Fit for 55 package must ensure competitiveness of EU companies

In mid-July, the European Commission presented its eagerly awaited Fit for 55 package, one of the most important parts of the Green Deal for Europe. While the overall aim of the Green Deal is to make the European economy carbon neutral by 2050, the Fit for 55 package increases the ambition in the area of reduction of greenhouse gas emissions to 55% by 2030 compared to 1990 levels.

The package focuses on many parts of EU energy systems: the EU Emissions Trading System (EU ETS), to promote the application of emissions trading to new sectors; directives on Energy Efficiency and Renewable Energy, to increase the use of renewable energy; faster roll-out of low emission transport modes; infrastructure and fuels for low emission transport; and taxation of energy. Apart from that, the package has an international impact as well, as the Commission proposed to set up a new Carbon Border Adjustment Mechanism that would incorporate the price of carbon into the imports from third countries, with less strict climate action rules.

In general, the European business community supports the idea of transformation of the European economy to climate neutrality. Companies all over the EU are dedicated to help the transition and turn Europe into the first climate-neutral continent in the world. However, these ambitions must not undermine the competitiveness of European businesses at the global level and therefore, the necessary enabling conditions and supporting tools are needed to help companies with the transition. For example, businesses agree that the allocation of free allowances should not be reduced as it would potentially destabilize the investment outlook for certain sectors.

The package contains a broad variety of legislative proposals. In this context, it will be extremely important to get all the details of the proposals right and find a good balance between climate ambition and economic and technological challenge. It is also crucial that double regulation of European industry be avoided. Given that Europe can’t win the global fight against climate change alone, the EU must ensure that other countries increase their levels of ambition as a level playing field in this area is key to preserving the competitiveness of European companies.