Implementing the EU Climate Law via the ‘Fit for 55’ package

Author Notes

ABSTRACT

To implement the European Union (EU) Climate Law’s newly established 55% greenhouse gas reduction objective for 2030, the EU Commission suggests a wave of reforms to the European energy and climate legislation. The contribution aims to describe the EU Commission’s 16 initial legislative and strategic proposals regarding the major pillars of the European energy and climate legislation and intends to give an overview on the suggested reforms. By comparing the legal status quo with the legal framework de lege ferenda as presented by the Commission’s proposals, the planned major changes to the legal structures are identified. To achieve the 55% greenhouse gas reduction objective for 2030, all existing legal climate and energy acts are planned to be tightened by amending their targets as well as scopes and revising their structures. The suggested reforms concern the existing EU emissions trading system, effort sharing system between the Member States, energy taxation, energy efficiency and renewable energies. Additionally, the implementation of new instruments, such as the second EU emissions trading system for the sectors buildings and transport, the Carbon Border Adjustment Mechanism and the Social Climate Fund, is proposed. The design of the package shows that the Commission still generally pursues a climate legislation characterized by a mix of instruments and policies being both price based and regulatory. So, even though the major proposed change—the introduction of a second separate emissions trading system—would strengthen the role of carbon pricing, the Commission still relies on a mix of instruments without defining a leading instrument.

INTRODUCTION

On 14 July 2021, the European Commission presented the ‘Fit for 55’ package.¹ Initially consisting of 16 legislative and strategic proposals², its purpose is the implementation of the European Union’s (EU) Green Deal³ in general and the raised 55% greenhouse gas (GHG) reduction objective of the newly adopted EU Climate Law⁴ specifically.⁵ After a brief overview on the EU Green Deal and the new EU Climate Law, the following contribution focuses on a presentation of the ‘Fit for 55’ package that suggests reforms to the existing EU legislation on climate and energy by proposing the tightening of the EU’s sub-targets regarding climate protection and energy and making existing legal acts more effective. The legislative package also contains entirely new, supplementary legislative proposals to achieve the new GHG reduction target of 55% by 2030 compared with 1990.

This contribution identifies and summarizes the legal changes and key policy options proposed within this broad legislative package. The Commission’s proposal is assessed as a comprehensive package with proposals upgrading the instruments already existing as well as implementing new ones. Its changes are described as deep, profound and challenging. However, a fundamental change of the pattern concerning climate and energy legislation could not be determined. The Commission is found to still be relying upon a mix of instruments and policies without defining one as a leading instrument.

PRE-EXISTING CLIMATE AND ENERGY LEGISLATION, EU GREEN DEAL AND EU CLIMATE LAW⁶

Over the years, the EU has developed a vast set of legislative acts dealing with the topics of energy and climate change.⁷ While the Regulation on the Governance of the Energy Union and Climate Action (Governance Regulation)⁸ and the newly adopted EU Climate Law mostly determine overarching objectives or serve the purposes of reporting and monitoring, other legal acts, such as, e.g. the EU Emissions Trading Directive (ETS Directive)⁹, the Effort Sharing Regulation (ESR)¹⁰, the Renewable Energy Directive (RED II)¹¹, the Energy Efficiency Directive (EED)¹², the Regulation on Land Use, Land Use Change and Forestry (LULUCF Regulation)¹³ or the Energy Taxation Directive (ETD)¹⁴ provide for sub-targets and/or instruments in order to operationalize the achievement of the overarching objectives.

Overarching objectives, monitoring and reporting: EU Climate Law and Governance Regulation

Until 2021, the EU’s overarching objective of a 40% GHG reduction in 2030 compared with 1990 was only determined by an endorsement of the European Council¹⁵ in 2014. This changed with the EU Climate Law of 2021¹⁶, which is one of the first legal outputs of the EU Green Deal of 2019: since its entry into force on 29 July 2021¹⁷, the EU itself is bound by the objective of climate neutrality in 2050.¹⁸ The EU Climate Law also establishes a binding commitment of the Union and its Member States to achieve a 55% net GHG reduction in 2030 compared with 1990.¹⁹ It additionally contains a qualitative objective to improve adaptation to climate change.²⁰

The EU Climate Law not only prescribes new respective raised targets regarding climate change mitigation and adaptation, but it also adapts the EU’s Governance Regulation²¹ to some of the aforementioned objectives.²² The Governance Regulation is the Union’s main legal instrument to monitor progress regarding the Union’s overall GHG reduction objective as well as progress towards the objectives in the areas of renewable energies and energy efficiency.²³ Thus, the Governance Regulation commits the Member States to regularly report on policies and measures related to those objectives in their National Energy and Climate Plans (NECPs).²⁴ The Commission regularly evaluates the Member States’ NECPs and gives recommendations in case of insufficient commitments or progress of the Member States.²⁵ The EU Climate Law changes the Governance Regulation to the extent that the overall climate neutrality objective is inserted into the Governance Regulation as a new additional basis for reporting and evaluation.²⁶ In contrast, the raised 55% GHG reduction objective is not inserted in the same manner: the EU Climate Law especially does not explicitly change the Governance Regulation’s definition of ‘the Union’s 2030 targets for energy and climate’.²⁷ In the context of the Governance Regulation, the former Union’s 2030 reduction target is only updated to the 55% GHG reduction target when reading Art. 2 No. 11 Governance Regulation in conjunction with recital (26) of the EU Climate Law, which describes the new EU climate target for 2030 as a ‘follow-up target’ to the target defined in Art. 2 No. 11 Governance Regulation.²⁸

In summary, the EU Climate Law establishes a new overarching objective for the Union’s architecture of energy and climate legislation with the climate neutrality objective for 2050. As a first step on the path to climate neutrality, the 2030 GHG reduction objective has been raised to 55%—a binding commitment for the EU and all Member States, even though it has neither been transferred as consequentially as possible into the Governance Regulation nor been divided among the Member States.

Consequences for the EU climate and energy instruments and sub-targets

An Impact Assessment of the EU Commission of 2020 has already shown the significant need for change regarding the other European legal instruments constituting the Union’s architecture of energy and climate legislation in the face of the raised 2030 target.²⁹ Of the several options presented and analysed within the Impact Assessment and following her initial preference³⁰, the EU Commission has chosen to suggest reforms to many legal instruments and adding new ones³¹, i.e. suggesting a policy mix for achieving the Union’s overarching and raised targets.³² Thus, the ‘Fit for 55’ package proposes reforms to all of the main pillars of the EU’s legal climate and energy architecture, i.e. the ETS Directive, the ESR, the LULUCF Regulation, the RED II, the EED, as well as the ETD. With the proposal for a second emissions trading system for the transport and building sectors (ETS-2) and a Carbon Border Adjustment Mechanism (CBAM), the Commission furthermore suggests adding entirely new instruments to the existing policy mix.

THE ‘FIT FOR 55’ PACKAGE

The subsequent presentation of the Commission’s legislative package is structured by means of the instruments to be used: it starts with the presentation of how the existing EU ETS is proposed to be strengthened and the proposal for the introduction of a new supplementary second allowance trading system at EU level, followed by a description of the suggested amendments to the ESR as well as to the ETD and afterwards discusses the proposals for amendments and the adoption of new complementary regulatory measures, such as the EED and the RED II as well as the proposed amendments to the LULUCF Regulation. It ends with an outlook on the expected timeframe.

