How Will the EU Emissions Reduction Plan Affect Businesses?


FRANKFURT — Cars with combustion engines will disappear from European showrooms by 2035. Steelmakers and cement producers will pay for every tonne of carbon dioxide their factories emit. Cargo ships may not be able to dock in ports like Rotterdam or Hamburg unless they are running on cleaner fuels. Commercial aircraft will need to fill it with synthetic fuel produced with green energy.

The European Union’s plan to cut greenhouse gas emissions by more than half by the end of the decade will touch almost every sector in the trade bloc, with profound ramifications for business and the bloc’s economy. European leaders said: climate The package presented Wednesday could put Europe at the forefront of new technologies such as electric car batteries, offshore wind generation or hydrogen-powered aircraft engines.

But the transition will be painful for some consumers and companies as well, adding to the cost of a wide variety of goods and services, such as video monitors imported from China, a holiday flight to a Greek island, and even a tank of gas. Companies that make anti-aging products, such as internal combustion engine parts, must adapt or go out of business.

The proposals could reshape polluting industries such as steelmaking, which directly employs 330,000 people in the European Union.

“This is a fact that needs to be told,” said Akio Ito, senior partner at Roland Berger, a Munich-based consulting firm. “One way or another, we as consumers will have to pay the price of green transition.”

Mr. Ito said the new proposals will challenge industries in several ways. Companies will need to switch to cleaner energy sources, which are likely to be more expensive, such as hydrogen. He said there is a risk that European companies will start moving some of their most polluting operations, such as iron making, outside the borders of the European Union.

European commissioner for the so-called Green Deal, Frans Timmermans, acknowledged Wednesday that “some sectors will profit more than others”. He said it was up to the European Commission to show that burdens and rewards could be distributed fairly.

The European Commission’s “Fit for 55” plan calls for 27 member states to reduce their greenhouse gas production by 55 percent by 2030 compared to 1990 levels.

The European Union’s target is more aggressive than the United States, which has committed to reducing emissions. 40 to 43 percent in the same period, but behind the UK, which made a commitment 68 percent reduction. China, the world’s largest emitter, says it’s just targeting peak emissions until 2030.

How the plan will affect industries in Europe is described below.

Most automakers have announced plans to switch to electric vehicles, but many still resisted putting an expiration date on the most profitable fossil fuel vehicles. The European Commission plan will require all new cars to be emission-free by 2035, removing the flexibility of companies like Volkswagen, Mercedes-Benz or Renault to continue selling certain petrol or diesel vehicles, including hybrids.

The commission’s plan also includes some provisions that benefit the industry. Public funds will be used to build charging stations on major highways every 60 kilometers or 36 miles, in a move to encourage sales of electric cars. The commission will also help finance a network of hydrogen fueling stations that benefits the following companies. Daimler and Volvo They plan to build long-haul trucks powered by fuel cells that convert hydrogen into electricity.

The association representing European automakers said the charging networks envisioned by the commission were not dense enough and complained that it would be wrong to ban internal combustion engines altogether.

Oliver Zipse, BMW CEO and President of the European Automobile Manufacturers’ Association, said in a statement that the European Union “should focus on innovation rather than mandating or effectively banning certain technology”.

Aircraft are major producers of carbon dioxide emissions, but they are also difficult to convert to emission-free operation. According to the commission proposals, airlines will have to start mixing synthetic fuel with the fossil fuels they currently use and will no longer receive tax breaks on fossil fuels. In other words, they will have to pay more to pollute.

european airlines, An industry lobby group representing Europe’s largest flagship and low-cost airlines Air France-KLM, easyJet, IAG, Lufthansa Group and Ryanair said its members support a green transition but will seek simpler regulations and financial support.

“Taxes draw money from industry that can support investments in fleet renewal and clean technologies that reduce emissions,” said Willie Walsh, Managing Director. International Air Transport Association, in a statement.

Airbus, the world’s largest aircraft manufacturer, has pressed for subsidies for airlines to renew their fleets and support for sustainable fueling technologies. The European giant, whose main stakeholders are the French, Spanish and German governments, has announced its plans to develop carbon-neutral aircraft within five years, and recently announced a zero emission concept aircraft that is, it works with hydrogen.

The agreement selects companies that ship cargo by sea and allows them to pay more for the emissions they produce to spur their transition to cleaner energy. Most of the ships navigating the seas today run on low grade oil and are major pollutants.

Shipping industry lobbyists have already complained that it is unclear how the plan will be implemented and which shipping routes will be affected. “Will it just be Europeans, or half the trade between China and the EU?” S&P Global Platts said in a statement. note.

The European Commission plan will increase the cost of pollution by tightening the European Trade System, which forces companies to effectively pay for the dangerous carbon dioxide they release into the environment. Anticipating changes helped increase the price of the loan by about 50 percent.

Steelmakers warned that the offers could further erode their competitive advantage against Chinese mills and deter investment needed to switch to lower emissions.

“We will face rising carbon costs – that will be the end result,” said Koen Coppenholle, CEO of cement industry trade group Cembureau.

Electricity generators will be forced to accelerate the transition from coal to wind, solar and hydropower. Renewable energy accounts for 20 percent of the electricity produced in Europe. The goal is to increase that figure to 40 percent by 2030, largely by increasing the penalty utilities pay for electricity produced from fossil fuels, making wind and solar more financially attractive.

Given how many business interests are at stake, the plan is likely to face furious lobbying from industry representatives as it passes through the legislature in Brussels. The Commission’s proposals must be approved by the leaders of the European Parliament and European national governments before they become law, a process expected to take about two years.

Proponents of the commission’s plan could find deep support from Europeans, who are increasingly concerned by bushfires, record hot summers, severe storms and other tangible evidence of the harm of climate change.

“We saw tornadoes in the Czech Republic. Who would have thought of that?” said Mr Timmermans. “Anyone who wants to deny the urgency of the climate crisis should look again.”

Monika Pronczuk Contributed to reports from Brussels.


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