This is the European green revolution: carbon taxes and the end of the sale of combustion cars in 2035

The European Commission presented on Wednesday a titanic legislative package on green transition that will affect all areas of the economy and society and that will serve to articulate during this decade the path that the EU should follow to definitively get rid of carbon dioxide (CO).₂) in 2050. “_Co2 emission must come at a price,” Commission President Ursula von der Leyen said in summary at the presentation of the plan.

The Community Executive, in its Fit for 55 proposal, in reference to the objective of reducing emissions in 2030 by at least 55% compared to 1990, announces several far-reaching measures, such as the prohibition of selling combustion cars from 2035 and reducing their environmental impact until then; new carbon tax rates; making it mandatory for residential buildings to be sustainable; and that 40% of gross energy consumption comes from renewables, among other points.

The 12 initiatives elaborated over months by Brussels, largely modernisations and revisions of existing rules, are the bowels of these green aspirations in a journey towards sustainability that will require great efforts, but that will also bring returns and benefits, according to the Vice-President of the Commission, Frans Timmermans, in a plea of solidarity with future generations.

With this package, the EU Executive not only aims to reduce emissions, but also seeks to gradually transform society as a whole and generate more sustainable economic growth. It aims, among other goals, to reduce the energy dependence of the EU, which spends about 27.5 billion euros a month on imports, and in particular fossil fuels.

The proposals, articulated in hundreds of documents, will now have to be negotiated with the Member States, represented in the Council, and with the European Parliament. Here are some of the ones that have the most impact.

Automotive

The Commission proposes that by 2030 new vehicles emit between 60% and 90% less polluting gases than today and that by 2035 no combustion car or van be sold within EU borders. To this end, it will promote electric and hydrogen models thanks to the manufacture of no less than three million publicly accessible electric dispensers by 2030, among other measures.

“20% of our emissions are still coming from our roads,” said European Commissioner for Transport Adina Valean at the launch of the major legislative proposal.

Although a general overhaul of the plan will be made in 2028, no changes are expected until the end of the decade to give the industry time to adjust to the transition. And although combustion cars can continue to be used, Brussels expects the fleet that includes these models to be completely replaced by 2050, when the entire transport sector should have reduced its emissions by 95%. From the Commission, European sources have reiterated, they assure that climate policy will not deindustrialize Europe, which will have time to adapt to this new framework.

Transport

Beyond cars and fuels, according to the proposal, commercial aviation will have to progressively mix biofuels with kerosene, a fuel that will have a new tax, and all ships that dock in community ports will have to use less polluting fuels. Among other measures, to encourage the use of fuels that are less harmful to the environment, Brussels will incentivise the use of sustainable aviation fuel (SAF) in the aviation sector through tax exemption, benefiting from a zero minimum tax rate.

Carbon at the border

The plan includes measures to prevent a “_CO2 leakage””, the technical way in which experts refer to the phenomenon in which the most polluting European companies could shift their production (e.g. steel, cement or aluminium) to nearby countries that have trade agreements with the EU but are less stringent in their environmental regulations.

This tool, which may clash with the rules of the World Trade Organisation, is ultimately intended to prevent Community industries from relocating to countries with softer rules, but also to safeguard the interests of Community companies.

To this end, Brussels also proposes a new mechanism to tax at the borders of the EU those products made outside whose manufacture generates more _CO2 than allowed. This excise duty has been designed mainly to prevent other countries less demanding with environmental standards from benefiting from a market like the European one, with more than 400 million consumers.

Brussels assured that this tool, openly criticized by partners such as the United States, will avoid at all costs falling into protectionism. However, the Community Executive is confident that the example will spread around the world and that the new package will be replicated in other markets.

Co2 price

According to the package prepared by the Community Executive, the emissions trading system (ETS) launched in 2005, which puts a price on CO, will be reformed.₂ released and affects some 10,000 energy-intensive installations and covers around 40% of the EU’s greenhouse gases.

The new ETS will cover road transport and the energy expenditure of buildings and generate funds to help households at risk of energy poverty. In this line, the plan includes the creation of a fund with 70,000 million euros in 10 years to help humble households that have problems paying for heating. Of this special fund, about 7,600 million would go to Spain, according to the proposal.

In turn, it is intended to encourage energy producers to choose less polluting technologies instead of paying a price per ton of CO.₂ issued, which will become more expensive, and it is expected that the reform of the ETS will also boost the energy efficiency of buildings, which will also have stricter objectives.

Renewable

Renewables are the great asset to reduce the EU’s energy dependence on fossil fuel imports. From the current target of 32% renewable energy in the EU’s gross final consumption in 2030, it will move to close to 40%. It will also be a legally binding target for countries, which on average place the weight of renewables at 20%.

“The fossil fuel economy has reached its limits,” Ursula von der Leyen said. “We want to leave the next generation a healthy planet and also good jobs and growth that does not harm nature. Climate goals are no longer just a political goal, but also a legal obligation.”

Taxation

In the plan, the European Commission also launches the idea of completely reforming the fiscal parameters with which the energy sector is governed within the EU. The objective is that those more polluting fuels, such as diesel or gasoline (especially if they are intended for transport) are taxed to a greater extent than other more sustainable alternatives such as biofuels or other renewable fuels such as hydrogen. Thus, according to the Brussels plan, conventional fossil fuels such as diesel and gasoline, as well as unsustainable biofuels, will be subject to the highest minimum tariff of 10.75 euros per gigajoule when used as engine fuel, and 0.9 euros when used for heating. The lowest minimum tariff, meanwhile, will be 0.15 euros in the case of electricity, regardless of its use, and advanced sustainable biofuels and biogas, as well as renewable fuels of non-biological origin such as renewable hydrogen. Between these two extremes there will be different rates depending on the type of fuel and use, but broadly speaking the difference in the tax between the most and least polluting alternatives will be more than 70 times.

The new rules, Brussels explained in a statement, aim to address the harmful effects of tax competition on energy, helping member states “derive revenues from green taxes less detrimental to growth than taxes on labour”. They will also remove obsolete exemptions and incentives for the use of fossil fuels, for example in EU air and maritime transport, while promoting clean technologies. In the proposal, the Commission charges hard against a “wide range of national exemptions and reductions” that today de facto favour the use of fossil fuels in the EU, while contributing to the fragmentation of the single market.

Source: Five Days