Amendments to the EU ETS and the introduction of a new ETS for the buildings and transport sectors

The proposed amendments to the ETS Directive³³ initially provide for a strengthening of the existing EU ETS. With the proposal for the introduction of a second emissions allowance trading system separate from the EU ETS for the buildings and transport sectors (ETS-2), the EU Commission additionally suggests the introduction of a new instrument into the architecture of EU climate and energy legislation. The changes to the ETS Directive go hand in hand with amendments and new proposals for accompanying legal acts that serve to prevent carbon leakage as well as a socially acceptable design of the pricing instrument.³⁴

Amendments to the already existing EU ETS

The proposals to strengthen the existing EU ETS by amending the ETS Directive aim for an overall GHG emission reduction of 61%—instead of the current 43%³⁵—by 2030 compared with 2005 in the sectors covered by the scope of the ETS Directive.³⁶ The main suggestions to strengthen the EU ETS concern the extension of the scope of the ETS Directive and measures to further the reduction of allowances and, thus, to increase the allowance price. An amendment to the Market Stability Reserve Decision (MSR Decision)³⁷ and a proposal for a CBAM accompany the planned amendments to the ETS Directive.

Extension of scope

According to the Commission’s proposals, the scope of the EU ETS should continue to cover essential areas of the industry and energy sectors as well as aviation³⁸ but should be extended to all intra-EU and, in part, extra-EU maritime transport.³⁹ Therefore, Chapter II of the ETS Directive is proposed to be recast. After a phase-in period of four years, i.e. from 2026 onwards, 100% of intra-EU maritime emissions and 50% of extra-EU maritime emissions would be covered by allowance trading.⁴⁰ Intra-EU maritime emissions are those that occur at berth in a port of an EU Member State or on a voyage between EU Member States.⁴¹ Extra-EU maritime emissions are defined as those emissions generated on voyages between the EU and third countries.⁴² During the phase-in period, the shipping companies’ obligation to surrender allowances for reported emissions would increase annually (20% in 2023, 45% in 2024 and 70% in 2025) and reach 100% in 2026.⁴³ In accordance with the expansion of the scope, the number of allowances available within the market is proposed to be increased by 79 million.⁴⁴

Reduction of allowances

A significant contribution to the GHG reduction performance of the EU ETS can be seen in the proposal of raising the annual linear reduction factor for the allowances in circulation from 2.2% to 4.2%.⁴⁵ The linear reduction factor of 4.2% is to be applied to the entire EU ETS—including emissions resulting from air transport in the future.⁴⁶ An increase in the allowance price—as a significant driver of the emission reduction performance of the EU ETS—is also proposed to be brought about by readjusting the total quantity of allowances in circulation in the aviation sector.⁴⁷ Additionally, the quantity of free allowances in the aviation sector is suggested to be successively reduced by 25% annually—starting in 2024 until in 2027, all allowances shall be auctioned.⁴⁸

MSR and CBAM

In order to strengthen and effectuate the EU ETS, the amendments to the ETS Directive are accompanied by the proposal for a single amendment to the MSR Decision⁴⁹ and in particular the proposal for a CBAM⁵⁰.

As the MSR extracts surplus allowances from the market, it supports the climate change mitigation purpose of the EU ETS by preventing too low allowance prices via a reduction of supply.⁵¹ The proposed amendment stabilizes the extraction rate at 24% of the total number of allowances in circulation after 2023, instead of reverting to 12% in 2023 as foreseen in Art. 1 para. 5 MSR Decision.⁵²

In the context of on-going debates on a possible design of a CBAM compatible with international trade law,⁵³ the EU Commission proposes to introduce the CBAM as a regulation directly applicable in the Member States and with the intention of serving the purpose of counteracting the risk of carbon leakage.⁵⁴ ‘Carbon leakage occurs if, for reasons of costs related to climate policies, businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less GHG emissions intensive products.’⁵⁵ Thus, the Commission also includes the protection of the Union’s internal market from imports of more GHG intensive products from third countries into its definition of carbon leakage. Within the scope of the CBAM, a regime replicating the domestic EU ETS regime is envisaged to be established for importers from third countries.⁵⁶ They are going to be obliged to purchase CBAM certificates based on the embedded emission intensity of products imported into the EU.⁵⁷ Identifying the number of CBAM certificates to be surrendered by the national climate authorities tasked with administrating the CBAM regime will occur in two different ways. On the one hand, the importers of selected material goods (listed in Annex I with the exception of electricity)⁵⁸ will receive a number of CBAM certificates corresponding to the emission intensity of the imported products based upon an appropriate declaration issued by the importer and calculated using the method described in Annex III.⁵⁹ On the other hand, as the basis for surrendering declarations for imported electricity a standard value is suggested. It is proposed to be defined based on specific default values for a third country, a group of third countries or a region within a third country.⁶⁰ If these values are not available, the determination will take place based on EU default values for comparable electricity production in the EU.⁶¹

As in the EU ETS, importers are subject to an allowance levy per ton of CO₂ equivalent under the CBAM.⁶² In order to ensure its effectiveness as a carbon leakage measure, the price per allowance shall reflect the weekly recalculated average price of the EU ETS allowance price.⁶³ Parallel to the implementation of the new carbon leakage instrument, the free allocation measure currently used for the purpose of preventing carbon leakage in the EU ETS regime⁶⁴ is going to be phased out gradually. The free allocation of allowances is therefore proposed to be reduced by 10% within a 10-year transitional phase starting in 2026, until free allocation for the production of products covered by the CBAM in the EU ETS ceases in 2036.⁶⁵

New separate ETS for the buildings and transport sectors

A major addition to the current architecture of the EU’s energy and climate legislation can be seen in the proposal to introduce a second separate emissions trading system to regulate the buildings and transport sectors (ETS-2)⁶⁶. While these sectors are currently subject to the effort sharing of the ESR,⁶⁷ the Commission proposes an additional, future coverage by a new emission trading system⁶⁸ and, thus, a ‘double regulation’ of the buildings and transport sectors.

Amendment to the EU ETS Directive

The introduction is to take place by adding an extra Chapter IVa to the existing ETS Directive, so that it will contain both the established EU ETS and the new ETS-2. Nonetheless, the ETS-2 system will be a self-standing one,⁶⁹ running in parallel to the established EU ETS. In consequence, allowances from the latter will not be tradable with those of the new ETS-2. By October 2031, however, the Commission provides for a review of whether the two separate trading systems can be merged.⁷⁰ The two trading systems are interlinked by reference to the existing monitoring, reporting and verification obligations of the established EU ETS.⁷¹ But the ETS-2 significantly differs from the EU ETS in applying an upstream approach:⁷² Obligations are not directly imposed on emitters but linked to the activity of releasing fuels for consumption in the sectors of buildings and road transport.⁷³ The ETS-2 allowances are to be auctioned exclusively and the EU Commission abstains from suggesting free allocation at all.⁷⁴ As in the EU ETS, allowances are valid unlimitedly.⁷⁵

The Commission proposes an introduction in 2025, with the obligation to surrender allowances arising for the first time in 2026.⁷⁶ The annual linear reduction factor is proposed to be set at 5.15% from 2026 to 2028 and at 5.43% from 2028 onwards.⁷⁷

