLOBAL CO2 EMISSIONS: The JRC report  outlines the CO2 emissions time series of the Emissions Database for Global Atmospheric Research (EDGAR) from 1970 until 202. Data indicates that since the beginning of the 21st century, global fossil CO2 emissions have grown steadily in comparison to the three previous decades, mainly due to the increase in fossil CO2 emissions by China, India, and other emerging economies. The COVID-19 crisis slowed down the global economy in the first half of 2020, resulting in an interruption in the global growth in CO2 emissions, followed by a rebound in 2021. Emission estimates for 2021 show that global anthropogenic fossil CO2 emissions increased by 5.3% from 2020, at 37.86 Gt CO2, just 0.36% below the 37.99 Gt CO2 emissions registered in 2019. The findings show that in 2021, major economies contributing 67.8% to the global emissions (China, USA, EU27, India, Russia, and Japan), showed increases in their CO2 emissions compared to 2020. These increases reflect the recovery of these economies. However, only in China the economic recovery pace was higher than the increase in CO2 emissions. 

Highlights of the week

EUROPEAN COMMISSION APPROVES PUBLIC SUPPORT FOR HYDROGEN PROJECTS: On 21 September, the European Commission approved a second Important Project of Common European Interest (IPCEI), called IPCEI Hy2Use. This aims to support the research and innovation, first industrial deployment and construction of relevant infrastructure in the hydrogen value chain. IPCEI Hy2Use was prepared by thirteen Member States, and it will unlock €5.2 billion in public funding and €7 billion in private investments. The scope of the project is to support the construction of hydrogen-related infrastructure and the development of innovative and sustainable technologies for the integration of hydrogen in the industrial processes. The first projects are expected to be operational by 2024-2024, while the overall IPCEI Hy2Use should be completed by 2036. 

ENVIRONMENTAL GROUPS SUE COMMISSION FOR LABELING FOSSIL GAS SUSTAINABLE INVESTMENT: On 19 September, four NGOs (ClientEarth, WWF, Transport & Environment and BUND) announced that they are starting legal action against the European Commission for labeling gas power plants sustainable under the EU’s sustainable finance Taxonomy as long as the technology meets a CO2 emissions threshold. The Taxonomy’s Complementary Delegated Act, which survived a vote in the European Parliament in July, specifically labels gas as sustainable. The NGOs argue that the Complementary Delegated Act does not respect the EU obligations under the Paris Agreement, and it is against the Taxonomy Regulation as well as the European Climate Law. The European Commission has 22 weeks to reply before the EU Court of Justice is asked to rule on the matter. 

STUDY ON REFUELEU AVIATION FINDS COMMISSION PROPOSAL MOST SUCCESSFUL: On 18 September, while interinstitutional negotiations on the ReFuelEU Aviation Initiative are taking place, the International Council on Clean Transportation (ICCT) produced a study which assesses the differences between the original text proposed by the European Commission and the positions taken by the European Parliament and the Council of the EU. The study concludes that the original Commission proposal would provide more greenhouse gas savings compared to the amendments made by the European Parliament and the Council of the EU. This is mainly because the Commission proposal would only qualify advanced biofuels with lower lifecycle emissions, whereas both the Council of the EU and the European Parliament propose to qualify a wider range of biofuel feedstocks for the production of sustainable aviation fuel, including some which are less effective in reducing emissions. 

FRANCE WANTS TO LABEL NUCLEAR-PRODUCED HYDROGEN ‘GREEN’:  French Energy Minister Agnès Pannier-Runacher sent a letter to Energy Commissioner Kadri Simson calling for the inclusion of nuclear among energy sources for the production of green hydrogen. The letter argues that the current rules restrict the production of green hydrogen from low-carbon electricity, namely nuclear power. Regarding addition, Pannier-Runacher proposes to label hydrogen as green in case this is produced from electricity mixes containing more than 90% of renewables. Notably, she expresses criticism over the proposed revision of the Renewable Energy Directive (RED III), which do not allow for the same value for low-carbon hydrogen and renewable hydrogen. The Trilogue negotiations on the RED3 are expected to kick off on 6 October.  

What’s next?

From 26 to 30 September, the European Commission is organizing the EU Sustainability Energy Week during which the REPowerEU plan, energy efficiency and a fair energy transition for all will be discussed.  

On 30 September, an extraordinary Energy Council will take place to follow up on the measures presented by the Commission on 14 September.  

On 3 October, the Committee on Transport and Tourism is expected to vote on the draft report on the Alternative Fuels Infrastructure Regulation and FuelEU Maritime. 

In October, the EU institutions will discuss several Fit for 55 files in the Trilogue meetings: on 4 October for Carbon Border Adjustment Mechanism (CBAM), on 6 October for Renewable Energy Directive, on 10 October for EU Emissions Trading System and Market Stability Reserve, and on 11 October for Effort Sharing Regulation. Moreover, on 13 October, the institutions will hold the Trilogue negotiations on the Social Climate Fund. The second Trilogue meeting on the revision of the Regulation on Land Use, Forestry and Agriculture is expected either on 10 or 26 October. 

On 18 October, the European Commission will present its Work Programme for 2023, presenting its upcoming policy initiatives.  

On 26 October, the second Trilogue meeting on CO2 emission standards for cars and vans will take place. 

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