Definition :

‘Fit for 55’ is the Commission’s nickname for the massive package of EU legislation it is preparing to table in June with the aim of conforming European laws to the bloc’s new climate objective for 2030.

Just about every EU law on energy and climate is going to be revised as part of the package, ranging from the renewable energy directive to EU legislation affecting energy taxation and the crown jewel of EU climate policy – the Emissions Trading Scheme, which regulates the world’s biggest carbon market.

Ambition :

• To achieve a climate-neutral Europe by 2050, to reduce emissions by at least 55% by 2030.
• To cover wide-ranging policy areas – from renewables to energy efficiency first, energy performance of buildings, as well as land use, energy taxation, effort sharing and emissions trading.
• To create a Carbon Border Adjustment Mechanismthat will help reduce the risk of carbon leakage and ensure a level-playing field
• To propose measures to implement Europe’s circular economyaction plan, the EU biodiversity strategy and the farm to fork 
• To include “impact assessments” – or comprehensive cost-benefit analyses

The package will include :

• Revision of the EU Emissions Trading System (ETS)
• Possible extension of the current system to new sectors (buildings, transport (road, maritime), etc.)
• According to our latest intel, it could also be an “adjacent” scheme
• Possible reduction of allowances allocated for free to airlines
• Review of the Market Stability Reserve
• More information here
• July 2021

• Introduction of a Carbon Border Adjustment Mechanism (CBAM)
• End goal is to reduce the risk of “carbon leakage” for selected sectors
• Possible scope will be initially limited to steel and cement, but ultimately broadened to include other sectors including fertilisers, non-ferrous metals, chemicals, pulp, paper, glass and electricity imports, amongst others
• Several design options are considered, including:
  • a carbon tax on selected products – both on imported and domestic products (consumption tax);
  • a new carbon customs duty or tax on imports; or
  • the extension of the EU ETS to imports (this is the most likely option according our latest intel)
• On carbon content and carbon pricing, the evaluation will be based on a system of EU-wide benchmarks already in place under the current EU ETS in sectors where applicable, and will also look at alternative approaches. The CBAM should not be a fixed cost applied to all third countries, but rather the difference between the carbon price and the price in the EU ETS.
• More information here
• July 2021

• Revision of the Energy Tax Directive (ETD)
• Phase-out of fossil-fuel subsidies
• Particular focus on aviation and maritime industries with the following considerations: (i) minimum excise rates, (ii) sectorial tax differentiation and (ii) product coverage
• More information here
• July 2021

• Revision of the Renewable Energy Directive (RED II)
• Possible increase of the minimum 32% target for renewable energy set at Union level, including a review of the level of ambition of sector specific measures
• Increased deployment of renewables in the power, heating & cooling and transport sectors
• Better use of waste heat
• Better integration of renewables in buildings
• Further promotion, development and use of renewable and other low-carbon fuels, including advanced biofuels, synthetic liquid and gaseous fuels & hydrogen
• More information here
• July 2021

• Revision of the Energy Efficiency Directive (EED)
• Possible provisions on the renovation of public buildings, public procurement, energy audits, heating & cooling and recovery of waste heat and energy services
• Focus also on related topics as security of supply, resource-efficiency, circular economy and competitiveness
• More information here
• July 2021

• Introduction of legislation to reduce methane emissions
• Binding rules on measurement, reporting and verification for all energy-related methane emissions
• Obligation to improve leak detection and repair of leaks on all fossil gas infrastructure
• Possible rules on eliminating routine venting and flaring in the energy sector
• Possible targets, standards or other incentives to reduce methane emissions from fossil energy consumed and imported in the EU
• More information here
• Q4 2021

• Revision of the energy performance of Buildings Directive (EPBD)
• Possible phased introduction of mandatory minimum energy performance standards for different types of buildings (i.e. public and private, non-residential and residential)
• Updated framework for Energy Performance Certificates
• Introduction of Building Renovation Passports
• Introduction of a deep renovation standard
• More information here
• Q4 2021

• Revision of the Third Energy Package for Gas (decarbonising gas markets)
• Introduction of rules fostering hydrogen infrastructure and markets (third-party market and network access rules and guarantees for neutral hydrogen network operations, repurposing of existing natural gas infrastructure, rules for import of hydrogen and hydrogen storage)
• Introduction of rules for the integration of renewable and low-carbon gases into the existing gas infrastructure and markets
• More information here
• Q4 2021