Earlier this summer, the European Commission put forward the most ambitious climate protection programme in EU’s history: the Fit for 55 Package. Henrique Laitenberger explains how the initiative came together, what it contains, what its implications are – and what the iconic English playwright William Shakespeare has to do with it.
Policymaking is rarely considered a poetic endeavour. The European Union is (especially, as some may interject) no exception to this. Yet on 14 July, Commission Executive Vice-President Frans Timmermans felt compelled to quote William Shakespeare when presenting the latest major EU policy initiative: “The time is out of joint: O cursed spite, / That ever I was born to set it right!” Timmermans’ channelling of Hamlet was intended to convey the momentousness of the occasion: for on that summer day, the Commission unveiled the so-called “Fit for 55 Package” – the EU’s contribution to tackling the climate crisis.
The importance of this initiative can indeed hardly be understated: containing twelve legislative proposals, the Fit for 55 Package seeks to ensure that the EU cuts its greenhouse gas emissions by at least 55% come 2030 and thereby set the bloc on the road to climate neutrality by 2050 at the latest. To many within the European Commission, the bundle of legislation is almost a work of (political) art itself: only in September 2020, Commission President Ursula von der Leyen had announced that the Commission planned to increase the EU’s 2030 climate target from 40% to 55%. Only in April 2021, this goal was finally set in stone when the European institutions agreed to entrenching it in a dedicated Climate Law. To create a legislative framework that was up to the task of achieving these revised objectives – a “Fit for 55 Package” – EU civil servants therefore had to draft new and update existing European laws in record time. That feat becomes all the more remarkable when considering the variety of different sectors that the Fit for 55 Package will affect: carmakers, powerplant operators, building enterprises, forest owners, and fertiliser producers – they and more will have to adapt their business models and operations to the legal realities that will be established by the new climate policies.
The formula that the Commission has chosen to make the EU carbon neutral by the middle of the century is simple: as Timmermans summarised it, the Commission wants to make it more difficult and expensive to use fossil fuels, while at the same time ensuring that it becomes easier and cheaper to use renewable energy. This is a leitmotif of the Fit for 55 Package that manifests itself more than anything through the expansion of emissions trading across different sectors: as one of its flagship announcements, the Commission thus proposed that heating and transport fuels should be subject to a new “cap-and-trade” system. Beyond emissions trading, the Commission is using a number of other tools to encourage sustainable economic activities: this ranges from tax incentives for renewables to an import charge on products from countries with weaker climate regulations and the expansion of carbon sinks. The Commission is also setting clear limits to industry: symptomatic of this is the proposal to ban cars powered by fossil fuels from entering the EU market from 2035 onwards. Through a blend of incentives and restrictions, the Commission wants to make the EU and its industry ready for a climate-friendly future.
Now that the Commission has put it on the table, however, the question becomes whether the European Parliament and EU governments deem the Fit for 55 Package fit for purpose. As one would expect, there has already been much pushback from a number of quarters – indeed, there are some who fear that the Commission’s plans may play out similarly grievously as Hamlet: the European right is anxious that the competitiveness of the EU’s economy will be severely damaged by what they perceive as overly ambitious climate policies. On the left, many politicians and observers consider the package not ambitious enough. Across the political spectrum, there are concerns that higher prices on car fuels and heating will deepen economic inequality and social divisions. While the Commission has also suggested the establishment of a Climate Social Fund to alleviate the effects of the stringent climate regulations, many MEPs and ministers suspect that the almost €150 billion envisaged for this scheme will not be enough.
Since the European institutions are presently in recess, the debate around the Fit for 55 Package is only expected to begin in earnest once they return in September. At present, political agreements on all the proposed policies are unlikely to be reached before the middle of 2022 at the earliest. Nonetheless, businesses should review the Commission’s proposals and prepare their positions now if they want to make their voices heard in the discussions. They must recognise, however, that the EU is not facing the choice to be, or not to be, ready for 55% emissions reductions by the end of the decade: the EU Climate Law legally bars the EU from falling short of this objective, as the Commission has been very keen to point out from the outset. The proposals can thus only be amended if it is credibly shown that this will not endanger the 2030 target. The release of the latest report of the Intergovernmental Panel on Climate Change (IPCC), with its dire warnings of the ever more rapidly approaching 1.5°C threshold, has likewise only boosted the Commission’s case that it is dithering and inertia that will lead to certain tragedy, not bold and firm climate action. There will therefore be little patience in Brussels for companies who, in the eyes of policymakers, doth protest too much about the scale of the EU’s ambitions.
Timmermans’ evocation of Shakespeare thus genuinely captures the spirit reigning within a large share of the EU institutions: just as Hamlet, many Commissioners, MEPs, and ministers know that they face an existential challenge they cannot shy away from. Similarly, they are all too aware of its magnitude: while there is a broad recognition – entrenched by the new IPCC report – that the EU must not continue on the primrose path of extensive fossil fuel use, there will be much disagreement over the most efficient and least disruptive route to climate neutrality. The knowledge that the Fit for 55 Package is probably the EU’s last chance to “set it right” will make the debates of the coming months particularly fervent – as policymakers seek to ensure that the tale of the EU’s climate action efforts has a more conciliatory ending than that of Shakespeare’s Prince of Denmark.
Henrique Laitenberger is a Consultant at Miltton Europe whose field of work includes EU climate and sustainability policy. While writing this piece gave him a renewed appreciation of Hamlet, his favourite Shakespeare play remains Macbeth.