Fit for 55 package: Council reaches general approaches relating to emissions reductions and their social impacts

On 29 June 2022 the Council adopted its general approaches on crucial legislative proposals of the Fit for 55 package. The common position adopted by the member states is focused on the following - the EU emissions trading system (EU ETS), effort-sharing between member states in non-ETS sectors (ESR), emissions and removals from land use, land-use change and forestry (LULUCF), a social climate fund (SCF), and new CO2 emission performance standards for cars and vans.

​​​​​​​In response to EU ETS negotiations, the Member States agreed to keep the overall ambition of a 61% reduction in emissions by 2030. Additionally, the Commission agrees to include a one-off reduction of the overall emissions ceiling by 117 million allowances and to increase the annual reduction rate of the cap by 4,2%. Free allowances for sectors covered by the Carbon Border Adjustment Mechanism are anticipated to be phased out between 2026 and 2035. The Council agreed to include maritime shipping emissions within the scope of the EU ETS, while choosing to create a separate ETS for buildings and road transport sectors, starting in 2027. As of 2027, free allowances for the aviation sector will be phased out, with 20 million of the phased-out allowances being set aside as compensation for higher prices.

For vulnerable households, micro-enterprises, and transport users to be able to cope with the increased carbon pricing, financial support will be necessary. Accordingly, the Council established a Social Climate Fund with a maximum budget of €59 billion over a five-year period, starting in 2027 and coinciding with the implementation of the EU ETS for roads and buildings.

For sectors not covered by the ETS, the Council agreed to an EU-level greenhouse emissions reduction target of 40% compared to 2005. The Council supports the Commission’s proposal to keep the increased national targets assigned to each member state. The Commission agrees that to achieve its objectives, the regulation relies on the joined efforts of all Member States. Additionally, Member States will have the possibility to adjust linear emissions trajectories in 2025. 

When it comes to the  land-use change and forestry (LULUCF) sector, the Commission agreed to an overall objective of 310 Mt CO2 equivalent of new removals – signifying an increase of removals of about 15% in comparison to current levels. 

Last but not least, the Member States agreed that new cars and vans should have 100% CO2 emissions reduction targets by 2035, and that car and van targets should be raised to 55% and 50% by 2030, respectively.  

In light of the positions of Parliament and the Council, negotiations can begin on a final agreement to achieve the goals of the Fit for 55 package.