Parliament votes on climate and energy package set the stage for RePowerEU plan
With hundreds if not thousands of amendments to choose between, and just ahead of the Commission unveiling its plan to get the EU off fossil fuel imports, MEPs in the European Parliament’s environment committee (ENVI) face quite the start to their week.What’s happening?
On 16/17 May, they will vote on a number of critical files of the European Commission’s Fit for 55 package: the EU Emissions Trading System (ETS) - including the proposal for a new Emissions Trading System for road transport and buildings (ETS2)-, the Carbon Border Adjustment Mechanism (CBAM), the Effort Sharing Regulation (ESR), the Renewable Energy Directive (RED), and the Land Use, Land Use Change and Forestry (LULUCF) Regulation.
Why does this matter?
The climate crisis is accelerating and the window for averting catastrophic impacts on ecosystems and human societies is rapidly closing. And if any further wake-up calls were needed, we also face an energy security crisis, adding to the urgency to wean the EU off fossil fuels. Meeting these challenges means the entire legislative framework under the EU Fit for 55 package needs to be as strong as possible, and avoid sending us down blind alleys. Decisions taken next week will determine emissions and consequences that will be with us for generations to come.
While the Commission’s proposals from July 2021 were inadequate, the co-legislators - starting with the EP’s ENVI committee next week - now have the chance to increase the overall ambition and fix a number of critical details.
WWF and many others have long pointed out that the 55% net emissions reductions target for 2030 is far from sufficient to contribute to keeping temperature rise to below 1.5°C. Instead, the EU must aim for 65% gross emissions reductions and close the many loopholes in the Commission’s proposals. Only with the full toolbox of strong legislation can the EU’s climate and energy objectives be achieved.
Alex Mason, Head of Climate at WWF European Policy Office, said:
“The next decade is critical if we’re to stop runaway climate change, so MEPs have a huge responsibility next week. The choices they make will help determine how quickly we get off fossil fuels, whether the right sorts of renewable energy are deployed and how the impacts on people - especially the most vulnerable in our society - are managed. They need to avoid the false solutions and delays being touted by industry lobbies, and make sure the energy transition doesn’t come at the expense of nature, but instead makes the best use of its ability to sequester carbon.”
What will WWF be looking out for?
Emissions Trading System (ETS) & Carbon Border Adjustment Mechanism (CBAM)
Overall, in order to support the 1.5°C goal, the EU ETS emissions reductions target must be increased to 70% by 2030, up from the inadequate 61% target proposed by the European Commission.
It is clear that resources and energy-intensive industries like cement, steel and chemicals - responsible for as much as 15% of EU greenhouse gas emissions - must decarbonise. However, their emissions levels have barely budged since 2013.
This is mainly because those industries receive free emissions allowances under the EU Emissions Trading System. This means that while other ETS sectors, like power, have had to pay to emit carbon, these resources and energy-intensive industries have not.
Now, with the revision of the ETS, it is critical for free allowances to be phased out so that industry is finally pushed towards decarbonising.
Ending freebies will generate substantial additional auctioning revenues for Member States. These should be invested in energy efficiency, innovation and a socially just transformation.
The proposed Carbon Border Adjustment Mechanism (CBAM), which will put a levy on imports of certain goods from regions with less strict rules on climate, must replace free ETS allowances, not be additional to them.
Camille Maury, Policy Officer at WWF European Policy Office said:
“MEPs must vote to end freebies for industry and spend the money on the green transition instead! Industries like cement, steel and chemicals are stuck in a polluting time warp. The time has come, finally, to phase out free ETS allocations to push polluters towards decarbonisation. The allowances should be auctioned, creating revenues for Member States to be invested in energy efficiency, innovation and a socially just transformation.”
ETS 2 & Social Climate Fund
The ETS in road transport and buildings (ETS 2) has been controversial from the start. This is because the Commission's proposal failed to include the safeguards needed to ensure that the poorest people in society do not carry an unfair burden from carbon pricing. The result was that the money going into the Social Climate Fund (SCF) from the ETS 2 would be needed to compensate for the ETS 2's potential negative impacts - turning the SCF into a safety net against new social harms, rather than reducing existing inequalities and emissions in the respective sectors.
But carbon pricing can play a role to reach the needed emission reductions in transport and buildings if it is embedded in an ambitious policy mix, including targeted support for the most vulnerable.
MEPs need to vote to ensure that the right safeguards are in place: controls on the price and full use of the ETS 2 revenues for decarbonising transport and buildings. A proportion of the revenues must be reserved for a large and transformative SCF, which targets support to the most vulnerable, excludes any support to fossil fuels and starts helping people at least three years beforeETS 2 affects households.