Amendment to the MSR Decision

The proposal for the introduction of the ETS-2 is accompanied by further amendments to the MSR Decision⁷⁸ with the purpose of introducing a separate MSR for the ETS-2.⁷⁹ Generally, the MSR works both ways, as allowances can be transferred from the market into the reserve and vice versa. The new reserve is proposed to be endowed with an initial holding of 600 million allowances.⁸⁰ In case the threshold of 440 million allowances being in circulation within the ETS-2 is exceeded, an amount of 100 million allowances shall be transferred into the reserve.⁸¹

In comparison to the design of the mechanism for releasing allowances in the MSR of the EU-ETS, the one of the ETS-2 is more complex. A distinction is made between three market scenarios: if the total number of allowances in circulation is below 210 million, 100 million allowances are taken from the reserve and added to the volume of allowances for auctioning.⁸² If the average allowance price of the last three months is twice as high as the average allowance price of the past 6 months, the Commission must release 50 million allowances from the MSR by means of a delegated act.⁸³ If the average allowance price of the past 3 months is three times higher than the average price of the previous 6 months, 150 million allowances must be released from the reserve.⁸⁴ While the first scenario can cause a readjustment by triggering the MSR mechanism immediately, releasing allowances from the reserve in the second and third scenario is only possible after 9 months of operation.⁸⁵ Thus, in contrast to the MSR of the established EU ETS, the new MSR provides distinct legal consequences in terms of the price-based triggers: allowances will be transferred back into the market if specific conditions, i.e. a specifically determined increase in the average allowance price, are fulfilled⁸⁶ instead of only convening a meeting of a committee established by the Commission.⁸⁷ The differentiation between the aforementioned scenarios serves the purpose of addressing ‘different levels of excessive price increase’ with correspondingly ‘different degrees of intervention’.⁸⁸ So, the design of the new MSR reflects the Commission’s concern about a too high CO₂ price within the ETS-2⁸⁹, which is a significant difference to the situation in the existing EU ETS, in which the MSR should foremost counteract the surplus of allowances and in this manner prevent a too low carbon price.⁹⁰ Furthermore, the new MSR is to be designed as a ‘rule-based automatism’,⁹¹ which, once the triggering conditions are met, would leave hardly any discretionary powers to the Commission.

The Social Climate Fund

Being aware of the fact, that implementing the new ETS-2 is going to have economic and social impacts, the Commission proposes to establish an additional financial support mechanism by means of a regulation.⁹² Especially, an increase of costs usually born by households is expected as far as fuel suppliers are going to be subjected to obligations under the new emission trading system and will most likely pass on their additional costs to the consumers.⁹³ Thus, the establishment of the ‘Social Climate Fund’, operating from 2025 to 2032, is proposed to address the social impacts arising from including the sectors of buildings and road transport into an emissions trading system.⁹⁴ The financial volume planned amounts to 23.7 billion euros for the period of 2025 to 2027 and 48.5 billion euros for the years of 2028 to 2032⁹⁵, which, according to the Commission’s forecast, corresponds to ~25% of the expected revenues from the ETS-2.⁹⁶ The distribution of the funds to the Member States is linked to the new planning instrument of Social Climate Plans.⁹⁷ Member States are supposed to hand in the Social Climate Plans when updating their NECPs in June 2024.⁹⁸ They are especially asked to provide for specific measures and investments to address impacts on vulnerable households, transport users and micro-enterprises.⁹⁹ By means of these plans the Commission pursues two objectives:¹⁰⁰ the Member States should be enabled to, firstly, provide temporary income support to vulnerable groups of their population and, secondly, they should be supported carrying out their measures and investments intended to reduce reliance on fossil fuels. Correspondingly, measures providing temporary direct income support as well as measures and investments incentivizing the decarbonization of buildings and their energy efficiency are eligible for funding.¹⁰¹ Additionally, if Member States take action in decarbonizing the transport sector, they may be supported by the Social Climate Fund.¹⁰²

The procedural requirements concerning the plans are aligned to those under the Governance Regulation: they must be submitted by the end of June 2024 as part of the update of the NECP under the procedure and timeline envisaged by the Governance Regulation. In terms of the substantive requirements, the plans have not only to include specific measures and investments to meet the objectives but also a timeframe for their implementation and impact assessments with regard to the likely effects of increasing prices on households as well as estimations concerning the costs of the projected actions.¹⁰³ The Commission is going to assess the submitted plans in accordance with the criteria of ‘relevance, effectiveness, efficiency and coherence’ and in case of a positive assessment, adopts an implementing decision.¹⁰⁴ If the Commission rejects the plan, the Member State concerned should, according to the proposal, update its plan.¹⁰⁵ The actual payments of financial allocations to the Member States shall only be made when the relevant agreed milestones and targets indicated in the Social Climate Plans are completed.¹⁰⁶ Whereas this proposed financial support is not designed to cover all costs of the Social Climate Plans, because the Member States must bear half of the estimated total costs themselves, the EU Commission suggests that the Member States shall use the revenues of the ETS-2 to cover their half of the costs.¹⁰⁷

Amendments to the ESR

Likewise, an increase of the ESR’s contribution to the 2030 GHG reduction target is planned. The amendments proposed by the Commission provide for an increase of the common EU-wide GHG reduction target in the sectors of buildings, transport, agriculture and waste management from currently 30% up to 40% compared with 2005 levels to be achieved by 2030.¹⁰⁸ In line with this purpose, the Commission, by applying the same methodology used when the ESR was adopted in 2018¹⁰⁹, also plans to revise the reduction targets for the Member States.¹¹⁰ Therefore, the proposed new national targets have been determined in consideration of the different capacities and cost-efficiency opportunities in Member States.¹¹¹ In accordance with the aforementioned criteria, Germany, for instance, will need to reduce its emissions progressively until it reaches −50% in 2030 compared with 2005 levels.¹¹² However, crucial for the design of the new architecture of EU energy and climate legislation is that one specific amendment has not been proposed: even though the new ETS-2 is supposed to cover and regulate the buildings and transport sectors, the proposal for the amended ESR Regulation does not provide for any adjustment of its scope to this change. In consequence, these sectors shall, according to the proposal made, also remain within the scope of the ESR.¹¹³ Hence, the buildings and transport sectors would be covered by the ESR as well as the ETS-2. The EU Commission considers a reduction of the scope of the ESR as premature as long as the ETS-2 has not been tested and evaluated.¹¹⁴

Additionally, inland water navigation is supposed to remain within the scope of the ESR while being—partly—transferred into the EU-ETS-system at the same time.¹¹⁵ But, as the EU ETS bases the coverage of maritime navigation on the scope of Maritime MRV Regulation¹¹⁶^,¹¹⁷ a significant number of ships used for inland water navigation would in fact not be covered by the EU ETS, but still by the ESR.¹¹⁸ Thus, the overlap between the scope of the EU-ETS and the ESR would not nearly be as significant as the overlap between the ESR and the ETS-2.

