EU’s “Green Deal” is now becoming concrete for companies

By 2030, the EU wants to achieve far more CO₂ savings than the previously targeted 40 percent CO₂ savings compared to 1990 – the member states and the European Parliament agreed on this at the end of 2020. After all, the “Green Deal” envisages that in 2050 the EU should be the world’s first climate-neutral association of states. Progress was made in the past year on key initiatives of this political program to transform the European economy in a way that is climate and environmentally friendly.

Building on this, the Commission will present specific measures in 2021. To this end, numerous laws are to be amended in June – many of them affect companies directly, others have a decisive influence on the economic environment.

Emissions trading reform
The intended faster shortage of certificates in the European Emissions Trading Scheme (EU ETS) will increase the CO₂ costs for almost 2,000 German power plants and combustion systems in industry and drive the search for technological alternatives. The industrial companies affected are often at the beginning of long value chains – effects will therefore also become apparent in these chains. In addition, proposals are expected to extend the EU ETS to sectors that have not yet been covered.

For the individual member states, Brussels could also propose higher binding targets for the sectors that are not yet subject to the EU ETS, for example for the areas of buildings and transport. These annual emissions budgets force the states to take national measures that affect many companies – such national regulations include, for example, fuel emissions trading in Germany since the beginning of the year.

New specifications for individual industries
For some energy and trade-intensive sectors such as steel and cement, a CO₂ border adjustment is to be established. The aim is to avoid competitive disadvantages in these industries as a result of rising CO₂ prices across the EU compared with competitors outside the European Union – and to prevent value creation from migrating.

For the automotive industry, there are signs of a renewed adjustment of the CO₂ limit values ​​and the establishment of more ambitious emissions standards (“Euro 7”), which would accelerate the market ramp-up for electric vehicles.

Circular economy as a focus
The focus of environmental policy projects is on promoting the circular economy. The Commission has announced that it will present a new legal framework for sustainable products and a proposal to revise the Ecodesign Directive in the fourth quarter of 2021. This means that companies have to make considerable adjustments to the design and manufacture of their products. The goal of further strengthening the circular economy will also lead to changes in the areas of “packaging” and “batteries”: new specifications for their design and reusability will also be pushed forward in 2021.

The Commission also wants to further reduce pollutant emissions into the environment. An action plan for the so-called zero pollutant ambition for the areas of air, water and soil is planned for March. Specifically, this is linked to considerations on the revision of the air quality directives or the industrial emissions directive. In the medium term, companies may have to adapt to further requirements for reducing emissions and thus adapting their production processes.

 

Source: DIHK (Association of German Chambers of Industry and Commerce) Brussels