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
Date: 2021-07-14
Institutions: European Commission, Secretariat-General
Subjects: EU energy policy, adaptation to climate change, carbon, carbon neutrality, clean technology, climate change, emission trading, green economy, greenhouse gas, innovation

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.7.2021  COM(2021) 550 final  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  
 
 
1. 

'FIT  FOR  55':  DELIVERING  THE  EU'S  2030  CLIMATE  TARGET  ON  THE  WAY  TO 
CLIMATE NEUTRALITY  

We  are  at  a  pivotal  moment  in  the  world’s  response  to  the  climate  and  biodiversity 
emergencies  and  we  are  the  last  generation  that  can  still  act  in  time.  This  decade  is  a 
make-or-break moment for delivering on our commitments under the Paris Agreement, in 
the interest of the health, wellbeing and prosperity of all. The EU has led by example in 
setting ambitious targets for reducing net emissions by at least 55% by 2030 compared to 
1990 and for being the first climate neutral continent by 2050. These goals are no longer 
aspirations or ambitions but obligations laid down in the first European Climate Law that 
create new opportunities for innovation, investment and jobs. 

In this spirit, the package of proposals aims to make the EU ‘fit for 55’ and deliver the 
transformational change needed across our economy, society and industry. This is a 
collective responsibility and opportunity that must be open to all, whether innovators and 
investors, companies and cities, or consumers, households and individuals. We all share 
in the benefits of more space for nature, cleaner air, cooler and greener towns and cities, 
healthier  citizens,  lower  energy  use  and  bills,  as  well  as  new  jobs,  technologies  and 
industrial opportunities. The challenge at the heart of the EU’s green transition is how we 
can bring these benefits to all as quickly and as fairly as possible, while strengthening our 
competitiveness, creating the jobs of tomorrow and effectively addressing the costs and 
impacts of the transition. 

Acting  before  we  reach  irreversible  tipping  points  will  allow  us  to  design  that 
transformation  rather  than  react  and  adapt  to  it.  While  the  cost  of  non-action  is  clearly 
higher  than  the  cost  of  fulfilling  our  climate  ambitions,  sterile  numbers  cannot  capture 
the  stark  consequences  of  continuing  business-as-usual.  Non-action  could  also  lead  to 
new dividing lines: between those who can afford clean, modern technologies based on 
renewables  and  those  with  no  alternative  to  old-fashioned  and  polluting  ones.  Next 
generations will bear the brunt of more frequent- and more intense - storms, wildfires, 
droughts  and  floods,  as  well  as  the  conflicts  that  they  could  trigger  around  the  world. 
Tackling  these  crises  is  therefore  a  matter  of  intergenerational  and  international 
solidarity. What we achieve in the next decade will determine our children’s future. This 
is  why  there  is  sustained  and  growing  public  support  for  climate  ambition  and  action1. 
Stepping  up  climate  action  is  also  an  appeal  of  especially  young  people,  including 
today’s  teenagers,  who,  as  agents  of  change,  call  on  governments  and  the  EU  to  act 
decisively and without delay to protect the climate and environment for next generations. 

Today’s proposals build on policies and legislation the European Union has already put 
in  place.  The  European  Green  Deal  set  the  blueprint  for  this  transformational 
change. It put in place the building blocks for the economy of tomorrow with landmark 
strategies  on  biodiversity,  circular  economy,  zero  pollution,  sustainable  and  smart 
mobility,  renovation  wave,  sustainable  food,  hydrogen,  batteries,  offshore  renewable 
energy  and  many  others.  Unprecedented  resources  have  been  earmarked  to  support  the 
transition, whether through the EU’s recovery plan, NextGenerationEU contributing at 
least  37%  to  the  green  transition,  the  next  long-term  EU  budget  for  2021-2027  or  the 
continued  focus  on  sustainable  finance  and  unlocking  private  investment.  And  we  will 

1Special 
https://ec.europa.eu/clima/citizens/support_en. 

Eurobarometer 

on  Climate  Change 

513 

(published 

on 

5 

July 

2021) 

1 

 
                                                 
continue to mobilise all EU policies to support the shift to climate neutrality, including 
research, skills, industrial, competition and trade policies.  

The package is also based on clear evidence – both on the need to reach our 2030 target 
but  also  on  how  to  achieve  it  in  the  best  and  fairest  way  possible.  The  2030  Climate 
Target Plan2 assessed the opportunities and costs of the green transition, and showed that 
the balance is a positive one if we get our policy mix right. This builds on the knowledge 
that what is good for the planet is good for people and the economy, as reflected by the 
economy growing by over 62% since 1990 with emissions falling by 24% over the same 
period, thus clearly decoupling growth from CO2 emissions. 

This experience and knowledge enables this package to be the most comprehensive set of 
proposals the Commission has ever presented on climate and energy, setting the basis for 
new  jobs  and  a  resilient  and  sustainable  European  economy  for  the  future.  It  lays  the 
regulatory foundation to reach our targets in a fair, cost-efficient and competitive way. 
It puts a price on carbon in more sectors, which brings significant additional revenues to 
ensure a fair transition, and makes clean solutions cheaper. It supports greater renewable 
energy  use  and  more  energy  savings.  It  facilitates  growing  sales  of  clean  new  vehicles 
and cleaner transport fuels. It ensures that industry can lead the transition and gives it the 
certainty  it  needs  for  boosting  investment  and  innovation.  It  focuses  on  taxing  energy 
sources  in  line  with  our  climate  goals  and  environmental  objectives.  The  package 
translates the polluter pays principle into practice. It aims to reverse the declining trend in 
nature’s capacity to remove carbon from the atmosphere. And it helps to ensure that our 
climate goals are not undermined by the threat of carbon leakage, by encouraging global 
climate action.  