Recast of the ETD

The Commission’s ‘Fit for 55’ package also provides for a recast of the ETD.¹¹⁹ Substantial changes concern the scope of the Directive on the one hand and adjustments of the minimum levels of taxation on the other hand. Firstly, the proposal extends the Directive’s scope by abolishing the current tax exemptions for energy products and electricity used in intra-EU shipping (including the fisheries sector) and intra-EU air transport.¹²⁰ Secondly, the proposal connects taxation ‘to the energy content of the energy products and electricity, coupled with their environmental performance derived from the overall EU framework’.¹²¹ Thus, instead of using the volume as the basis for determining the minimum levels of taxation for energy products and electricity covered by the ETD’s scope¹²², the energy content and the ‘environmental performance’ are going to be used. The latter is described as ‘the specific characteristics of the different products and their treatment under the current ETD and in the Member States, the expected evolution of the EU energy mix and it is consistent with the other proposals in the ‘Fit for 55’ package (in particular the proposals to revise the EU ETS and RED II)’.¹²³

Based on this definition, the Commission simplifies the determination of the minimum taxation rates by categorizing energy products and electricity in Tables A, B, C and D of the ETD’s Annex I and ranking them according to their environmental performance.¹²⁴ Within the proposal, four categories of minimum taxation rates are each set for motor fuels (Table A)¹²⁵ and heating fuels (Table C).¹²⁶ Significantly lower minimum taxation rates are set in Table B of Annex I for motor fuels that are used for special purposes (e.g. in the agricultural sector).¹²⁷

The example of the minimum taxation rates for motor fuels in Table A can be used to illustrate the new taxation structure provided for in the Commission’s proposal: the first group of Table A contains conventional fossil fuels (e.g. petrol and gas oil), which are subject to the highest minimum taxation rate.¹²⁸ This rate serves as the reference for the rates of the subsequent groups. The second group, which covers ‘fuels that are fossil based but are less harmful’ than the motor fuels of the first group and can potentially contribute to decarbonization (e.g. natural gas, hydrogen), is subject to a minimum taxation rate of two thirds of the reference rate.¹²⁹ This rate is valid for a transitional period of 10 years; then the full reference rate is applicable.¹³⁰ The third group contains ‘sustainable but not advanced biofuels’, for which a minimum taxation rate of half of the reference rate is set.¹³¹ The last group covers advanced fuels (e.g. biogases and hydrogen from renewable sources), for which the minimum taxation rate is much lower than the reference rate.¹³²

Electricity shall always be subject to the lowest minimum taxation rate according to Table D of Annex I.¹³³ The proposal suggests to generally state minimum taxation rates in euros per gigajoule in the future.¹³⁴

Amendments to and adoption of new complementary regulatory measures

In the context of revising the whole architecture of the EU’s energy and climate legislation, the Commission also proposes to tighten existing regulatory acts as well as to adopt new acts with both cross-sectoral as well as only sector-specific effects.

Regulatory acts with cross-sectoral effects

The cross-sectoral regulatory acts include the regulation of energy efficiency within the EED—especially concerning the energy, industry and buildings sectors—and of renewable energies within RED II—especially concerning the energy, industry, transport and buildings sectors. The intended amendments particularly provide for a tightening of the existing targets and setting new ones.

EED

The proposal to amend the EED¹³⁵ provides for an increase of the Union’s binding energy efficiency target for final and primary consumption of at least 9% in 2030 compared with the projections of the 2020 reference scenario.¹³⁶ Expressed in absolute numbers, the Union’s final energy consumption shall not amount to more than 787 Mtoe and the Union’s 2030 primary energy consumption shall not amount to more than 1023 Mtoe in 2030.¹³⁷ Thus, even though the target is suggested to be expressed in a different manner in comparison to the current EED,¹³⁸ i.e. the percentage of the reduction target is significantly reduced from 32.5% to 9%, the proposed new target would represent raised ambitions compared to the target, which is in place now due to the change of the baseline year from 2007 to 2020.¹³⁹ To achieve this, the Commission plans to oblige Member States to set national contributions, instead of national targets in their NECPs, using the new calculation method from Annex I of the Directive.¹⁴⁰ In addition, the Commission proposes a gap-filling mechanism in case the contributions notified by the Member States are assessed as insufficient.¹⁴¹ This mechanism is designed as aligned but additional to the mechanisms under the Governance Regulation.¹⁴² Resulting from this, the national contributions would remain only indicative for the time being. Only in the context of adapting the already binding targets of the Member States, the Commission proposes to set one additional binding target: currently, the Member States are obliged to achieve 0.8% of new annual savings in final energy consumption between 2021 and 2030.¹⁴³ According to the Commission’s proposal, this obligation should only be applicable until 2023.¹⁴⁴ Starting from 2024, 1.5% new savings in annual final energy consumption have to be achieved.¹⁴⁵

Furthermore, the Commission proposes to legally enshrine the ‘energy efficiency first’-principle, which contains the obligation to take energy efficiency solutions into account in planning, policy and investment decisions in all sectors with an impact on energy demand, including social housing.¹⁴⁶ In light of this principle, Chapter II of the Directive is fundamentally revised and aligned to a stronger regulation of the public sector.¹⁴⁷ In line with the new heading of an ‘exemplary role of public sector’, new Member State targets are proposed, e.g. the obligation to reduce the energy consumption of public services and facilities by at least 1.7% annually compared with the year the amended EED enters into force minus two additional years.¹⁴⁸ According to this proposal, the public sector would also be obliged to always take energy efficiency into account when awarding contracts.¹⁴⁹

RED II

The proposals for amendments of RED II also provide for a tightening of the existing and the setting of new targets.¹⁵⁰ According to the Commission’s proposals, the current EU target of at least a share of 32% of energy from renewable sources in the Union’s gross final consumption of energy in 2030 is raised to 40%.¹⁵¹ This overarching target is proposed to be complemented by additional EU-wide and national sub-targets, some of which are new and aim to promote the production and use of renewable energies in certain sectors; others already exist and are only planned to be raised. This includes the following in particular:

The introduction of a new indicative Union target of 49% of renewable energies in buildings by 2030 with the purpose of mainstreaming renewable energy in buildings.¹⁵² To reach this target ‘Member States shall set an indicative target for the share of renewables in final energy consumption in their buildings sector in 2030’¹⁵³ consistent with the Union’s target in their NECPs.¹⁵⁴ Their calculation is supposed to be done by using the methodology set out in Art. 7 and their expression should be made in terms of a share of national final energy consumption.¹⁵⁵
A new national indicative target to annually increase renewable energy used for final energy and non-energy purposes in the industry sector by 1.1% as well as a binding target for renewable fuels of non-biological origin used as feedstock or as an energy carrier with the purpose of mainstreaming renewable energy in industry.¹⁵⁶ The latter amounts to 50%.¹⁵⁷ The implementation of the first target is also to be provided by its integration into the NECPs.¹⁵⁸
While it is proposed to reduce the Member States’ annual target for the share of renewable energy in the heating and cooling sector from 1.3% to 1.1%¹⁵⁹, it is at the same time proposed to make it binding, whereas currently Member States are only obliged to ‘endeavour to increase the share of renewable energy in that sector’.¹⁶⁰
New Member State targets in the transport sector, according to which Member States are obliged to reduce GHG emissions by 13% by 2030 compared with the baseline set out in Art. 27 by increasing the amount of renewable fuels.¹⁶¹ To this end, gradually increasing sub-targets are set—i.e. the share of advanced biofuels and biogas is to be increased to at least 0.2% in 2022, 0.5% in 2025 and 2.2% in 2030 and the share of renewable fuels of non-biological origin is to be increased to at least 2.6% in 2030.¹⁶²

In addition, the proposal aims to foster the cross-border cooperation between the Member States: it obliges them to establish a cross border pilot project to produce renewable energy with at least one other Member State within 3 years.¹⁶³ Furthermore, all coastal states are obliged to jointly determine the amount of offshore renewable energy to be generated within each sea basin by 2050 as well as intermediate steps in 2030 and 2040.¹⁶⁴ The latter must be described in the respective NECPs.¹⁶⁵

Sector-specific regulatory acts

Sector-specific regulatory legal acts are intended to describe EU legislation concerning energy and climate, which primarily contains targets, emissions standards and limits serving exclusively to regulate a specific sector. The Industrial Emissions Directive¹⁶⁶, e.g. only regulates the industrial sector, or the Energy Performance of Buildings Directive¹⁶⁷ only applies to the buildings sector. However, the Commission’s amendments and new proposals within the framework of the ‘Fit for 55’ package are—so far—limited to the transport sector.

