The European Commission this Wednesday launched a resounding message inside and outside its borders: if a company does not include the fight against climate change among its priorities, it will be increasingly difficult to access and operate in the European market, the most powerful of the world by population (405 million inhabitants) and purchasing power. One of the clearest signals is directed at the motor industry. Brussels has proposed that from 2035 new cars and vans that emit carbon dioxide cannot be sold, which in practice means banning combustion, diesel, gas and hybrid engines.
The Commission thus aligns itself with what some countries were already proposing - Spain in its new climate change law had set that veto for 2040 - with what several European firms, such as Volvo or Volkswagen, had put on the table and with the preferences that consumers are showing to a large extent. The measure is a message to European manufacturers to accelerate their transformation towards the electric car and a warning to outside firms to change if they want to continue doing business in Europe.
Although important, the veto on combustion cars is not the only measure that the Commission has put on the table this Wednesday. Brussels, in fact, has become the world capital of the fight against climate change with the approval of the first legislative bills to drastically accelerate the reduction of greenhouse emissions during this decade. Europe was the first continent to set the goal of achieving climate neutrality (zero emissions) in 2050 and now it is ahead of the rest of the international community in setting the first concrete measures to achieve it. The plan, baptized with the bizarre English name of
Fit for 50
(in the form for 50, in English), it also includes the objective of doubling renewable energies until reaching a 40% share in 2030, the setting for the first time of mandatory energy efficiency targets and the tightening of market conditions for emissions to raise the price of the ton of CO₂.
In addition, the transport and housing sectors are forced to enter their own emissions market.
All of this is complemented by a border adjustment mechanism that from 2026 will penalize imports in certain sectors of companies whose production does not meet European cleaning standards.
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"The fossil fuel economy has reached its limits," declared the president of the European Commission, Ursula von der Leyen, after the approval of a whole battery of legislative proposals.
"We want to leave the next generation a healthy planet and also good jobs and growth that does not harm nature," added the European leader.
"The climate goals are no longer just a political objective, but also a legal obligation," said the president of the Commission.
From now on, in the coming months, the Commission will have to agree with the European Parliament and with the governments of the 27 all these measures in a negotiation that is expected to be tough.
And, once the entire regulatory package is agreed, countries will have to update their energy and climate plans to be more ambitious.
The plan includes the creation of a social fund of 72,000 million euros in the period 2025-2032 to mitigate the impact that the rising cost of energy supply can have on the daily lives of millions of European citizens, both due to higher costs in transport as well as the higher energy consumption bill in homes. Brussels hopes to prevent the fight against climate change from triggering protests such as the one experienced in France with the so-called yellow vest revolt, which spontaneously and suddenly paralyzed much of the country to protest against an increase in fuel taxation.
During the last two years, the Commission and the countries have been negotiating a tightening of the emission cut targets in line with what the United Nations required to comply with the Paris Agreement.
The EU had committed in the middle of the last decade to reduce its emissions by 2030 by 40% from 1990 levels. However, more ambition was needed.
At the end of last year, Europe presented its new proposal to the UN: to reach a reduction of 55%.
Brussels recognizes that the jump will require great efforts in all the industries involved and a profound change in the production model and in the current consumption pattern of the majority of the population that it intends to promote with the regulatory package presented this Wednesday.
Transport
Among the most visible changes is the ban on cars with a combustion engine from 2035. In order not to be seen as rewarding one technology over another, the Commission uses as a reference the emissions of CO₂ —the main greenhouse gas— of the vehicles. In 2030, the cars sold will have to emit 55% less of this gas (taking current emissions as a reference). By 2035, the reduction should be 100%, which means that new cars and combustion vans will no longer be able to be sold. Vehicles that are already in circulation may continue to operate. But community sources estimate that the development of a second-hand market for efficient vehicles and the natural renewal of the fleet will lead to the disappearance of passenger cars that use gasoline or diesel by 2050.
The commitment to the electric vehicle or hydrogen fuel —thinking of trucks and air and maritime transport— is accompanied by objectives to develop the essential refueling infrastructure.
The legislative project establishes that from 2035 there will be an electricity recharging station every 60 kilometers on the main roads.
And every 150 kilometers in the case of hydrogen.
Car assembly line at the Volkswagen factory in Zwickau, Germany.Jens Schlueter / Getty Images
The commitment to the electrification of transport contemplated in the regulations approved this Wednesday are aligned with the recovery programs promoted by the EU. It is specified, for example, in plans such as the electric car approved on Tuesday by the Government of Spain and which has financing of 4,295 million euros to transform the automotive industry.
Transport and housing will also be incorporated into a new emissions market, in which the companies that supply energy to these sectors will participate.
Brussels hopes that setting a price for CO₂ emissions in these activities will contribute to their reduction, given that companies will foreseeably pass on the new cost to the final consumer.
