The Seven Elements of the EU Green Deal You Should Care About

The European Union has unveiled its blueprint for how the continent intends to meet stricter 2030 climate targets on the way to eliminating emissions by mid-century.

From the scores of new rules for cutting carbon across the economy, we summarize below the key elements of the so-called Fit for 55 package -- the EU’s program to slash pollution by at least 55% from 1990 levels.

While several years of negotiation are expected before the planned legislation comes into force, there are major changes afoot for citizens and industry. Here’s a look at some of the biggest -- from the price of a plane ticket to the cost of heating your home.

Emissions Trading System

In plain English: Cutting emissions faster

What it will entail: The EU wants to use its world-leading carbon market to cut enough emissions to reach its new 2030 target. To do so, it plans to quicken the pace at which emission caps shrink each year, forcing manufacturers, power producers and airlines to curtail their carbon footprint more swiftly.

Why it matters: This will be the biggest overhaul of the Emissions Trading System to date, affecting everything from the price of flights to the cost of your electricity bill -- though there’ll be a social fund to help those hardest-hit. Carbon prices briefly jumped on Wednesday following the release of the proposals.

The Seven Elements of the EU Green Deal You Should Care About

Carbon Border Adjustment Mechanism

In plain English: Making sure Europe doesn’t get undercut

What it will entail: In a world-first, the EU plans to introduce an import levy for steel, cement and aluminum produced in other countries with lower environmental standards. Importers will have to buy special certificates at a price linked to the Emissions Trading System -- effectively a penalty for bringing in such goods, which will also include fertilizers and power.

The Seven Elements of the EU Green Deal You Should Care About

Why it matters: The EU knows that an ambitious climate plan comes with its downsides; namely, its companies could be vulnerable to competitors outside the bloc that aren’t subject to the same stringent environmental rules.

This is an effort to address that risk, and has global ramifications, potentially spurring other countries to step up their own climate efforts. Yet the system will be complex -- to ensure it meets global trade rules -- and even the most meticulous design won’t eliminate the risk of diplomatic rifts with EU trading partners, from the U.S. to Russia or China.

Aviation and Shipping

In plain English: Ending exemptions for some of the highest-polluting sectors

What it will entail: The shipping industry will be included in the Emissions Trading System for the first time, while airlines -- already included -- will eventually have to pay for all the pollution their planes produce. The Commission also wants to see more sustainable aviation fuel blended into regular jet fuel, and is proposing a fuel-tax system to impose minimum levies on both shipping and aircraft sectors.

Why it matters: Despite the transport industry’s high emissions, shipping and aviation have been largely exempt from the strictest environmental regulations until now. Low-cost airlines may be particularly hard-hit by the new rules, and passengers could face higher ticket costs as a result. But the regulations could give a boost to the fledgling sustainable-fuel industry, and -- as travelers choose greener options -- to the region’s rail sector.

Car Emission Standards

In plain English: Getting rid of the combustion engine

What it entails: The EU is proposing that emissions from new cars fall by 55% from 2030 and drop to zero from 2035. That marks a significant tightening of current targets, which require only a 37.5% reduction from 2030, though it falls short of the expected 65% cut.

Why it matters: Passenger cars account for about 12% of total EU CO2 emissions, so curbing that output will be key to achieving the bloc’s goals.

The policy will bolster demand for electric models, and carmakers are getting prepared. Volkswagen AG, the region’s largest manufacturer, for example, expects more than 70% of its namesake brand sales to be electric from 2030.

The regulation could also boost infrastructure, since it will require member states to install charging points at regular intervals along major highways.

Renewable Energy Targets

In plain English: Boosting the share of energy from renewable sources

What it entails: The EU’s executive is proposing to raise its renewables target to 40% of the energy mix by the end of the decade, from the existing 32% goal. It’s also aiming to expand the share of clean fuels in transport.

The Seven Elements of the EU Green Deal You Should Care About

Why it matters: Europe needs to double the share of electricity produced from renewable sources to be in with a chance of meeting its goals. The new regulation will be a boon to producers of renewable energy, which has already overtaken fossil fuels as the dominant power source in Europe’s electric grid.

Energy Efficiency

In plain English: Saving more energy

What it will entail: The Commission wants to promote energy efficiency across multiple sectors, from construction and agriculture to transport and communications. It plans to mandate all public bodies to renovate their buildings so that they waste less energy.

Efficiency requirements will have to be considered in public tenders and governments will have to focus on increasing energy savings among vulnerable consumers, helping to alleviate energy poverty.

Why it matters: The EU only achieved its 2020 energy efficiency target due to “exceptional circumstances,” a clear reference to the economic impact of the pandemic. Current national climate and energy plans for 2030 are too weak -- providing for a 29.4% reduction in energy consumption across the continent, below the existing EU objective for 32.5% efficiency.

Land Use and Forestry

In plain English: How the EU plans to absorb more carbon from the atmosphere

What it entails: The EU wants to increase the amount of carbon dioxide absorbed by “sinks” such as forests and grasslands -- to 310 million tons a year by 2030 from around 270 million tons currently.

The bloc is also working on a system of carbon-removal certificates, which would help curb emissions in agriculture by allowing farmers to offset their pollution.

Why it matters: The EU knows it’s not just about reducing emissions, but about absorbing what’s already out there. The proposals would require stronger protections for forests, but the actual cost is relatively low: between five euros and 10 euros for every ton of CO2 soaked up from the atmosphere.

©2021 Bloomberg L.P.

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