First of all, an amendment to the Regulation on CO₂ emission performance standards for new passenger cars and new light commercial vehicles¹⁶⁸ is envisaged.¹⁶⁹ It mainly increases the CO₂ reduction targets for 2030 and further adds a new target for 2035: thus, the 2030 CO₂ reduction target for newly registered passenger cars is proposed to be increased from 37.5% to 55% and for light commercial vehicles from 31% to 50% compared with year 2021.¹⁷⁰ For year 2035, a CO₂ reduction of 100% compared with year 2021 is envisaged for new registrations of both passenger cars and light commercial vehicles¹⁷¹, which is equivalent to a de facto ban of internal combustion engines from year 2035 onwards.

This fundamental change is accompanied by the Commission’s proposal to redesign the Directive on the deployment of alternative fuels infrastructure¹⁷², thereby changing its legal nature to a regulation, and a strategic roll-out plan, which shall support the rapid deployment of alternative fuels infrastructure.¹⁷³ Binding requirements for the rollout of public charging and hydrogen refuelling stations, also covering technical specifications for interoperability, are proposed for electric vehicles¹⁷⁴, hydrogen vehicles¹⁷⁵ and liquefied natural gas vehicles.¹⁷⁶ Furthermore, the proposal obliges Member States to ensure the installation of a minimum shore-side electricity supply for certain seagoing ships and for inland waterway vessels¹⁷⁷ as well as an appropriate number of liquefied natural gas refuelling points in maritime TEN-T ports.¹⁷⁸ Additionally, the Commission wants to foster the infrastructure for electricity supply for general aviation in the aviation sector and thus sets new targets for the supply of electricity to stationary aircraft.¹⁷⁹

The already existing reporting mechanism of the ‘National Strategy Frameworks for Alternative Fuels and the Corresponding Infrastructure’, which have to be submitted by the Member States, is proposed to be continued and to be expanded: although these strategies are not planned to be integrated into the NECPs, the proposal imposes a work, review and monitoring process upon them¹⁸⁰, which is comparable to the one applying to the NECPs to some extent. Under this regime, the strategy framework would have to be submitted to the Commission in draft form by January 2024 and would have to contain national targets, policies and measures that are oriented, inter alia, towards the expansion targets set out in Articles 3, 4, 6, 8–12.¹⁸¹ The Commission shall assess the objectives, policies and measures within 6 months and may make recommendations, which the Member States shall duly take into account.¹⁸² If a Member State concerned does not address a recommendation or a substantial part thereof, it shall provide a written explanation.¹⁸³ The final strategy frameworks must be submitted to the Commission by January 2025.¹⁸⁴ Comparable to the process of the NECPs according to the Governance Regulation is the iterative process between the Member States and the Commission―in case of the alternative fuels infrastructure used with the purpose of developing ‘concise planning to deploy infrastructure’ and by these means ‘meet the targets as laid down in the Regulation’.¹⁸⁵

In addition, the Commission also presented two proposals for new regulations concerning the fuel transition to renewable and low carbon fuels and substitute sources of energy in the sectors of air transport (ReFuelEU Aviation)¹⁸⁶ and maritime transport (FuelEU Maritime).¹⁸⁷ ReFuelEU Aviation pursues to ensure a level playing field for sustainable air transport ‘while increasing the uptake of sustainable aviation fuels by aircraft operators and the distribution of sustainable aviation fuels at Union airports’.¹⁸⁸ Therefore, within the proposal for this regulation, minimum targets for the provision of sustainable and synthetic fuels in proportion to the total fuel volume at EU airports are set.¹⁸⁹ Additionally, it puts airport operators under the obligation to provide for the necessary infrastructure and contains provisions on Member State enforcement.¹⁹⁰ Inversely, FuelEU Maritime sets a limit to the annual GHG intensity of the energy used on-board of ships, which increases in 5-year intervals starting in 2025.¹⁹¹ It also provides for requirements for the use of on-shore power supply or zero-emission energy at berth for specific ship types¹⁹² and establishes monitoring¹⁹³, reporting¹⁹⁴ and sanctioning obligations.¹⁹⁵

Amendments to the LULUCF regulation

Concerning the LULUCF Regulation, the Commission proposes substantial changes.¹⁹⁶ The proposal not only suggests a quantified EU target for net GHG reductions by 2030 for the first time¹⁹⁷ but also describes major changes to the system and functioning of the regulation starting in 2026: it firstly extends the scope of the regulation and then defines three time periods, whereby for the time period after 2025 quantified targets are set for the first time.¹⁹⁸ From 2021 to 2025 the system of the LULUCF Regulation generally remains as it is, especially by further applying the no-debit rule.¹⁹⁹ The no-debit rule means that within the scope of the LULUCF Regulation the Member States shall ensure that their emissions do not exceed their removals, calculated as the sum of total emissions and total removals on their territory.²⁰⁰ From 2026 onwards, the no-debit rule is planned to be replaced by a quantified net GHG reduction target.²⁰¹ It would oblige the EU to reach net removals of 310 million tons CO₂ equivalent by 2030 based on the GHG inventories of 2016, 2017 and 2018.²⁰² This common target is planned to be distributed among the Member States by defining binding national targets of minimum net removals to be achieved in 2030.²⁰³ To this end, Annex IIa of the proposal already contains national targets for 2030,²⁰⁴ while the Commission plans to adopt interim targets for the years of 2026 to 2029 as implementing acts.²⁰⁵

From 2031 onwards, a further extension of the scope of the LULUCF Regulation to certain GHG emissions of the agricultural sector (which is covered by the scope of the ESR until 2030) is planned, so that a jointly regulated ‘land sector’ would be created.²⁰⁶ For this new sector, the Commission aims to reach climate neutrality by 2035 at the latest.²⁰⁷ The proposal calls upon the Member States to present policies and measures undertaken to reach this objective within their NECPs.²⁰⁸ After 2035, only negative emissions are envisaged.²⁰⁹

Temporal outlook: legislative process and implementation in the Member States

The Commission’s timetable for the legislative process can only be qualified as ambitious and justifies the prognosis that it is almost impossible to meet. This can be exemplified by the proposal to revise the ETD: first of all, a distinction must be made between the ordinary and the special legislative procedure. The ordinary legislative procedure according to Art. 294 TFEU²¹⁰ is initiated by the Commission’s legislative proposals and it can take up to three readings in Parliament and Council, if no agreement between the institutions is reached sooner. Generally, an agreement can be reached after each reading. Even though the council can decide by qualified majority within the ordinary legislative procedure and after its final approval the legal act is deemed to be adopted²¹¹, experience shows that this legislative procedure can take up to two and a half years. Hence, final decisions in the ordinary legislative procedure about the legal acts presented in the package can be expected at the end of 2022 at the earliest. Final decisions in mid or late 2023 might be more realistic. Additionally, this timeline does only apply to the legal acts, which have to be adopted under a special legislative procedure. In case of the ETD, for instance, the legal basis of the Commission’s proposal is Art. 192 para. 2 TFEU, which provides for a special legislative procedure requiring the council’s decision to be taken unanimously. According to the Commission’s proposal, the amended ETD shall be implemented by the Member States until 31 December 2022²¹², in order to allow for the tax to be levied from January 2023 onwards. Taking into consideration that the negotiations on the revision of this Directive taking place in 2015 failed,²¹³ it appears highly doubtful to expect the council to reach an agreement in less than a year. But only if such a tight timeframe was to be kept, the Member States would have sufficient time to implement the Directive by the end of 2022.

