Society and economy
The Commission proposes to increase the existing Modernisation Fund and Innovation Fund, and establish a new Social Climate Fund. The latter will correspond in principle to 25% of the revenues expected from the extension of the ETS to road transport and buildings (€72 billion for the period 2025-2032). This will provide Member States with dedicated funding to support citizens in energy and/or transport poverty, in an effort to balance the potential negative impacts of the ETS extension.
Reception of the package and next steps
The Fit for 55 package has been highly anticipated by Member States, businesses, and NGOs. Oftentimes, climate-related policy is received with mixed feelings and this package is no exception. Some stakeholders argue that it is too demanding, while others complain that is insufficient to address the climate crisis. It is even rumoured that some of the Commissioners are unhappy with the details of the final package.
The extension of the ETS is a particularly thorny subject. The European Environment Bureau (EEB), for instance, has serious concerns about the new ETS for road transport and buildings. Comprised of over 170 European organisations, the EEB fears that additional emissions costs resulting from the proposed changes will be passed on to consumers. Back in 2018, rising petrol prices sparked the gilet jaunes protest movement; French MEPs are particularly unsettled by the prospect of history repeating itself.
The introduction of the CBAM is also a delicate matter, with the EU’s trade partners voicing concerns that the mechanism could unfairly penalise their products.
The package will now undergo the scrutiny of Member States and will need to be approved by the EU Parliament before they become enforceable. This procedure is likely to result in modifications to the proposals. Some policies will also need to be implemented through national regulations – a process that, at times, has introduced variations across Member States. At first look, Fit for 55 would seem to represent a significant step towards the realisation of the ambitious European climate agenda. But it remains to be seen whether it is sufficiently strong to deliver on its promises, while also being politically acceptable to the many, somewhat fragmented, array of stakeholders involved.