The Fit for 55 Package cements the EU’s global leadership by action and by example 
in the fight against climate change. However, EU action alone is not enough and cannot 
deliver the global emission reduction the world needs. The EU remains fully committed 
to the multilateral global order and calls upon partners around the world to work together. 
This is why the EU is working with the G7, the G20 and other international partners to 
show  that  increased  climate  ambition,  economic  prosperity  and  sustainable  growth  can 
go hand in hand. Ahead of the crucial 26th United Nations Climate Change Conference 
of the Parties (‘COP26’) in Glasgow in November 2021, this set of proposals aims to set 
an  agenda  to  work  with  the  rest  of  the  world  towards  a  green  transition  that  addresses 
existential threats and creates new opportunities for all.  

The  Fit  for  55  Package  is  a  set  of  interconnected  proposals  that  together  deliver  our 
ambition.  This  Communication  gives  an  overview  of  the  different  proposals  as  well  as 
their  linkages  and  explains  the  toolbox  of  policy  measures  chosen.  It  presents  how  the 
package  strikes  the  overall  balance  between  fairness,  emissions  reductions,  and 
competitiveness and illustrates how the different policies work together.  

2 COM(2020) 562 final 

2 

 
 
 
                                                 
The Fit for 55 Package: At a glance 

The Fit for 55 package consists of a set of inter-connected proposals, which all drive towards 
the same goal of ensuring a fair, competitive and green transition by 2030 and beyond. Where 
possible existing legislation is made more ambitious and where needed new proposals are put 
on the table. Overall, the package strengthens eight existing pieces of legislation and presents 
five  new  initiatives,  across  a  range  policy  areas  and  economic  sectors:  climate,  energy  and 
fuels, transport, buildings, land use and forestry.  

The legislative proposals are backed by impact assessment analysis, which takes into account 
the  interconnection  of  the  overall  package.  The  analysis  shows  that  an  over-reliance  on 
strengthened  regulatory  policies  would  lead  to  unnecessarily  high  economic  burdens,  while 
carbon pricing alone would  not  overcome persistent market  failures  and  non-market  barriers. 
The chosen policy mix is therefore a careful balance between pricing, targets, standards and 
support measures.  

Pricing 

Targets 

Rules 

•Stronger Emissions Trading 
System including in aviation  

•Updated Effort Sharing 
Regulation 

•Extending Emissions Trading 
to maritime, road transport, and 
buildings 

•Updated Land Use Land 
Use Change and 
Forestry Regulation 

•Updated Energy taxation 
Directive 

•New Carbon Border 
Adjustment Mechanism 

•Updated Renewable 
Energy Directive 

•Updated Energy 
Efficiency Directive 

•Stricter CO2 
performance for cars & 
vans 

•New infrastructure for 
alternative fuels 

•ReFuelEU: More 
sustainable aviation 
fuels 

•FuelEU: Cleaner 
maritime fuels 

Support measures 

•  Using  revenues  and  regulations  to  promote  innovation,  build  solidarity  and 
mitigate impacts for the vulnerable, notably through the new Social Climate Fund 
and enhanced Modernisation and Innovation Funds. 

2.  WHOLE-OF-ECONOMY APPROACH: FAIR, COMPETITIVE AND GREEN TRANSITION 

The Fit for 55 Package aims to deliver the EU’s increased emission reductions target to 
the benefit of all Europeans and to create opportunities to take part in the transition, help 
those most in need, and drive stronger overall emissions reductions. It will also support 
the EU’s green recovery from the pandemic, help spread environmental standards beyond 
EU borders and boost innovation in the products and technologies of the future.  

3 

 
 
 
 
 
2.1  A  socially  fair  transition:  tackling  inequality  and  energy  poverty  through  climate 
action  

The transition towards climate neutrality can be a unique opportunity to reduce systemic 
inequality. Carbon pricing instruments, for example, raise revenues that can be reinvested 
to address energy poverty and mobility challenges for the vulnerable, spur innovation and 
economic  growth,  and  create  employment.  This  is  not  just  a  matter  of  fairness  and 
solidarity  it  is  a  wider  societal  necessity  to  tackle  inequities  that  existed  before  the 
European  Green  Deal  and  that  would  worsen  without  resolute  action  against  climate 
change and towards zero pollution.  

This is why solidarity is a defining principle of the European Green Deal – between 
generations, Member States, regions, rural and urban areas, and different parts of society 
–  as  exemplified  by  the  Just  Transition  Mechanism  and  a  number  of  other  instruments 
put in place at EU level in recent years. Reaching climate neutrality will require a shared 
sense  of  purpose,  collective  efforts  and  a  recognition  of  different  starting  points  and 
challenges.  Many  citizens,  especially  younger  people,  are  ready  to  change  their 
consumption and mobility patterns when empowered by relevant information in order to 
limit their carbon footprint and to live in a greener, healthier environment. However, this 
package also addresses the concerns of those whose employment or income are affected 
by the transition.  

This  approach  is  reflected  across  the  Fit  for  55  package,  from  sharing  efforts  to  reach 
climate  targets  among  Member  States  based  on  their  relative  wealth  to  taking  into 
account  their  different  capabilities  when  distributing  revenues  and  to  addressing 
inequalities within each Member State. This reflects the need for increased solidarity and 
social fairness to match our increased speed and ambition. 