A similar concern can be raised for the revision of the ETS Directive, which particularly provides for the introduction of the ETS-2 in 2025 and would establish obligations starting in 2026: implementation by the Member States is envisaged for December 2023²¹⁴, while for the adoption of this legal act the ordinary legislative procedure is applicable. Under the assumption of an adoption of the amendment in mid or late 2023, the deadline for its implementation by the Member States on 31 December 2023 can only be described as more than ambitious.

CONCLUSIONS

Taking the EU Commission’s impact assessment concerning the achievability of the raised 55% GHG reduction objective for 2030 of the newly enacted EU Climate Law into account²¹⁵, the volume of the ‘Fit for 55’ package and the number of legislative and strategic proposals is no surprise. Regarding the fact that within the impact assessment the Commission already seemed to prefer a policy mix for achieving the raised target²¹⁶, it can further be deemed predictable that the Commission did not change its general pattern concerning climate and energy legislation and sticks to a mix of instruments. Nevertheless, the role of carbon pricing would be strengthened within this mix. In consequence, if the legislative package was adopted as proposed, the EU’s architecture of climate and energy legislation would remain characterized by a combination of price-based instruments on one hand and regulatory measures on the other. To this effect, existing legal acts are planned to be tightened by amending their targets, their scope or by revising their structure and new legal acts serving a supportive purpose are planned to be added. Nonetheless, what kind of and how many frictions might arise between the proposed measures remain to be seen. Keeping the buildings and transport sectors within the scope of the ESR during the set-up period of the second emissions trading system (ETS-2)²¹⁷, and, thus, obliging the Member States to take GHG reduction measures in those sectors regardless, for instance, could be deemed as sufficiently justified from the perspective of keeping a safeguard. Whether this is effective in order to raise GHG reduction ambitions in the transport and buildings sectors within only 9 years until 2030 cannot be answered yet. The general problem of an ambitious overarching target in the face of a shrinking amount of time until 2030 also shows itself in the ambitious and possibly unrealistic timetable of the Commission:²¹⁸ The feasibility of, e.g. implementation of the ETD by the end of 2022 or of the ETS Directive by the end of 2023 could at least be called into question.

A general revision of the Governance Regulation is not part of the package, but many proposals include amendments to the regulation or refer to its mechanism of monitoring and reporting.²¹⁹ Its nature as an ‘Umbrella Regulation’²²⁰ remains unchanged, i.e. its function as the main governance mechanism with the purpose of providing overarching control of energy and climate policies, especially on the Member State level and, thus, monitoring the achievement of the sectoral targets—as well as the newly introduced climate neutrality objective—remains.²²¹ Even a certain strengthening of the Governance Regulation can be deduced from the proposals because more actions required from Member States are inserted into the scope of the NECPs²²² or linked to the NECPs, e.g. in case of the Social Climate Plans.²²³ However, the package does not address the structural problems of the Governance Regulation such as the lack of a mechanism with binding effect in case of insufficient ambition of the Member States or the vague character of the Commission’s recommendations with regard to the NECPs.²²⁴ A closer look at those structural problems might be necessary in the near future, especially as the instrument of the NECPs seems to gain in importance.

Authors’ Contributions

S.S.: conceptualization, methodology, supervision; validation, writing [(parts of) original draft]; writing (review and editing).

H.W.: conceptualization, investigation, validation, writing [(parts of) original draft], writing (review and editing).

E.-M.T.: conceptualization, investigation, validation, writing [(parts of) original draft], writing (review and editing).

M.K.: conceptualization, investigation, validation, writing [(parts of) original draft], writing (review and editing).

Conflict of Interest

We declare that there are no conflicts of interest when submitting the article.

Acknowledgements

The article is based on work in the projects ‘Lenkungskreis der Wissenschaftsplattform Klimaschutz’ and the ‘Kopernikus-Projekt ARIADNE’, which are both funded by the German Federal Ministry of Education and Research, the first project additionally by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety.

Footnotes

EU Commission, Press Release, European Green Deal: the Commission proposes transformation of EU economy and society to meet climate ambitions, 14 July 2021, online (https://ec.europa.eu/commission/presscorner/detail/en/IP_21_3541) accessed 23 August 2021.

EU Commission, Website, Delivering the European Green Deal, online. (https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_en) accessed 23 August 2021; another proposal has been added on 16 July 2021.

EU Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, The European Green Deal, 11 December 2019, COM(2019) 640 final; extensively analysed by Ludwig Krämer, Planning for Climate and the Environment: The EU Green Deal, JEEPL 2020, 267–306.

Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No. 401/2009 and (EU) 2018/1999 (‘European Climate Law’), OJ 2021 L 243, 1 (hereinafter EU Climate Law).

EU Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality, 14 July 2021, COM(2021) 550 final, 1 [hereinafter COM(2021) 550 final].

This sub-chapter is based on a publication written in German by Sabine Schlacke, Miriam Köster, Eva-Maria Thierjung, Das ‘Europäische Klimagesetz’ und seine Konsequenzen, EuZW 2021, 620–626 (hereinafter Schlacke/Köster/Thierjung).

For a summary in German, see Sabine Schlacke, Miriam Köster, Helen Wentzien, Eva-Maria Thierjung, Kursänderung der EU: Verschärfung der Klimaschutzziele—Konsequenzen für das deutsche Klimaschutz- und Energierecht, EnWZ 2021, 7–13 (7–8) (hereinafter Schlacke/Köster/Wentzien/Thierjung) and Schlacke/Köster/Thierjung 620 (620–621); for a longer analysis, see, e.g. Kati Kulovesi, Sebastian Oberthür, Assessing the EU’s 2030 Climate and Energy Policy Framework: incremental change towards radical transformation? RECIEL 2020, 151–166 (hereinafter Kulovesi/Oberthür) or Ingmar von Homeyer, Sebastian Oberthür, Andrew J. Jordan, EU climate and energy governance in times of crisis: towards a new agenda, Journal of European Public Policy 2021, 959–979 (961–963).

Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action OJ 2018 L 328, 1, last amended by the EU Climate Law (hereinafter Governance Regulation).

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2013 establishing a scheme for GHG emission allowance trading within the Community and amending Council Directive 96/61 EC, OJ 2003 L 275, 32, last amended by Commission Delegated Decision (EU) 2020/1071 of 18 May 2020, OJ 2018 L 234, 16 (hereinafter ETS Directive).

Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 setting binding national annual GHG emission reduction targets for the period 2021 to 2030 as a contribution to climate action to meet the commitments under the Paris Agreement, OJ 2018 L 156, 26 (hereinafter ESR).

Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources, OJ 2018 L 328, 82, last amended by Commission Delegated Regulation (EU) 2019/807 of 13 March 2019, OJ 2019 L 133, 1 (hereinafter RED II).

Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2019/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC, OJ 2012 L 315, 1, last amended by Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019, OJ 2019 L 158, 125 (hereinafter EED).