The Commission considers the measure essential to accelerate the reduction in sectors from which a large part of the emissions originate.
More expensive gasoline and diesel
Taxation will also help accelerate the introduction of the electric car.
The Commission proposes to reform the directive on energy taxes to penalize fuels with more emissions.
To do this, the project plans to change the volume tax for a tax based on the energy load of each fuel.
The consequence is that gasoline or diesel will bear a tax of 10.75 euros per gigajoule, while recharging with electricity will have a rate of only 0.15 euros.
The new taxation will also penalize kerosene from the aviation sector, which for the first time will be subject to tax, and the shipping sector.
Emissions markets
The current emissions market, in which the industries responsible for 40% of emissions participate, tightens, which will foreseeably raise the price of a ton of CO₂, already around 50 euros. Brussels proposes that the contribution of these industries to the general objective of reducing emissions of the entire European economy goes from 43% today to 61% in 2030. This increase of 18 points would be achieved with a cut of 117 million to the volume of securities in the market (to make them more expensive) and the progressive reduction of the free delivery of these titles.
With the new measures, Europe aspires to become the world benchmark in the fight against climate change for a decade that, according to experts, will be crucial to contain the rise in the planet's temperature and avoid catastrophic consequences in the years to come.
Climate tariff
Brussels is aware that the EU, alone, cannot avoid this threat because the 27 countries of the community club are only the origin of 9% of the planetary greenhouse emissions.
But the Commission is confident in the carry-over effect of standards applied to a market of 405 million inhabitants.
And if the example does not spread, Brussels proposes the introduction of a border adjustment mechanism that, for the first time, will penalize imports from countries where the fight against climate change falters. The ecological tariff would affect sectors of great energy consumption, such as the production of steel or aluminum. And in current market conditions it would hit Russia, Turkey, China, the United Kingdom and Ukraine especially, according to a report by the research firm Center for European Reform. Brussels is confident, however, that the EU's main trading partners will adapt their production models and that the new border mechanism, whose compatibility with WTO rules is questioned by some analysts, will not have to be applied or only in cases exceptional.
Community sources specify that the tariff will be introduced progressively, for a decade, starting in 2026, and for the moment it will only affect imports of steel, aluminum, cement and fertilizers. The EU will check the CO₂ footprint of the exporters' production. And if these emissions are not penalized in their countries, they will impose a tax equivalent to what they would have paid if they produced within the community territory. The introduction of this surcharge will advance in parallel with the withdrawal of the free concession of emission rights to companies in the same sectors that produce in Europe.
For now, the threat of imposing this tariff has already aroused the misgivings of the new United States Administration, which has publicly asked Europe to park this measure.
At the meeting of the finance ministers of the G-20 that was held last weekend in Venice (Italy), a mention was included in the final communiqué of the fixing of a carbon price - some type of tax that penalizes the CO₂ emissions— as one of the instruments to combat climate change.
Europe has complained for years that, while the EU has its emissions market that already penalizes carbon dioxide, other large economies do not have it and compete in better conditions.
Multimillion dollar aid
Commission sources admit that the implementation of the new objectives "will require a massive investment." But they stress that the EU will deploy multimillion-dollar aid to ensure that European companies can adapt without succumbing to the weight of new obligations or international competition with more relaxed standards. "The objective is not to deindustrialize Europe, quite the contrary," says a senior Commission official.
Brussels proposes to expand the innovation fund by almost 50%, which currently expects to mobilize around 20,000 million euros between 2020 and 2030. The fund is financed with the auction of 450 million carbon dioxide emission rights, to the that another 200 million would be added at least.
The expansion would also reach the modernization fund, financed with 2% of the revenue from the emissions market and destined to help a dozen Central and Eastern European countries (Poland, Romania, Bulgaria, Hungary, Czech Republic, Slovakia, Estonia , Latvia, Lithuania and Croatia). The expected income for this fund amounted to 14,000 million in this decade, a figure that could be doubled with the proposal, which raises the item from the auction of rights to 4.5%. The list of beneficiaries is expanded to include Greece and Portugal.
Brussels also recalls that in the EU budgetary framework for 2021-2027 (almost two trillion euros between the regular budgets and the recovery fund) it foresees that up to 30% of the financing of the programs will be allocated to the transition green. In the case of the recovery fund, up to 37%. The aid will also reach the most vulnerable households through the 72,000 million euros from the new social fund. Estimates from Brussels suggest that some 34 million Europeans already have financial difficulties to pay for heating costs, a risk of energy poverty that could increase with measures that will make the price of some fuels more expensive.
In order to access the social fund, the Member States must establish support programs for the most vulnerable households, for policies of housing renovation or isolation.
The European budget may cover up to 50% of these programs.
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