In  this  spirit,  a  new  Social  Climate  Fund  will  provide  dedicated  funding  to  Member 
States to support European citizens most affected or at risk of energy or mobility poverty, 
to accompany the introduction of the Emissions Trading to road transport and buildings. 
Energy poverty alone affects up to 34 million people in the European Union today. The 
Fund  will  help  mitigate  the  costs  for  those  most  exposed  to  fossil  fuel  price  increases 
during  the  transition.  The  new  Fund  will  promote  fairness  and  solidarity  between  and 
within  Member  States  while  mitigating the  risk  of  energy  and  mobility  poverty.  It  will 
build on and complement existing solidarity mechanisms3. The Social Climate Fund will 
provide €72.2 billion in current prices for the period 2025-2032 in the EU budget from 
the new Emissions Trading System. It will enable Member States to support  vulnerable 
low  and  middle-income  households,  transport  users,  and  micro-enterprises  affected  by 
the  impact  of  the  extension  of  emission  trading  to  building  and  transport.  It  will  entail 
support  to  investments  to  increase  the  energy  efficiency  and  renovations  of  buildings, 
clean  heating  and  cooling,  and  integrate  renewable  energy  in  a  manner  that  can 
sustainably  reduce  both  CO2  emissions  and  energy  bills  for  vulnerable  households  and 
micro enterprises. It will also finance access to zero- and low- emission mobility. Where 
needed  and  as  long  as  it  is  required,  the  Fund  can  cover  direct  income  support,  while 
green  investments  through  the  Fund,  and  through  a.o.  the  Recovery  and  Resilience 
Facility and the European Regional Development Fund, are carried out and deliver their 
benefit.  

3 e.g. Cohesion Fund, Just Transition Fund and European Social Fund Plus. 

4 

 
                                                 
Its  volume  will  in  principle  correspond  to  25%  of  the  expected  revenues  from  the  new 
emissions  trading  covering  the  building  and  road  transport  sectors,  starting  one  year 
before  carbon  pricing  comes  into  effect  in  order  to  be  ready  for  the  change.  It  will  be 
combined  with  national  contributions  of  at  least  to  50  percent.  The  Commission  will 
shortly  propose  an  amendment  to  the  Own  Resource  Decision  and  the  Multiannual 
Financial Framework 2021-2027 to accommodate this new instrument.   In addition, the 
Commission intends to lay down further guidance to Member States through a proposal 
for Council Recommendation as to how best to address the social and labour aspects of 
the climate transition.  

The Commission will assess the functioning of the Social Climate Fund in 2028, also in 
light  of  the  desired  effects  of  the  Effort  Sharing  Regulation  and  the  application  of 
emission trading to the new sectors. 

To  strengthen  the  social  dimension  further  the  Commission  calls  on  Member  States  to 
use a part of revenues generated from the auctioning of allowances for the buildings and 
road  transport  sectors  to  mitigate  the  impact  on  those  low  and  low-middle-income 
vulnerable households and transport users, in addition to the Social Climate Fund.  

Member States with a higher share of fossil fuels in the energy mix, higher greenhouse 
gas emissions, higher energy intensity and lower GDP per capita will also benefit from 
an  enhanced  Modernisation  Fund.  Resources  in  this  fund  will  depend  on  the  carbon 
price, but the fund will be bolstered with an additional 192,5 million allowances.  

Finally, there will also be continuous  solidarity under the Effort Sharing Regulation 
and the EU Emissions Trading System where in particular one tenth of allowances for 
auctions are redistributed among Member States.  

2.2 A competitive transition: New opportunities through industrial and sectoral change 

Achieving the 2030 target will require systemic transformation across the economy. The 
forthcoming revisions of National Energy and Climate Plans and Governance Regulation 
will ensure an integrated planning, implementation and monitoring of the green transition 
towards 2030. They will allow the EU and its Member States to progress in a balanced 
manner.  The  Fit  for  55  proposals  reflect  this,  with  action  across  industry,  transport, 
buildings and energy. Complementary and targeted policies at EU and national level will 
accelerate  the  change  in  behaviour,  technological  innovation  and  deployment,  and 
development  of  new  infrastructure.  A  cornerstone  of  the  package  is  to  build  on  the 
important  achievements  of  the  EU  Emission  Trading  System  by  strengthening  it  and 
applying  it  to  new  sectors  where  so  far  emission  reductions  have  been  lacking.  The 
experience  of  the  last  16  years  has  shown  that  emissions  trading  is  a  highly  effective 
mechanism  to  bring  down  emissions  in  a  cost-effective  way,  while  the  revenues  it 
generates  can  be  used  to  support  the  transition  to  cleaner  production  and  to  stimulate 
innovation.  

Next  to  a  carbon  price  signal,  clear  targets  are  needed  to  drive  change  such  as  in  the 
revised Effort Sharing Regulation (ESR), which will empower Member States to take 
national  action  to  tackle  emissions  in  the  buildings,  transport,  agriculture,  waste  and 
small  industry  sectors.  The  proposal  should  deliver  an  EU-wide  reduction  of  40%  in 
emissions from these sectors by 2030, compared to the situation in 2005. The principles 
for attributing the relative effort to each Member State remain the same as before. Their 

5 

 
 
different  capacities  to  take  action  will  continue  to  be  recognised  by  setting  national 
targets based on GDP per capita, with adjustments made to take national circumstances 
and cost efficiency into account.  

Applying emissions trading to new sectors complements the other policies of the package 
to  drive  changes  in  public  and  private  investments,  consumer  behaviour  and  business 
practices.  The  Commission’s  impact  assessments  show  that  a  decision  not  to  apply 
emissions trading to these areas would require much stronger regulatory measures in all 
sectors  than  proposed  in  this  package,  notably  in  fuel  standards,  renewable  energy  and 
energy efficiency as well as taxation. 

