The European Climate Law is a regulation which, unlike a directive, is directly incorporated into European Union law and into the domestic law of all its Member States, without any national transposition measures.

The Climate Package, also said  «Fit for 55», is a set of legislative proposals that should more materialize the objective of reducing greenhouse gas emissions by 55% by 2030.

Europe’s ambition is to become the first continent to achieve carbon neutrality. 

Since 2019 and the start of Ursula von der Leyen’s European Commission presidency, we witness an consideration of the effects of global warming by policy makers

The summer of 2021 climate news will have been marked by numerous natural disasters, the publication on 9 August of the latest report by the Intergovernmental Panel on Climate Change (IPCC), but also by significant legislative advances. 

In France, the “Climate and Resilience” law was enacted on 22 August. It reflects 56 of the 146 proposals of the Citizens’ Climate Convention adopted by the Head of State, including the reduction of greenhouse gas emissions by 40% by 2030. However, this law will have to be brought into line with the more ambitious objectives recently defined by the European Union. 

Indeed, the European climate law, which entered into force on 29 July 2021, sets as objectives climate neutrality by 2050, as well as the reduction of greenhouse gas emissions by 55% by 2030 compared to 1990 levels.  

This law is a regulation which, unlike a directive, is directly incorporated into European Union law and into the domestic law of all its Member States, without any national transposition measures.  

This regulation aims to align the EU’s climate strategy with the Paris Agreement’s objective of limiting the global temperature increase to 1.5 degrees. This is the first time that the European Union and its Member States have a legally binding target for reducing greenhouse gas emissions. 

The European Climate Law is adopted, but how it will be implemented remains to be clarified: that is the purpose of the « Fit for 55 ». 

The EU climate law translates into a legal obligation the European Commission’s initiatives taken as part of the “Green Deal for Europe”, presented on 11 December 2019, which aim to make the continent the first to achieve carbon neutrality. 

The adopted measures include

    • The establishment of a European Scientific Advisory Board on Climate Change. “This board will provide independent scientific advice and produce reports on measures, climate targets and indicative carbon budgets for EU greenhouse gas emissions” (Article 3). 
    • The evaluation by the European Commission every 5 years of the measures and progress made. In this respect, it will be able to make recommendations to Member States whose actions are incompatible with the objective of climate neutrality, and those will be obliged to follow them up or justify their inaction (Article 7). 

In addition to this regulation adds the Climate Package also said  «Fit for 55», published by the European Commission on 14 July 2021. This is a set of legislative proposals that should more materialize the objective of reducing greenhouse gas emissions by 55% by 2030. This “Fit to 55” includes in particular: 

In the context of carbon pricing: 

    • A revision of the EU Emissions Trading Scheme (EU ETS). This mechanism sets the price of carbon and lowers the cap on emissions from certain economic sectors (electricity generation, steel, cement, refining, chemicals industries and district heating) each year. The Commission would like to see an increase in the reduction target, as well as the inclusion of new sectors such as maritime and road transport, aviation and buildings. 
    • The introduction of a carbon adjustment mechanism at the borders. It aims to raise the cost of imports from countries with less environmental concerns. 

In the context of the energy and transport sectors: 

    • Increase the share of renewable energy in energy consumption from 32% to 40% by 2030.
    • A tightening up of standards on vehicle pollution, including the end of the sale of petrol and diesel engines by 2035. 

The whole « Fit for 55 » package is now to be considered by all EU bodies by 2023 to move from proposals to legal obligations. 

It should be noted that at this time these targets need to be achieved collectively. The EU’s consideration of the different starting points of member countries, their national circumstances and their emission reduction potential have not yet been defined.    

All economic actors are affected by a transformation of our growth model and its medium-term effects.

The European climate law and the “Fit to 55” will have an economic and social impact on all the activities of the Union and therefore of France. Although they are not yet clearly measured, the Commission is already trying to mitigate future risks, such as the “yellow waistcoats”, by creating a Social Climate Fund to support the poorest households and SMEs. 

Increasing fuel prices, taxes on products imported from outside the EU, switching to electric vehicles… Achieving climate neutrality means changing our production and consumption methods but also the opportunity to enter a resilient and sustainable economy. 

Increasing fuel prices, taxes on products imported from outside the EU, switching to electric vehicles... Achieving climate neutrality means changing our production and consumption methods but also offers an opportunity to enter a resilient and sustainable economy. 

The European Climate Law introduces new opportunities that businesses should grab without delay.

  • It is in the interest of family businesses, in a transmission approach, to anticipate future legislation in order to perpetuate their activities. The definition of efficient action plans and the securing of growth levers can be achieved through the study of strategic positioning or the formalisation of CSR policies. 

  • Intermediate-sized companies, in a logic of compliance, will need more support in preparing their extra-financial reporting or in analysing the financial risks associated with the effects of climate change. 

  • Investment fund managers, in a logic of financial attractiveness, will need to know, for example, the impact of their investments through technical expertise missions in environmental and social risk management. 

Thus, the European climate law sets the tone for the next COP 26 to be held in Glasgow in November: there is an urgent need for a paradigm shift and the European Union wants to be a leading player. 

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