Regulation (EU) 2018/841 of the Parliament and of the Council of 30 May 2018 on the inclusion of GHG emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework, OJ 2018 L 156, 1, last amended by Commission Delegated Regulation (EU) 2021/268 of 28 October 2020, OJ 2021 L 60, 21 (hereinafter LULUCF Regulation).

Council Directive 2003/96/EC of 27 October 2003 restructuring the Community Framework for the taxation of energy products and electricity, OJ 2003 L 283, 51, last amended by Commission Implementing Decision (EU) 2018/552 of 6 April 2018, OJ 2018 L 91, 27 (hereinafter ETD).

European Council, Conclusions, 2030 Climate and Energy Policy Framework of 23/24 October 2014—EUCO 169/14.

See above in the introduction; for an analysis of the provisional agreement reached in April 2021, see Matteo Fermeglia, Recent Developments in EU Environmental Policy and Legislation, JEEPL 2021, 313–323 (314–316).

Art. 14 EU Climate Law.

Art. 2 para. 1 EU Climate Law; Schlacke/Köster/Thierjung, 620 (621).

Art. 4 para. 1 EU Climate Law; Schlacke/Köster/Thierjung, 620 (621).

Art. 5 para. 1 EU Climate Law; Schlacke/Köster/Thierjung, 620 (622).

See above at pre-existing climate and energy legislation, EU Green Deal and EU Climate Law; furthermore, see Sabine Schlacke, Simon Lammers, Das Governance-System der Europäischen Energieunion—Erreichung der energie und klimapolitischen Ziele durch weiche Steuerung? EurUP 2018, 424–437 for an in-depth analysis of the Governance Regulation (hereinafter Schlacke/Lammers) and Sabine Schlacke, Michèle Knodt, The Governance System of the European Energy Union and Climate Action, JEEPL 2019, 323–339 (hereinafter Schlacke/Knodt).

Schlacke/Köster/Thierjung, 620 (624).

Art. 1 para. 1 lit. a Governance Regulation; Schlacke/Lammers, 424 (426); Schlacke/Knodt, 323 (326); Kulovesi/Oberthür, 151 (155).

Art. 1 para. 1, Art. 3 para. 1, 2 Governance Regulation; Schlacke/Lammers, 424 (426–428); Schlacke/Knodt, 323 (328–329); Kulovesi/Oberthür, 151 (153–154).

Art. 29–32, 34 Governance Regulation; Schlacke/Lammers, 424 (429–435); Schlacke/Knodt, 323 (329–332); Kulovesi/Oberthür, 151 (154–155).

Art. 13 EU Climate Law; Schlacke/Köster/Thierjung, 620 (624–625).

Art. 2 No. 11 Governance Regulation; Schlacke/Köster/Thierjung, 620 (624).

Recital (26) EU Climate Law; Schlacke/Köster/Thierjung, 620 (624).

EU Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Stepping up Europe’s 2030 climate ambition—investing in a climate-neutral future for the benefit of our people, 17 September 2020, COM(2020) 562 final [hereinafter COM(2020) 562 final]; Commission Staff Working Document, Impact Assessment, Accompanying COM(2020) 562 final, 17 September 2020, SWD(2020) 176 final 1 + 2 [hereinafter SWD(2020) 176 final 1+2]; for an analysis of COM(2020) 562 final, see Ruven C. Fleming, Romain Mauger, Green and Just? An Update on the ‘European Green Deal’, JEEPL 2021, 164–180 (167–170); for an analysis of SWD(2020) 176 final 1+2, see, e.g. Michèle Knodt, Michael Pahle et al., Wegmarken für das EU-Klimaziel 2030—Versteckte Risiken und Chancen der Szenarien der EU-Kommission für den Pfad zur Klimaneutralität, 2021, online (https://ariadneprojekt.de/publikation/wegmarken-eu-klimaziel-2030/) accessed 25 August 2021; Schlacke/Köster/Wentzien/Thierjung 7 (8–12); Agora Energiewende, Ecologic Institute, A ‘Fit for 55’ Package Based on Environmental Integrity and Solidarity: Designing an EU Climate Policy Architecture for ETS and Effort Sharing to Deliver 55% Lower GHG Emissions by 2030, 2021, online (https://static.agora-energiewende.de/fileadmin/Projekte/2021/2021_03_Silver_Buckshot/A-EW_206_Fit-for-55-Package_WEB.pdf) accessed 25 August 2021; SAPEA, Science Advice for Policy by European Academics, A systemic approach to the energy transition in Europe, 2021, 42–65, online accessed 30 August 2021.

COM(2020) 562 final, 2, 12–14, 24; Knodt/Pahle et al., 5 et seq.; Schlacke/Köster/Wentzien/Thierjung, 7 (9).

COM(2021) 550 final, 2–3.

On the development of policy mixes within the EU see Jon Birger Skjaerseth, Towards a European Green Deal: the evolution of EU climate and energy policy mixes, International Environmental Agreements 2021, 25–41.

EU Commission, Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC establishing a system for GHG emissions allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union GHG emission trading system and Regulation (EU) 2015/757, 14 July 2021, COM(2021) 551 final [hereinafter COM(2021) 551 final]; Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC as regards aviation’s contribution to the Union’s economy-wide emission reduction target and appropriately implementing a global market-based measure, 14 July 2021, COM(2021) 552 final [hereinafter COM(2021) 552 final]; aside from those proposals described in detail below, the Proposal for a Decision of the European Parliament and of the Council amending Directive 2003/87/EC as regards the notification of offsetting in respect of a global market-based measure for aircraft operators based in the Union, 14 July 2021, COM(2021) 567 final [hereinafter COM(2021) 567 final] additionally introduces a legal obligation for EU-based airlines for the notification of offsetting data to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) of the International Civil Aviation Organisation by 30 November 2022. As, according to COM(2021) 567 final, 1–2, the Commission predicts this offsetting requirement to be zero for the year of 2021, the proposed amendment so far serves the purpose of formally complying with CORSIA’s rules.

EU Commission, Proposal for a Decision of the European Parliament and of the Council amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union GHG emission trading scheme until 2030, 14 July 2021, COM(2021) 571 final [hereinafter COM(2021) 571 final]; Proposal for a Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism, 14 July 2021, COM(2021) 564 final [hereinafter COM(2021) 564 final]; Proposal for a Regulation of the European Parliament and of the Council establishing a Social Climate Fund, 14 July 2021, COM(2021) 568 final [hereinafter COM(2021) 568 final].

Recital (2) ESR.

Recital (26) ETS Directive Proposal; COM(2021) 551 final, 1, 29.

Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union GHG emissions trading scheme and amending Directive 2003/87/EC, OJ 2015 L 264, 1 last amended by Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018, OJ 2018 L 76, 3 (hereinafter MSR Decision).

Art. 2 para. 1 in conjunction with Annex I ETS Directive.

COM(2021) 551 final, 2, 16–17.

COM(2021) 551 final, 2, 16.

Art. 3 g No. 1 ETS Directive Proposal; COM(2021) 551 final, 41.

Art. 3ga ETS Directive Proposal; COM(2021) 551 final, 42.

Art. 9 ETS Directive Proposal; COM(2021) 551 final, 44.

Art. 9 ETS Directive Proposal; COM(2021) 551 final, 17, 44.

Art. 3c para. 6 Aviation Directive Proposal; COM(2021) 552 final, 15.

Art. 3c para. 5 Aviation Directive Proposal; COM(2021) 552 final, 15.

Art. 3d Aviation Directive Proposal; COM(2021) 552 final, 15.

