By 2050, Europe aims to become the world’s first climate-neutral continent, which is detailed in the 2019 European Union Green Deal - a roadmap of both tax and non-tax policy initiatives designed to achieve this ambitious target. This Green Deal consists of eight major policy areas (broadly categorised as either “Just Transition” or “Financing the Transition”), each of which consists of dedicated regulations, strategies and funding sources for projects under different stages of maturity.
Fit for 55-package
To pave the path to meet this aspiration in the fight against climate change, the European Commission (EC) presented, on 14 July 2021, its ‘Fit for 55’ package, which contains various ambitious climate targets. These targets set out a clear ambition for a green (and digital) transition in the EU as a whole and in individual EU member states by 2030:
- minimum 55 percent reduction in greenhouse gas (GHG) emissions by 2030, compared to 1990 levels
- above 32 percent share of renewable energy in the energy mix by 2030
- at least 32.5 percent improvement in energy efficiency.
Green transition
The European Green Deal was always intended to be a green game changer, and the ‘Fit for 55’ plan further articulates this strategy, brings EU legislation in line with the 2030 and gives traction to these transformative efforts. ‘Fit for 55’ leads the way for a green transition via the use of regulations and strategies, new initiatives, amendments to key legislation and key non-legislative communications.
The green transition is now sealed into EU policy, which calls for many measures designed to “green” the EU, such as banning the sale of new petrol and diesel cars and vans in the EU market from 2035; more types of fuel being covered by a carbon tax and expanding the scope of the existing emissions trading scheme to additional carbon intensive sectors such as road transport and maritime.
Is your organization prepared for the proposed legislative changes?
The EU continues with the rapid revision of existing, and introduction of new, regulations. For instance, the EU Carbon Border Adjustment Mechanism, which is a new carbon pricing framework in the EU, will come into effect on 1 October 2023, having a transformational impact on companies engaged in international trade of the foreseeable growing list of covered commodities codes and re-shaping global trade at large.
To future-proof business activities, we recommend that companies start implementing clear and feasible transition strategies now. KPMG Meijburg & Co would be pleased to help your company prepare for and adapt to the upcoming changes that will realize the long-term ambition of climate neutrality. These transition strategies go beyond just discussing decarbonization and taking strategic decisions. They also include understanding complex regulatory developments and how to navigate through them.