2.2.1 Industrial transformation and carbon pricing 

The  green  transition  presents  a  wealth  of  opportunity  to  the  EU  industry  as  the  world 
follows  our  lead  in  developing  markets  for  clean  new  technologies  and  products  and 
providing  sustainable,  local  and  skilled  jobs  across  the  EU.  EU  industry  is  ready  to 
invest,  but  needs  predictability  and  a  coherent  regulatory  framework,  access  to 
infrastructure and support for innovation.  

The  package  includes  new  requirements  for  industry  to  decarbonise  production 
processes,  but  also  support  mechanisms  for  the  uptake  of  new  technologies.  The 
Innovation  Fund,  which  supports  business  and  SMEs’  investment  in  clean  energy,  will 
grow  its  financing  for  innovative  projects  and  infrastructure  to  decarbonize  industry. 
Particular  attention  will  be  given  to  projects  in  sectors  covered  by  the  Carbon  Border 
Adjustment Mechanism (CBAM).  

Reflecting the need for steeper emission reductions, the Commission is today proposing 
that  by  2030  sectors  covered  by  the  revised  EU  ETS4  will  need  to  reduce  their 
greenhouse gas emissions by 61%, compared to 2005 levels. To achieve this, we need to 
lower  the  annual  emissions  cap  in  line  with  the  pathway  to  meeting  the  higher  2030 
ambition.  

To strengthen the role of carbon pricing in the transport sector, the Commission proposes 
to gradually extend the current EU ETS to the maritime sector over the period 2023 to 
2025.  Greater  efforts  will  also  be  required  from  aviation  operators  to  reduce  their 
emissions,  which  is  why  the  Commission  is  proposing  to  phase  out  the  free  emissions 
allowances  this  sector  currently  receives.  In  order  to  also  address  aviation  emissions  at 
global  level,  the  Carbon  Offsetting  and  Reduction  Scheme  for  International  Aviation 
(CORSIA)  will  be  implemented  through  the  EU  Emissions  Trading  System  Directive. 
We  will  both  pursue  domestic  policies  and  continue  working  with  our  partners  at 
international level through the International Maritime Organization and the International 
Civil Aviation Organization (ICAO). 

Fossil fuels used by road transport and buildings are substantial sources of emissions 
and pollution. As they have been very difficult to decarbonise so far, they are also full of 
innovation  and  job  creating  potential.  For  instance,  emissions  trading  in  road  transport 
will  increase  incentives  to  supply  cleaner  fuels  for  existing  vehicles.  It  will  lead  to  an 
evolution of the available fuels on the market for the existing fleet, pushing providers to 

4  Power  sector,  energy-intensive  industry  sectors  including  oil  refineries,  steel  works,  and  production  of 
iron,  aluminum,  metals,  cement,  lime,  glass,  ceramics,  pulp,  paper,  cardboard,  acids  and  bulk  organic 
chemicals, as well as aviation and maritime sectors. 

6 

 
 
 
 
                                                 
decarbonise their fuels.  The carbon price in itself, however, does not  guarantee a quick 
transition  to  zero  emission  mobility  for  which  complementary  policies,  including  on 
charging infrastructure are needed.  

Similarly,  applying  emissions  trading  to  fuels  in  the  buildings  sector  will  help  bring 
cleaner  heating  fuels  to  the  market,  shorten  payback  periods  for  investments  in 
renovation  and  accelerate  fuel-switching  in  heating  and  cooling  in  existing  buildings. 
This  will  be  complemented  by  policy  measures  to  improve  the  energy  efficiency  of 
buildings  and  energy  appliances  and  systems  so  that  the  overall  energy  needs  in  our 
homes and in heating and cooling will also be reduced.  

This is why the Commission proposes to start applying emissions trading from 2026 
for  road  transport  and  buildings.  This  will  be  done  in  a  separate  system  focused  on 
upstream fuel suppliers,  putting the responsibility on fuel producers to comply with the 
system,  rather  than  requiring  individual  households  or  road  transport  users  to  take  part 
directly. Emissions from road transport and building sectors will be capped, with the cap 
reduced over time so that total emissions fall. 

If international partners do not share a comparable ambition to the EU, there is a risk of 
carbon  leakage  whereby  production  is  transferred  from  the  EU  to  other  countries  with 
lower ambition for emission reduction. If this risk materialises, there will be no reduction 
in  global  emissions.  This  is  why,  as  outlined  in  further  detail  in  Section  4  of  this 
Communication,  the  Commission  is  proposing  a  Carbon  Border  Adjustment 
Mechanism  putting  a  price  on  imports  of  a  limited  number  of  high-polluting  goods 
based on their carbon content.  

This industrial transition to 2030 – and beyond to climate neutrality – must be a collective 
and inclusive  effort, co-designed with  the industrial ecosystems. The updated  Industrial 
Strategy announced the co-creation of transition pathways with social partners and other 
stakeholders to chart how best to accelerate and benefit from the twin transitions, looking 
at the scale, speed and conditions facing each ecosystem. The pathways will identify the 
scale  of  the  needs,  including  reskilling,  investment  or  technology  needs  and  devise 
actions to meet them, building on inputs such as industrial strategy roadmaps. Priority is 
given to ecosystems that commit to the transition, face the most challenges and have been 
heavily  affected  by  the  crisis,  such  as  in  mobility,  construction  and  energy  intensive 
industries.  

