What is the EU doing?

In 2019 the European parliament declared a “climate and environmental emergency”. In 2020 EU leaders pledged to cut greenhouse gas emissions by 55% by the end of this decade. Now comes the hard part: turning promises into policies to curb dangerous global heating.

On Wednesday, the European Commission published a dozen legislative proposals to ensure its climate and energy laws fit the ambition of a 55% cut in emissions by 2030, compared with 1990 levels. From phasing out the internal combustion engine to forest protection, no sector of the EU economy will go untouched.

What are the main proposals?

• EU member states will face tougher greenhouse gas reduction targets and goals to increase renewable energy by 2030. The EU as a whole will aim to get 40% of its energy from renewable sources by the end of the decade.

• Pollution will become more expensive for electricity generators and heavy industry, under the European emissions trading system (ETS). The ETS cap on emissions will be tightened. Free allowances will be phased out from 2030 onwards, slowly driving up the cost of pollution.

• Foreign companies importing steel, aluminium and other carbon-intensive products into the EU will have to buy allowances to sell their goods into the European single market. The “carbon border adjustment mechanism” is intended to protect EU companies from losing out to more lightly regulated rivals.

• A new emissions trading system would be set up by 2025 for fuel producers supplying buildings and road transport. To head off critics warning of higher energy bills, the EU executive wants to create a EUR144.4bn (GBP123.2bn) fund to help people pay for energy efficiency upgrades to their homes and greener cars, with EUR72bn of that coming from the EU budget.

• After years of slow progress, the EU will overhaul what officials call its “outdated” energy taxation law, to phase out tax breaks for fossil fuels in EU aviation and shipping.

Does it all add up?

While the head of the European Commission, Ursula von der Leyen, has insisted the whole plan rests on scientific advice, green campaigners have a different interpretation of what science demands. Many NGOs and green politicians wanted a target of 65% or 70%. Greenpeace derided the EU announcements as “a fireworks display over a rubbish dump”.

Campaigners are also worried about “accounting tricks”, such as the freedom for EU member states to use offsets – buying emissions reduction credits from a better performing country – rather than do the hard work at home. Greens are also alarmed by what they see as failure to close a big loophole. Campaigners say not enough has been done to stop forests being chopped down for fuel, an outcome that has the perverse effect of increasing greenhouse gas emissions and destroying nature.

What changes might people notice?

If the plans succeed, cars will become less polluting. Emissions standards for cars and vans will be tightened, with the production of diesel and petrol-powered cars consigned to history by 2035. Electric charging points should be more widespread, in theory every 60km on main roads.

People should get more help to insulate their homes and buy green vehicles, through the EU “social climate fund”. National governments would have to help finance the fund and organise the programmes.

But the reform model chosen could send energy bills soaring. The planned emissions trading system for housing and road transport, requiring heating and fuel producers to buy allowances, will make fuel more expensive.

Critics argue that Brussels is risking a backlash from low and middle income earners who depend on cars, in a potential repeat of the confrontation between the French president, Emmanuel Macron, and thegilets jaunes (yellow vests)protesters over fuel taxes. One analysis has suggested the commission proposals could add an extra EUR429 to average household energy bills, and EUR373 increase in driving costs.

How will this affect the rest of the world?

The plan to hit polluting imports with a special carbon levy is the measure most likely to attract attention from China, the US, Australia and other countries importing polluting products into the EU. The plan – a carbon border adjustment mechanism – means from 2026 companies would have to buy allowances to sell certain carbon-intensive products in the EU, including iron and steel, fertilisers and aluminium. The intention is to put foreign imports on a level playing field with European companies, who have long protested about “carbon leakage”, for example EU steel producers losing market share to more lightly regulated rivals outside the EU, without any overall diminution in total emissions.

EU officials are confident they can avoid retaliation at the World Trade Organization, because they say the scheme targets companies, not countries. The levy is based on the amount of CO2 in a product, giving companies an incentive to move to greener production.

Foreign countries may also protest against plans to include large ships docking at EU ports into an emissions trading system.

What happens now?

The dozen texts have to be agreed by EU ministers and members of the parliament in an accelerated process lawmakers hope to conclude in 2022. The laws have to be agreed by a union that spans climate lukewarm governments, such as coal-dependent Poland and enthusiasts, such as Sweden, Denmark and Finland.

Expect a frenzy of lobbying as campaigners, business groups and non-EU countries seek to toughen up, water down and throw out proposals they do not like. Most big companies have now endorsed the EU goal of net zero emissions by 2050, but support becomes significantly weaker when that means taking action in the next decade, according to analysis by the UK-based thinktank Influence Map. Their analysis of 216 industry groups showed that only 36% supported the goal of cutting emissions by 55% by 2030.

“The days of punching the air and saying let’s go to zero carbon in 2050… … are ending now,” said former senior EU official Peter Vis. “It is not the grand declarations that are going to be the emphasis from this point on, it’s the hard choices that go with it.”