Fit for 55

The European Commission's Fit-for-55 package proposal to go to 100% zero emission car sales from 2035 shows a serious commitment for reaching carbon neutrality by 2050, and will put European industry in the driving seat to dominate the new global electric vehicle (EV) market. While this move could democratise the purchase of EVs, policy-makers need to take a small extra step to ensure early build up of EVs to drive cost reductions and fully guarantee that chargers are available in the right locations.

In her 2021 State of the Union address, European Commission President Ursula von der Leyen appealed to Europe’s soul, which, she said, has been tested to the core in times of multiple crises. The team of the Heinrich-Böll-Stiftung European Union did its own soul-searching, pointing at the good, the not-so-good and the missing in von der Leyen’s speech.

While the EU's Fit-for-55 Package includes many important files, the European Commission postponed legislation on methane a particularly potent greenhouse gas to December 2021. This article summarises the issues at stake and argues that without stringent regulation on this gas, the Fit-for-55 Package will fail to reach climate goals.

The proposal for a Carbon Border Adjustment Mechanism (CBAM) is likely the most contentious element of the Fit for 55 package, with significant ramifications not only internally in the EU but beyond its borders. It is a long-discussed idea whose time has finally come as part of European Commission President von der Leyen’s European Green Deal grand bargain.

Tax systems across the EU are currently neither fair nor green. The burden of taxation has been steadily shifting in recent decades from corporate profits and personal wealth to labour income, especially of lower-income earners, helping to drive growing inequality across the EU. And with men disproportionately represented among the EU’s wealthiest citizens, the system helps underpin gender inequality too.

Green budgets refer to tools that aim to achieve environmental and climate objectives by analysing the environmental impacts of budgetary and fiscal policy choices. Budgeting can therefore be a tool to mainstream gender equality and environmental objectives at the same time. While taxation can also enhance gender equality and incentivise a green transition, this chapter  focuses on the budget side due to the revenue structure of the European Union (EU), in the context of the European Green Deal, the EU Budget 2021-2027 and the Recovery and Resilience Facility.

On 14 July 2021, the European Commission will present its proposals for implementing the EU Climate Law - the so-called “Fit-for-55” package. This will be the starting signal for one of the most important EU debates of the next years: how can the EU reduce its greenhouse gas emissions by 55% by 2030 and how can it become climate neutral by 2050?