EU unveils 2030 climate plan, takes aim at CO2 from ships, planes and cars

Quantum Commodity Intelligence – The European Commission on Wednesday unveiled its legislative climate plan as it seeks to plot a pathway to meet its legal obligation to cut emissions 55% under 1990 levels by 2030.

In comparison, by 2019, the EU had cut emissions 24% below 1990 levels by 2019.

"By acting now we can do things another way... and choose a better, healthier and more prosperous way for the future," European Commission President Ursula von der Leyen said at a press conference on Wednesday.

The plan will see the EU tax jet fuel, regulate shipping emissions in the carbon market, and by 2035 effectively ban the sale of new diesel and gasoline cars, under a bundle of draft laws unveiled by the European Commission Wednesday to meet new European Climate Law binding targets.

Shipping, buildings and road transport will be included in cap-and-trade carbon markets for the first time - a move that will likely be contentious among some of the poorer member states who will need to sign off on the plan.

"Nothing we have presented today is going to be easy, It is going to be bloody hard. I know that. It is something we need to do. It is our responsibility," said EU Commission Vice-President Frans Timmermans announcing the plans in Brussels.

The legislative package is enshrined in 12 different policy proposals that will need to be approved by member states and directly elected European parliamentarians before becoming law.

The measures include:

• Reducing the cap for companies and installations including in the EU carbon market to 61% below 2005 levels by 2030 - a figure that means emissions in the scheme have to fall at an chunky rate of 4.2% per year. That compares with the existing goal of a 2.2% linear reduction;
• Broadening the existing scheme to include emissions from shipping from 2023-2025. 100% of emissions from intra-EU shipping will be included in the scheme, where prices are currently over €50/mt, as well as 50% of emissions from all journeys that call at EU ports;
• Phasing out free allowances for the aviation sector, meaning all airlines landing and taking off in the EU will need to purchase carbon permits in the EU scheme to cover all emissions of greenhouse gases. Currently, airlines receive a portion of allowances for free;
• Launching a new carbon trading scheme for buildings and road transport fuels where fuel suppliers will have to buy allowances to put fuel on the market. The cleaner the fuels, the less they pay. A quarter of the revenue from the system (estimated to rise to €72 billion per year) will go into a social climate fund that will be open to all member states to, among other things, provide temporary direct income support, help citizens finance zero emissions heating and cooling systems or purchase a cleaner car;
• Launching new EU aviation regulations that mean from 2025 a minimum of 2% of all aviation fuels should come from sustainable aviation fuel. That figure rises to 5% by 2030 including 0.7% from synthetic fuels, 20% by 2035 including 5% from synthetic aviation fuels, 32% by 2040 including 8% from synthetic fuels, 38% by 2045 including 11% from synthetic aviation fuels and 63% by 2050, including 28% from synthetic fuels
• Implementing new EU shipping regulations that set a maximum limit on the greenhouse gas content of energy used by ships calling at European ports via an index;
• Passing measures to align taxation of energy products across the bloc for the first time, although the introduction is delayed;
• Introducing tighter emission limits for cars, which are expected to mean the end of the sale of internal combustion engine cars by 2035; and 
• Implementing a carbon border adjustment tax, requiring companies from outside of the EU to pay more for importing cement, iron, steel, aluminium, fertiliser and electricity into the bloc.

The package is the most ambitious that any nation or political union has ever proposed to tackle emissions and the EU hopes it will encourage other nations to take on tough targets in the run up to climate talks in Glasgow this year.

However, environmental groups fear it will be watered down when the Commission proposal heads to the EU Parliament and EU Council for debate over the next 12-18 months.

One hot topic will be the new emissions trading scheme for transport fuels that will work on a similar basis to existing schemes to incentivise production of non-fossil based fuels.

Pascal Canfin, chair of the European Parliament's environment committee, labelled the plan last month "political suicide" and cited analysis by the Commission that showed it would cut emissions of road transport fuels just 3%.

The EU Commission hopes that by recycling 25% of the revenue direct to governments it can overcome objections to it.