EU’s “Fit for 55” – Day 1 – Initial Observations by Acquis

Today is the day that the EU releases one of the most significant and voluminous policy and legislative packages.  Many of the proposals are relevant intra-EU, but there are several with significant impact on third-countries, EU trade generally and the private sector, beyond the borders of the EU.

Testament to the global relevance of the proposals,  the New York Times put out an alert and an article today with the headline: “Europe Lays Out Vision for a Carbonless Future, but Big Obstacles Loom”. As to “The Brussels Effect” - the article also notes that “(…) The political importance of the effort, pushed by the European Commission, the EU’s bureaucracy, is without doubt. It puts Brussels at the forefront of the world’s efforts to decarbonize and reach the goal of a carbon-neutral economy by 2050.”  

 After a series of press conferences, the “EU Fit for 55” package was presented by the European Commission, who will publish all information on the package throughout this week. This package consisting of energy, environmental and climate laws serve to meet the EU’s 2030 goal of cutting emissions by 55%. The package contains 13 legislative proposals and others revisions of existing laws, with significant impact beyond the EU for third-countries as well.

 The European Commission chose to address the environmental challenges facing the Union with several flagship policy measures. One of the clear leaders in the fight against carbon emissions and the main focus of today’s press conferences is the proposal on expanding the EU’s Emissions Trading Scheme which will expand carbon pricing. Importantly, the EU has confirmed that there will be a price on carbon in road and maritime transport as well as on heating. Additional expansions to the current European carbon pricing scheme (EU ETS) as well as reduction in fossil fuel subsidies are expected to be the spearheads of the EU’s decarbonisation goals.


The Executive Vice President of the European Commission anticipates many difficulties getting the package over the finish line. He stated “Any fundamental transition will get us a lot of pushback.” In particular, the Commission expects pushback from some of the Member States as well as some industry leaders such as car manufacturers and airlines. Additionally, the expansion of the ETS means that the carbon pricing will now be felt on the consumer or household level leading to Frans Timmermans receiving many questions on potential concerns of a resurgence of the Gilet Jaune movement across Europe.

One of the main concerns brought up by the European business community  was that the carbon costs will affect their profits and may lead to them losing market share to foreign competitors that do not have as stringent measures on carbon costs (“Carbon Leakage”). To address this concern, the European Commission is proposing a carbon border adjustment mechanism (CBAM) that should ensure that importers of carbon intensive products in the scope of the mechanism to pay similar carbon costs as compare to EU producers.

 Pushback at Member State level was already apparent at the European Council in May where Latvia, Slovenia, Poland and Luxembourg opposed the Commission’s plan to extend the ETS to transport and buildings. The concern is that increased energy prices will negatively affect the EU’s lower income families. To tackle these issues, the Commission repeatedly discussed their plans to support low-income households and to ensure that the transition will be equitable.  To this end, the Commission plans to use half of the revenues of emission pricing to support low-income households in the transition. This “Social Climate Fund” is proposed to provide dedicated funding to Member States to help citizens finance investments in energy efficiency, new heating and cooling systems, and cleaner mobility.

 Please check back on the Acquis Website this week for our daily briefing on the Fit for 55 package and as we uncover more about the EU’s Fit for 55 Package and how you can get involved in the legislative process.