Katie Treadwell, Energy Policy Officer, WWF European Policy Office said:
“The Social Climate Fund must be more than a safety net for households affected by a carbon price. It must enable them to engage actively in reducing their emissions and provide targeted investment as well as income support to the most vulnerable. This means it must increase as carbon prices go up, it must come in earlier than a carbon price and it must not finance any fossil fuels.”
Jonathan Packroff, Climate & Energy Policy Assistant, WWF European Policy Office added:
“Carbon pricing can play a role in decarbonising buildings and road transport, but MEPs must vote to put in place meaningful safeguards, including a limit to the price that can be put on consumers. All revenues that will be generated by emissions trading must be used to help vulnerable citizens and for investments to reduce emissions in these sectors. We also shouldn’t have any illusions: We will need other measures, too, including stricter rules for carmakers and massive investments in heat pumps, district heating and deep renovations.”
Renewable Energy Directive
The Commission proposal included a renewable energy target of just 40%, which is insufficient to protect the climate and build a sustainable future economy - this should be increased to at least 50%.
The EC proposal also failed to tighten the rules on bioenergy. Burning trees and crops for energy increases emissions compared to fossil fuels, either in general or over the timeframe we have available to stop climate change. Yet despite this, these practices will largely still be considered ‘renewable’ and so eligible for public subsidies. This approach flies in the face of science, and risks undermining much of EU climate action.
Finally, WWF is calling for an end to new hydropower plants in the EU, on the grounds that they would make a trivial contribution to cutting GHG emissions but have a huge impact on freshwater biodiversity.
Alex Mason, Head of EU Climate and Energy Policy, WWF European Policy Office said:
“Shifting towards a 100% renewable energy system is essential to stopping climate change and increasing the EU’s energy independence, but the type of renewables is also critical. MEPs must therefore strengthen the proposed law by increasing the overall target, but also stop the scandalous practice of subsidising the burning of trees and crops for energy, and end all new hydropower development in the EU.”
Land Use, Land-Use Change and Forestry (LULUCF)
The revision of the weak LULUCF Regulation is an opportunity to address both climate change and nature loss in unison. The cheapest, most effective, and most readily available way to increase Europe’s carbon sinks is to protect and restore forests, peatlands, and other natural ecosystems and promote changes to farming practices that are a win-win for climate and nature.
However, the Commission has proposed increasing the LULUCF target to only 310 million tonnes, a far cry from the 600 million tonnes that could be achieved and that would be commensurate with the climate emergency we face. The Commission proposals also foresee the use of offsetting in the land use sector to avoid emission cuts elsewhere, for example in sectors covered by the Effort Sharing Regulation, which would directly undermine climate action. We need to increase carbon dioxide removal in addition to cutting emissions, not instead of it.
Alex Mason, Head of EU Climate and Energy Policy, WWF European Policy Office said:
“The cheapest, most effective, and easiest way to increase Europe’s carbon sinks is to protect and restore our forests, peatlands, and other natural ecosystems. This is a win-win for climate and biodiversity and given the climate emergency the European Parliament should double the Commission’s paltry target. But that mustn’t be used to offset emissions elsewhere - net removals in the land use sector are hard to measure and can be reversed, so can’t be treated as tonne-for-tonne equivalent to emissions in other sectors.”
Effort Sharing Regulation (ESR)
The Commission proposed to increase EU countries’ national targets to help reach the collective net 55% by 2030. But the rules on what EU governments have to do to achieve these targets, and show and commit to in their national plans are not tight enough to ensure we get there. Even more so for reaching climate neutrality.
The Commission’s suggestions deepen the climate divide between EU countries, with some Member States responsible for most of the collective climate action, and others left largely off the hook. While it is understandable that EU countries should not necessarily follow the same pace, it must be ensured that all EU countries will converge and reach net zero as soon as possible.
In this negotiation, MEPs should demand that all EU countries set the date by which they will achieve climate neutrality. A proposal for doing this was put forward by the Greens (amendment n° 393).
Romain Laugier, Climate & Energy Policy Officer, WWF European Policy Office, said:
“The EU climate neutrality goal is not much use without a solid plan to achieve it. Yet around half of EU countries have still not decided by when they will reach net zero. The Commission’s proposal failed to strengthen national planning to set those targets, so MEPs must take up this responsibility and require that Member States rapidly decide on their climate neutrality date”.
What’s next?
The EU Parliament’s Environment Committee will vote on these files on 16/17 May, with plenary votes expected for June.
On 18 May, the European Commission is expected to present its REPowerEU legislative proposals underpinning its strategy to wean the EU off Russian fossil fuels from March.