The Commission acknowledges that the green transition can only succeed if the EU has 
the skilled workforce it needs to  stay competitive. Education and training are central  to 
raising awareness  and boosting skills  for the  green economy in the instruments such as 
the green strand in Erasmus+ and the Education for Climate Coalition. With the European 
Skills  Agenda  for  sustainable  competitiveness,  social  fairness  and  resilience  the 
Commission is rolling out flagship actions to equip people with the right skills needed for 
the  green  and  digital  transition.  Under  the  Agenda,  the  Commission  also  facilitates  the 
development of commitments for re- and upskilling in all industrial ecosystems. Various 
ecosystems,  including  the  automotive  ecosystem,  have  already  committed  to  re-  and 
upskill their workforce across the entire value chain, as part of the Pact for Skills.  

2.2.2 Cleaner mobility and transport fuels 

Next to carbon pricing, other measures are needed to put transport on a firm path to zero 
emissions,  and  drive  down  air  pollution  as  transport  represents  almost  a  quarter  of  the 
EU’s greenhouse gas emissions and is the main cause of air pollution in cities. Emissions 

7 

 
 
remain higher than in 1990 and a 90% reduction in overall transport emissions by 20505 
will be required to reach climate neutrality.  

The Fit for 55 package therefore includes four proposals promoting cleaner vehicles and 
fuels in a technologically neutral way. The revision of the CO2 emission standards for 
new  cars  and  vans  aims  at  further  reducing  the  greenhouse  gas  emissions  of  these 
vehicles,  providing  a  clear  and  realistic  pathway  towards  zero-emission  mobility. 
Consumer demand for zero emission vehicles is increasing sharply already6.  

The Alternative Fuels Infrastructure Regulation will ensure the necessary deployment 
of  interoperable  and  user-friendly  infrastructure  for  recharging  and  refuelling  cleaner 
vehicles  across  the  EU,  keeping  pace  with  the  development  of  the  market  and 
guaranteeing that rural and remote areas will also be covered. The proposed mandatory 
targets  for  alternative  fuels  infrastructure  are  key  to  support  the  penetration  of  cleaner 
vehicles  and  the  continued  growth  of  this  market  which  presents  extraordinary 
opportunities for the EU car industry. 

All these measures reinforce and complement each other. Knowing that the average car 
lasts  10  to  15  years,  putting  a  price  on  carbon  for  road  transport  is  urgent  to  make  the 
existing  fleet  drive  cleaner.  In  addition,  more  ambitious  CO2  standards  will  help  to  get 
more zero emission vehicles on the road quickly, while infrastructure obligations will put 
in  place  the  necessary  charging  and  refuelling  stations  to  serve  the  millions  of  new 
vehicles  that  are  expected  by  2030  and  while  we  continue  to  build  a  sustainable  and 
globally competitive battery value chain. 

The transition of the automotive industry and its supply chain is already happening. This 
requires  using  financial  resources such  as the  Innovation  Fund  and  possibilities  under 
State aid rules for investments to create new business opportunities in different segments 
of the industrial ecosystem. In addition, the European Social Fund Plus (ESF+), InvestEU 
and other EU funding programmes can be used to support re- and upskilling measures.  

The  Commission  is  also  proposing  to  promote  the  uptake  of  sustainable  fuels  in  the 
aviation  and  maritime  sectors  complementing  the  ETS  for  the  aviation  and  maritime 
sectors  which  makes  polluting  fuels  more  expensive  for  suppliers.  The  ReFuelEU 
Aviation  to  promote  sustainable  aviation  fuel  will  oblige  fuel  suppliers  to  blend  an 
increasingly high level of sustainable aviation fuels into existing jet fuel uploaded at EU 
airports,  as  well  as  incentivise  the  uptake  of  synthetic  fuels,  known  as  e-fuels.  The 
upcoming zero  emission aviation  Alliance will complement this work to  ensure market 
readiness for disruptive aircraft configurations (e.g. hydrogen, electric). The Commission 
also  calls  on the Council  and the European Parliament to  agree quickly  on the updated 
Single  European  Sky  regulatory  framework,  which  is  estimated  to  help  cut  aviation 
emissions by up to 10%. 

The  FuelEU Maritime  proposal  to  promote sustainable maritime fuels  will  create new 
requirements for ships, regardless of their flag, arriving to or departing from EU ports, by 

5  As compared to 1990 levels. 
6 Almost half a million new electrically chargeable vehicles (ECVs) were registered in the EU in the final quarter of 
2020. This was the highest figure on record and translated into an unprecedented 17% market share. It also brought 
the  annual  total  to  one  million  new  ECVs,  which  means  that  the  existing  electric  fleet  doubled  in  just  12  months 
(Quarterly Report of European Electricity Markets, Q4 2020). 

8 

 
 
 
                                                 
imposing  a  maximum  limit  on  the  greenhouse  gas  content  of  the  energy  they  use  and 
making  these  limits  more  stringent  over  time.  The  upcoming  Renewable  and  Low-
Carbon  Fuels  Value  Chain  Alliance  will  boost  the  supply  and  deployment  of  the  most 
promising fuels for all modes of transport.  

Certainty about emissions performance in these sectors can only be provided by making 
sure that new fuels respect the sustainability criteria for renewable energy sources. This 
link must be preserved and we must ensure that we promote only the cleanest advanced 
biofuels  and  novel  electro-fuels  with  the  best  emissions  performance.  In  aviation, 
ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) 
will be implemented. These measures are complemented by the revised Energy Taxation 
Directive, which will make cleaner fuels more attractive in all transport modes and close 
loopholes for polluting fuels. 

2.2.3 Energy 

Energy use accounts for 75% of the EU’s emissions, so the transformation of our energy 
system  is  central  to  our  climate  ambitions.  Saving  more  energy  and  using  more 
renewables  in  the  energy  we  do  use  is  a  key  driver  for  jobs,  growth  and  emission 
reduction.  

