Explained: How Europe’s ambitious new climate agenda will affect businesses

Source: The Indian Express and All India Radio

About EU’s “Fit for 55” proposal:

The European Union has unveiled some of the world’s most ambitious proposals, titled “Fit for 55”, to reduce carbon emissions and wean its 27 members off fossil fuels. The plan aims to cut their output of greenhouse gases by 55% by 2030, compared with 1990 levels.

The commission’s proposals require endorsement by the European Parliament and leaders of European national governments before they become law, a process that is expected to take around two years.

The roadmap of EU’s “Fit for 55” proposal:

The European Union’s plan to cut its greenhouse gas emissions by more than half by the end of the decade will touch almost every industry in the trade bloc.

Road Transport:
  • Cars with internal combustion engines will disappear from European showrooms by 2035.
  • To boost electric car sales, Public funds will be used to help build charging stations every 60 kilometers, or 36 miles, on major highways
  • The commission will also help finance a network of hydrogen fueling stations (fuel cells that convert hydrogen to electricity).
Water and air transport:
  • Commercial airliners will be required to fill up with synthetic fuel produced with green energy.
  • Cargo ships were not able to dock in ports like Rotterdam, Netherlands, or Hamburg, Germany, unless they run on cleaner fuels.
Heavy industry:
  • Steel producers and cement makers will pay for every ton of carbon dioxide their factories emit.


  • Renewables already account for 20% of the electricity produced in Europe. The goal is to raise the figure to 40% by 2030
  • Electricity producers will be pushed to speed up the switch to wind, solar and hydropower from coal.

How EU “Fit for 55” proposal compares at the global level?

The European Union’s target is more aggressive than that of the United States, which committed to reducing emissions by 40% to 43% over the same period, but behind Britain, which pledged a 68% reduction. China, the world’s largest emitter, has only said it aims for emissions to peak by 2030.

Criticism of the EU’s “Fit for 55” proposal:
  • Automakers: The European Union should “focus on innovation rather than mandating, or effectively banning petrol and diesel-powered cars.
  • The shipping industry is unclear how the plan would be applied and which shipping routes would be affected
  • Heavy industries have complained that the proposals could further erode their competitive advantage over producers in China and discourage the investment needed to shift to lower emissions.
  • Companies that make products destined for obsolescence, like parts for internal combustion engines, must adapt or go out of business.
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