COM(2021) 571 final.

COM(2021) 564 final.

Cf. recital (4) MSR Decision.

COM(2021) 571 final, 3, 11.

See Michael Mehling et al., Designing Carbon Border Adjustments for Enhanced Climate Action, American Journal of International Law 2019, 433–481, esp. fn. 160 for an overview on the literature; for an analysis in German, see also Ulrich Fahl et al., Industriewende: Wettbewerbseffekte und Carbon Leakage—Neue Politikmaßnahmen im Zuge des Europäischen Green Deal, 2021, online (https://ariadneprojekt.de/publikation/kurzdossier-carbonleakage/) accessed 29 September 2021.

COM(2021) 564 final, 1–2.

Recital (8) CBAM Regulation Proposal; COM(2021) 564 final, 17.

Recital (13), Art. 1 para. 2 CBAM Regulation Proposal; COM(2021) 564 final, 17, 25.

Art. 6, 7, 20–22 CBAM Regulation Proposal; COM(2021) 564 final, 30–32; 37–38.

Annex I CBAM Regulation Proposal: the list of goods only contains the categories of cement, electricity, fertilizers, iron and steel and aluminum, which are again diverted into sub-categories; COM(2021) 564 final.

Art. 6, 7 para. 1, 2, Annex III CBAM Regulation Proposal; COM(2021) 564 final, 30–31.

Art. 7 para. 3; Annex III 4.2. CBAM Regulation Proposal; COM(2021) 564 final, 31.

Art. 20–22 CBAM Regulation Proposal; COM(2021) 564 final, 37–38.

Art. 21 CBAM Regulation Proposal; COM(2021) 564 final, 38.

Art. 10b in conjunction with Art. 10a ETS Directive.

Art. 10a para. 1a ETS Directive Proposal; COM(2021) 551 final, 46.

Chapter IVa ETS Directive Proposal; COM(2021) 551 final, 3, 19–20, 52 et seq.

Art. 2 para. 1 ESR; see for example Kulovesi/Oberthür, 151 (157).

Chapter IVa ETS Directive Proposal; COM(2021) 551 final, 3, 19–20, 52 et seq.

Art. 30a ETS Directive Proposal; COM(2021) 551 final, 3, 19, 52.

Art. 30i ETS Directive Proposal; COM(2021) 551 final, 58.

Art. 30g ETS Directive Proposal; COM(2021) 551 final, 57.

COM(2021) 551 final, 19.

Art. 30a, Annex III ETS Directive Proposal; COM(2021) 551 final, 19, 52.

Art. 30d ETS Directive Proposal; COM(2021) 551 final, 54.

Art. 30g ETS Directive Proposal in conjunction with Art. 13 ETS Directive; COM(2021) 551 final, 57.

Art. 30b para. 1, Art. 30d para. 1 ETS Directive Proposal; COM(2021) 551 final, 52, 54.

Art. 30c ETS Directive Proposal; COM(2021) 551 final, 53–54.

Proposals to amend the MSR Decision are included in COM(2021) 551 final, 58 et seq.

COM(2021) 551 final, 22.

Art. 30d para. 2 ETS Directive Proposal; COM(2021) 551 final, 54.

Art. 1a para. 5 ETS Directive Proposal (Amendment to the MSR Decision); COM(2021) 551 final, 60.

Art. 1a para. 6 ETS Directive Proposal (Amendment to the MSR Decision); COM(2021) 551 final, 60.

Art. 1a para. 7 ETS Directive Proposal (Amendment to the MSR Decision) in conjunction with Art. 30 h para. 1 ETS Directive Proposal; COM(2021) 551 final, 60, 57.

Art. 1a para. 7 ETS Directive Proposal (Amendment to the MSR Decision) in conjunction with Art. 30 h para. 2 ETS Directive Proposal; COM(2021) 551 final, 60, 57–58.

Art. 1a para. 7 ETS Directive Proposal (Amendment to the MSR Decision) in conjunction with Art. 30 h ETS Directive Proposal; COM(2021) 551 final, 60, 57–58.

Recital (57) ETS Directive Proposal; COM(2021) 551 final, 36–37.

For the EU ETS: Art. 29a para. 1 ETS Directive.

Recital (57) ETS Directive Proposal; COM(2021) 551 final, 36–37.

See above at MSR and CBAM.

Recital (57) ETS Directive Proposal; COM(2021) 551 final, 36–37.

EU Commission, Proposal for a Regulation of the European Parliament and of the Council establishing a Social Climate Fund, 14 July 2021, COM(2021) 568 final [hereinafter COM(2021) 568 final].

Cf. COM(2021) 568 final, 2.

Art. 1 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 21, 11.

Art. 9 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 27.

Recital (23) Social Climate Fund Regulation Proposal; COM(2021) 568 final, 17.

Art. 1 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 21.

Art. 3 para. 1 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 23; Art. 14 para. 2 Governance Regulation.

Art. 3 para. 1 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 23.

100

Recital (14) Social Climate Fund Regulation Proposal; COM(2021) 568 final, 15.

101

Art. 5–7, 6 para. 2 lit. a–c Social Climate Fund Regulation Proposal; COM(2021) 568 final, 25–27.

102

Art. 6 para. 2 lit. d–f Social Climate Fund Regulation Proposal; COM(2021) 568 final, 26.

103

Art. 4 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 23–25.

104

Art. 15, 16 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 29–32.

105

Art. 16 para. 3 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 32.

106

Art. 19 para. 1 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 33.

107

Art. 14 para. 1, 2 Social Climate Fund Regulation Proposal; COM(2021) 568 final, 29.

108

EU Commission, Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2018/842 on binding annual GHG emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement, 14 July 2021, COM(2021) 555 final, 17 (Art. 1) [hereinafter COM(2021) 555 final].

109

Recital (11) ESR Proposal; COM(2021) 555 final, 15.

110

Annex ESR Proposal; COM(2021) 555 final, 3.

111

Recital (11) ESR Proposal; COM(2021) 555 final, 15.

112

Annex ESR Proposal; COM(2021) 555 final.

113

COM(2021) 555 final, 8.

114

COM(2021) 555 final, 8.

115

Commission Staff Working Document, Impact Assessment Report, Accompanying COM(2021) 555 final, 14 July 2021, SWD(2021) 611 final, 27 [hereinafter SWD(2021) 611 final].

116

Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and amending Directive 2009/16/EC, OJ 2015 L 123, 55, last amended by Commission Delegated Regulation (EU) 2016/2071 of 22 September 2016, OJ 2016 L 320, 1.

117

SWD(2021) 601 final, Part 1, 51.

118

SWD(2021) 611 final, 27–28.

119

EU Commission, Proposal for a Council Directive restructuring the Union framework for the taxation of energy products and electricity (recast), 14 July 2021, COM(2021) 563 final [hereinafter COM(2021) 563 final].

120

Art. 14, 15 ETD Proposal; COM(2021) 563 final, 40–42.

121

COM(2021) 563 final, 12–13.

122

COM(2021) 563 final, 3.

123

COM(2021) 563 final, 13.

124

Annex I ETD Proposal; COM(2021) 563 final.

125

Art. 7 para. 1, Annex I ETD Proposal; COM(2021) 563 final, 36.

126

Art. 9 para. 1, Annex I ETD Proposal; COM(2021) 563 final, 37.

127

Art. 8 para. 1, Annex I ETD Proposal; COM(2021) 563 final, 37.

128