To reach the 2030 target, the updated Renewable Energy Directive proposes to increase 
the overall binding target from the current 32% to a new level of 40% of renewables in 
the  EU  energy  mix.  This  will  be  complemented  by  indicative  national  contributions, 
showing  what  each  Member  State  should  contribute  to  reach  the  collective  target.  The 
proposal  supports  Member  States  in  making  the  most  of  their  cost-effective  renewable 
energy potential across sectors through a combination of sectoral targets and measures. It 
aims  at  making  the  energy  system  cleaner  and  more  efficient  by  fostering  renewables-
based  electrification  and,  in  sectors  such  as  industry  and  transport  where  this  is  more 
difficult, it will promote the uptake of renewable fuels, such as clean hydrogen.  

Reduced energy consumption allows us to bring down both emissions and energy costs 
for consumers and industry. The revision of the Energy Efficiency Directive proposes to 
increase the level  of ambition  of the energy  efficiency  targets  at  EU level  and to  make 
them  binding.  This  should  lead  to  9%  reduction  in  energy  consumption  by  2030, 
compared to the baseline projections7. As part of this, national indicative benchmarks for 
energy  efficiency  calculated  with  a  new  formula  will  also  guide  Member  State  action. 
The revision of the Energy Performance of Buildings Directive, planned for later in the 
year,  will  identify  specific  measures  to  accelerate  the  rate  of  buildings  renovations, 
contributing  to  energy  efficiency  and  renewable  goals  and  greenhouse  gas  emissions 
reductions in the buildings sector. 

The tax system for energy products must both preserve the internal market and support 
the green transition  by setting the  right  incentives. Therefore, a  revision  of the  Energy 
Taxation  Directive  proposes  to  align  the  minimum  tax  rates  for  heating  and  transport 
fuels with EU climate and environmental objectives, while mitigating the social impact. 

7 The reference scenario used as a baseline for defining the level of ambition of the Union’s targets has been updated in 
the  legislative  proposal  for  the  revision  of  the  Energy  Efficiency  Directive.  The  targets  will  from  now  on  be 
calculated using the 2020 Reference scenario baseline whereas the current energy efficiency targets were calculated 
using the 2007 Reference scenario baseline.  

9 

 
 
 
                                                 
 
The  new  rules  will  remove  outdated  exemptions,  for  example  in  aviation  and  maritime 
transport, and other incentives for the use of fossil fuels, while promoting the uptake of 
clean fuels. 

2.3 A green transition: Protecting nature and increasing the EU’s natural carbon sink 

The twin climate and biodiversity crises cannot be treated in separately. We either solve 
the  climate  and  nature  crises  together,  or  we  solve  neither.  This  also  means  that  we 
should  not  take  more  resources  than  the  planet  can  afford  to  share  with  us.  If  we  help 
delicate land and ocean ecosystems recover, they can provide for life on the planet and 
fulfil  their  role  in  the  fight  against  climate  change.  Restoring  nature  and  enabling 
biodiversity to thrive again is essential to absorb and store more carbon.  

We  therefore  need  to  increase  the  capacity  of  the  EU’s  forests,  soils,  wetlands  and 
peatlands, oceans,  and water bodies to  act  as  carbon sinks and stocks.  In a modernised 
agricultural  sector,  we  also  need  farming  practices  that  put  land  and  nature  first  and 
regenerate the quality of our soils to ensure our food security.  

As  part  of  the  updated  Land  Use  Land  Use  Change  and  Forestry  Regulation,  the 
Commission is proposing to set higher ambitions for the expansion of the EU’s natural 
carbon  removals,  which  is  key  for  balancing  out  emissions  and  reaching  climate 
neutrality.  The  new  proposal  looks  to  reverse  the  current  trend  of  diminishing  CO2 
removals  and  increase  the  quality  and  quantity  of  the  EU’s  forests  and  other  natural 
carbon  sinks.  It  proposes  to  set  an  EU  target  of  net  greenhouse  gas  removals  in  the 
LULUCF sector of 310 million tons of CO2 equivalent by 2030. Specific national targets 
are proposed to contribute to this shared goal. Beyond 2030, the Commission will assess 
progress  and  envisages  proposals  to  set  this  sector  on  the  pathway  to  reaching  climate 
neutrality – considering emissions and removals from the LULUCF sector and non-CO2 
agricultural emissions. 

Member  States  will  retain  a  certain  flexibility  in  dividing  the  effort  between  the  Effort 
Sharing  Regulation  and  LULUCF  sectors,  underlining  again  the  complementarity 
between the different proposals in the Fit for 55 package. 

The  Commission  is  also  taking  multiple  measures  to  incentivise  good  practices  in  the 
production  of  biomass,  and  to  ensure  supply  and  demand  for  woody  biomass  remain 
within  the  limits  of  sustainability8  and  are  in  line  with  our  objectives  of  restoring 
biodiversity, improving the health of nature, and staying within planetary limits.  

The  proposal  on  renewable  energy  generation  includes  strengthened  sustainability 
criteria  for  bioenergy  by  extending  their  scope  of  application  and  by  enlarging  no-go 
areas  for  sourcing.  Bioenergy  currently  accounts  for  around  60%  of  renewable  energy 
production  and,  while  that  share  is  projected  to  decline  between  2030  and  2050,  the 
overall demand for renewable energy will increase. The proposal confirms the cascading 
principle, which privileges the highest value added use of wood, and ensures that national 
support schemes for the use of sustainably sourced biomass are in line with it and avoid 
harmful impacts on biodiversity. 

