European Commission Announces 2030 Climate Target Plan

As part of the European Green Deal—and flowing from the European Commission's (the "Commission") December 2019 announcement of a 2050 zero carbon target across the European Union ("EU")—on September 17, 2020, the Commission announced its Climate Target Plan on how to increase the EU's greenhouse gas ("GHG") emissions reduction target for 2030 to at least 55%, an increase from an earlier target of 40% against 1990 levels. The Commission also adopted an amended proposal for a regulation to be issued by the European Parliament ("EP"), establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999. In a bold move, in its plenary session of October 8, 2020, the EP proposed an amendment seeking a 60% reduction target.

A Synopsis Report and Impact Assessment issued by the Commission in connection with the 2030 Climate Target Plan highlight general support for the Commission's revised target and confirm that the economic risks and costs in doing so will be limited. The increased target is seen as both economically feasible and beneficial, assuming that proper policies are put in place, including the use of carbon revenues. The Climate Target Plan accordingly:

• presents an EU-wide, economy-wide GHG emissions reduction target of at least 55% compared to 1990 levels by 2030, including emissions and removals;
• previews actions required across all economic sectors and the launch of revisions of the key legal instruments to achieve this increased ambition; and
• lays the groundwork for a public debate in autumn 2020 to increase the EU's contribution to the Paris Agreement before the end of the year and sets the stage for the Commission to make detailed legislative proposals by June 2021.

To meet the target, different sectors of the economy will have differing contributions to make. For example, the Commission suggests that:

[B]uildings and power generation can make the largest and most cost-efficient emissions reductions, in the order of 60% and more compared to 2015. Rapid penetration of renewable energy, which is becoming the most cost-effective electric power source, the application of the energy efficiency first principle, electrification and energy system integration will drive the change in both sectors.

Transportation will be required to use 24% in renewable energy via increased use of electric vehicles, biofuels, and other renewables and low-carbon fuels. Decarbonization of the sector will be aided by greater use of rail and other sustainable transport modes, in particular for freight transport. By June 2021, the Commission will look at new carbon dioxide standards for cars. In order to reach the overall climate neutrality target by 2050, nearly all cars on the roads must be zero-emissions by that time, which will force a decision on the timing and extent of a ban on cars with internal combustion engines.

In addition, the Commission is looking into various policy initiatives to help meet the targets, including the following:

• a legislative proposal by June 2021 for the EU Emissions Trading System ("EU ETS") to begin covering emissions from intra-EU maritime transport, reduce the free allocation of allowances for aircraft operators, make a one-off reduction to the EU ETS cap, and revise the linear reduction factor that defines the annual reduction of the cap beyond the current level of 2.2% to guarantee that the sectors covered by the EU ETS deliver the necessary emissions reductions;
• a carbon border adjustment mechanism for certain sectors to address the risk of carbon leakage; and
• a legislative proposal to update the Land Use, Land Use Change, and Forestry Regulation.

Accordingly, over the course of the coming nine months, the Commission will review its key climate and energy legislation. More broadly, the communication announcing the 2030 Climate Target Plan concludes that:

A reinforced and expanded use of emissions trading at [the] EU level, energy efficiency and renewable energy policies, instruments supporting sustainable mobility and transport, circular economy, environmental, agricultural, financial, research and innovation, and industrial policies will all have important roles in achieving the objectives of the European Green Deal in general and an increased climate target for 2030 and climate neutrality by 2050 in particular.