Newsletter 5.2021
Dear reader,
Welcome to the fifth EUROFUEL newsletter of the year. In this edition we take stock of the Fit for 55 Package and look at Eurofuel’s positions on the different proposals tabled by the European Commission.
As expected, the Commission’s approach puts a strong pressure to decarbonise all sectors, including heating. The proposals promote the development of renewable and cleaner energy systems for Europe’s homes and public buildings.
Our sector – providing reliable and comfortable heating solutions to around 20 million households across Europe – fully supports the Commission’s efforts and has concrete solutions to help achieve EU’s climate objectives. More information on our contribution will be soon available to the public in the upcoming Eurofuel’s Roadmap. The latter describes the transition pathway which will enable our industry to deliver renewable heating fuel fully compatible with EU’s 2050 climate neutrality objective. This will set our vision for the future, and your contribution will be paramount to make it real. Stay tuned for the official launch!
Yours,
Dr Ernst-Moritz Bellingen
Fit for 55 unveiled
On 14 July, the Commission published the Fit for 55 package, intended to set the EU on the path to a greenhouse gas emissions reduction of 55% by 2030 and, ultimately, climate neutrality by 2050. The package contains more than a dozen legislative proposals updating the entire EU climate and energy legislation to match the EU’s goals in these areas.
The proposals under the Fit for 55 aim to reduce emissions holistically across all sectors. Heating and buildings will be heavily impacted by the initiatives tabled by the Commission.
Below an overview of the most relevant ones for Eurofuel:
- The revision of the Energy Taxation Directive proposes to increase minimum taxation rates for fossil fuels used in heating. According to the new minimum rates proposed, the most polluting fuels will be taxed the highest (gas, oil and petrol) while electricity – regardless of its use (i.e. transport or heating) – would be taxed the lowest.
- The revised Renewable Energy Directive includes measure to foster the shift from fossil to renewable energy in heating (mainly through renewable electricity). It sets a an increased target to produce 40% of the EU’s energy from renewable sources by 2030 and the objective to reach at least a 49% renewable share in the energy used in buildings by 2030. Related to that, the proposal also establishes a binding 1.1 % annual increase in renewable energy use for heating and cooling. According to the Commission, all these objectives can be fulfilled by direct electrification (such as using renewable electricity from wind and solar or supplying heating and cooling via heat pumps), direct renewable heat (e.g. geothermal and ambient energy, solar thermal, etc.), or district heating and cooling, which can use renewable energy sources as well as waste heat and cold from industrial and service sector processes.
- The revision of the Energy Efficiency Directive sets a higher targets for energy savings by 2030, requiring Member States to collectively ensure that energy consumption is reduced by at least 9% by 2030 compared to the 2020 reference scenario. To this end, the proposal establishes a new target for Member States to reduce energy use in the public sector by 1.7% every year and requires national governments to renovate at least 3% of the total floor area of all public buildings annually.
- The package also includes a revision of the Emission Trading System which establishes a new EU-wide emissions trading system for buildings and road transport. The latter will regulate fuel suppliers (rather than households and car drivers). The suppliers will be responsible for monitoring and reporting the quantity of fuels they place on the market and for surrendering emission allowances each calendar year depending on the carbon intensity of the fuels. This approach aims to incentivise fuel suppliers to decarbonise their products, accelerating fuel-switching in heating in existing buildings.
- To compensate poorer households and help them switch to cleaner fuels, the Commission presented a Climate Action Social Facility, a fund providing EUR 72.2 billion in current prices for the period 2025-2023 in the EU budget from the new Emissions Trading System to enable Member States to support vulnerable low and middle-income households, transport users, and micro-enterprises affected.
As clear from the overview above, the Package will have a strong impact on Eurofuel, as the proposals provide strong incentives to swiftly decarbonise heating by promoting renewable solutions (mostly electricity based ones).
The proposals will now be examined by the Parliament and the Council who are expected to start working on the files in the coming weeks. Given their complexity and far-reaching implications for all sectors of society, the files’ legislative procedures are expected to be lengthy and controversial.
Eurofuel response to Fit for 55
As explained above, the Commission’s approach does not provide the right level of flexibility to allow every existing solution to contribute to the decarbonisation of heating. The framework proposed on 14 July for instance fails to support the potential of renewable fuels. Concrete options to create a more balanced policy framework are summarised in the statement developed by Eurofuel after the publication of the package:
Throughout the upcoming legislative process, Eurofuel will continue advocating for the key policy asks mentioned above and engage with key policymakers involved with the proposals.