8 JRC Publications Repository - Brief on the role of the forest-based bioeconomy in mitigating climate change through 

carbon storage and material substitution (europa.eu). 

10 

 
 
 
 
                                                 
The new EU Forest Strategy presented together with the Fit for 55 package, as well as, 
the  forthcoming  New  Soil  Strategy,  EU  Nature  Restoration  Law  and  Carbon  Farming 
Initiative planned for later in 2021, will further strengthen the EU’s natural carbon sinks, 
ensure that biodiversity  has a key place in  the overall approach and support the crucial 
social and economic functions of forestry and forest-based sectors.   

3.  OPPORTUNITIES  AND  INCENTIVES:  INNOVATION  AND  INVESTMENT  FOR  A 

COMPETITIVE TRANSITION 

The  transition  to  a  climate  neutral  economy  supports  innovation.  The  European  Green 
Deal is a growth strategy and as outlined in the EU’s updated Industrial Strategy, the Fit 
for 55 proposals offer significant opportunities to develop, deploy and export low-carbon 
technologies and green jobs9.  

By setting a clear policy framework with detailed targets and policies, the Commission is 
increasing  investor  certainty  and  reducing  the  risk  of  locking  in  investments  in  carbon 
intensive industries that will become obsolete before too long and lead to stranded assets. 
The  EU  gains  from  a  first  mover  advantage  with  increasing  global  action  on  climate 
change.  Investments  in  a  low  carbon  economy  can  spur  economic  growth  and  jobs, 
accelerate the clean energy transition, increase long-term competitiveness and play a role 
in the green recovery.  

The  EU’s  long-term  budget  and  its  recovery  package  NextGenerationEU  are 
specifically  tailored  to  supporting  the  green  transition.  30%  of  programmes  under  the 
2021-2027 Multiannual Financial Framework are dedicated to support climate action, for 
example through cohesion policy, agriculture, and the LIFE programme for climate and 
environment. The target of using 35% of research and innovation funding under Horizon 
Europe for green investments as well as the various partnerships and missions10 under the 
programme provide necessary resources for building sustainable and innovative solutions 
to  the  green  transition.  Horizon  Europe  provides  substantial  support  for  SMEs,  in 
particular  start-ups  and  spinout  companies  to  develop  and  scale  up  game-changing 
innovations. 

In  addition,  Member  States’  national  recovery  and  resilience  plans  financed  under  the 
Recovery  and  Resilience  Facility  need  to  contribute  to  the  green  transition  with 
measures accounting to at least 37% of the plans’ allocations. But public funding will not 
be  sufficient.  The  Strategy  for  Financing  the  Transition  to  a  Sustainable  Economy  will 
help unlock the private investment needed to finance this transition11. 

The  Commission  will  continue  to  incentivise  investments  in  the  green  transition.  In 
reviewing  the  environmental  and  energy  State  aid  guidelines  the  Commission  will  pay 
particular  attention  to  ensure  that  they  mirror  the  scope  and  ambition  of  the  European 
Green  Deal.  Whilst  the  recent  evaluation  of  the  current  IPCEI  Communication  showed 
that the provisions work well, some targeted adjustments would be necessary, including 
to  further  enhance  their  openness  and  facilitate  participation  of  SMEs  and  to  provide 
guidance on the criteria to pool funds from national budgets and EU programmes. 

9  See  the  Impact  Assessment  for  the  Communication  on  Stepping up  Europe’s  2030  climate  ambition,  SWD  (2020) 

10 For the green transition, the missions on Climate neutral and smart cities; Healthy oceans, seas, coastal and inland 
waters;  Soil  health  and  food  and  Adaptation  to  climate  change,  including  societal  transformation  are  particularly 
relevant.  

177 final. 

11 COM (2021) 390 final 

11 

 
                                                 
To support this, the Fit for 55 proposals contain their own dedicated financial instruments 
to  support  a  fair  transition,  based  on  the  revenues  generated  by  the  extension  and 
strengthening  of  emissions  trading.  This  underlines  once  more  the  interconnection 
between the different parts of this package of proposals. Existing solidarity mechanisms 
and funds are strengthened to address distributional impacts and boost further investment 
in  innovative  low-carbon  solutions.  The  size  and  scope  of  the  Innovation  Fund  is 
extended to provide support to projects in the form of carbon contracts for difference to 
trigger emission reductions in industry.  

4.  A SUSTAINABLE EU IN A SUSTAINABLE WORLD 

While  only  accounting  for  8%  of  global  CO2  emissions,  the  EU  recognises  its 
responsibility  for  a  higher  share  of  cumulative  emissions.  The  EU  is  committed  to 
decisively  forge  a  path  towards  a  green,  competitive,  inclusive,  circular  economy.  The 
European  Green  Deal,  as  our  growth  and  competitiveness  strategy,  is  contributing  to 
transform the global  narrative, affecting political  and business markets, and offering an 
example to follow.  

Global engagement and international cooperation is key to address the climate crisis and 
the EU actively engages with partner countries bilaterally and multilaterally. 

The Fit for 55 package is a key milestone on the road to Glasgow, where the next United 
Nations Climate Change Conference, also known as COP26, will be held later this year. 
It  will  be  the  backbone  of  the  EU’s  delivery  on  its  commitments  to  the  planet  and  the 
world, as signed up to in the Paris Agreement.  

The EU is determined to ensure that decarbonisation gains in the EU should not simply 
push carbon emissions  outside our borders. Such carbon leakage is currently prevented 
by  the  issuance  of  free  allowances  under  the  Emissions  Trading  System  (ETS).  That 
system  has  been  effective  in  addressing  the  risk  of  leakage  but  it  also  dampens  the 
incentive to invest in greener production at home and abroad. 

In  this  spirit,  the  Commission  is  today  proposing  a  Carbon  Border  Adjustment 
Mechanism  (CBAM).  Designed  as  a  climate  action  instrument,  it  introduces  a  market 
dynamic  that  protects  the  integrity  of  EU  and  global  climate  policy  by  reducing 
GHG emissions  in  the  EU  and  globally, and  induces  the  relevant  sectors  to  modernise, 
become more sustainable, and drive down their carbon content.  

The CBAM will be gradually introduced for a few selected products. A simplified system 
will  apply  in  the  first  years  with  the  objective  of  facilitating  a  smooth  roll  out  of  the 
mechanism. The proposal for a CBAM ensures that the same carbon price will be paid by 
domestic and imported products and will thus be non-discriminatory and compatible with 
WTO  rules  and  other  international  obligations  of  the  EU.  In  the  sectors  concerned, 
CBAM will be gradually phased-in  while free allowances are phased out, ensuring that 
the new system provides stronger incentives for the EU and foreign industries to innovate 
and reduce emissions. Moreover, sectors and companies outside the EU that may already 
have  lower  carbon  content  in  their  production  cycles  or  in  which  a  similar  system  of 
carbon pricing is applied will benefit from this under CBAM. As such, it is an invitation 
to our international partners for jointly increasing climate ambition.  

The  global  move  away  from  fossil  fuels  is  already  well  under  way.  And  the  effects  go 
beyond  climate  and  environment  -  they  are  also  geopolitical.  The  EU  must  adjust  its 
policies accordingly to ensure a stable transition, including outside of its borders. In this 

12 

 
 
 
spirit,  the  European  Commission  will  soon  come  forward  with  new  legislation  to 
minimise  the  EU’s  contribution  to  deforestation  and  forest  degradation  worldwide  and 
embed sustainable corporate governance in companies’ strategies. 

We expect partners to fulfil their Paris commitments too and are ready to work together 
by  strengthening  EU  climate  diplomacy.  In  order  to  enhance  cooperation  with  our 
international  partners and facilitate the global transition  to a net  zero economy, the full 
range of the EU’s external policy instruments will be harnessed to align with these higher 
goals.  As  part  of  its  climate  diplomacy  in  bilateral  partnerships  and  multilateral 
organizations,  the  EU  will  ensure  that  it  consults,  explains,  assists  and  where  possible 
accommodates  partners,  while  keeping  the  main  objectives  as  laid  down  in  the  Paris 
Agreement  in  focus.  This  also  includes  support  to  climate  finance  to  help  vulnerable 
countries adapt to climate change and invest in reducing greenhouse gas emissions. The 
EU  and  its  Member  States  have  consistently  been  the  world’s  largest  contributor  of 
public climate finance to low- and middle-income countries, and this will continue, with 
particular attention to the needs of the least developed countries.  

5.  CONCLUSION 

The European Union is built on the premise of developing common policies to achieve 
our common interests.  It requires solidarity between its Member States and between its 
citizens to achieve these goals and enjoy its benefits, with everybody acting in line with 
their own capacities and competences, and respecting different national specificities and 
starting points in reaching the end goal. The Fit for 55 package is designed in this spirit: 
efforts are shared between Member States in the most cost effective way, acknowledging 
our differences, and support is given to those most in need, to ensure that the transition 
reaches everybody in a beneficial way. 

The package of proposals has been carefully crafted to create the right balance of policy 
measures and revenues generated to design and drive a just and transformational change 
across  the  t  EU  economy.  Changing  the  weight  of  each  tool  inevitably  has  knock-on 
effects on several others, and removing any of the proposed measures requires a tuning 
up of proposals in other areas. To make the European Union Fit for 55 and reduce in time 
our emissions by at least 55%, we need all these tools and this balance. 

13 

 
 
 
The  Fit  for  55  package  recognises  that  the  EU  citizens  need  to  be  offered  better 
information,  affordable  options  and  appropriate  incentives  to  make  the  individual 
changes  that  collectively  help  us  live  in  balance  with  our  environment  and  our  planet. 
Citizens  of  all  regions  and  ages  will  be  closely  involved  in  the  implementation,  for 
instance through the European Climate Pact and citizens’ panels of the Conference on the 
Future of Europe. It also acknowledges the effectiveness of putting a price on carbon and 
marshals the economic power of companies and markets to deliver structural changes to 
our  economy  that  provide  the  cleaner,  healthier  products  and  services  that  we  need. 
Finally, it enables the EU to shape long-term investments, lead markets and enforce new 
green  standards.  It  is  this  combination  that  will  make  the  EU  fit  for  a  climate  neutral 
future. 

The  challenges  of  climate  change  require  a  global  response  and  the  EU  will  continue 
engaging  actively  with  its  partner  countries  to  support  the  climate  and  energy 
transformation globally.  

The  Commission  has  now  presented  the  necessary  proposals  for  the  EU  to  fulfil  our 
commitments  and  targets,  and  to  genuinely  embrace  the  transformation  that  lies  ahead. 
We invite the European Parliament and the Council to swiftly begin their legislative work 
on  the  proposals  presented  today,  and  to  ensure  that  they  are  treated  as  a  coherent 
package, respecting the multiple interconnections between them.  

The make-or-break decade has already started. The EU needs its policy toolbox to be Fit 
for  55  in  place  as  soon  as  possible  to  meet  our  2030  targets  and  set  us  firmly  on  the 
pathway towards becoming the first climate-neutral continent by 2050. 

14