The EU's climate law: Is climate action now picking up speed?

July 16, 2021

A statement by Moritz Lehmkuhl

With the new climate law, the EU has presented its most comprehensive package of climate action measures to date. Nevertheless, even this will not be enough to meet the 1.5 degree target. Therefore, it remains important what companies do within the framework of voluntary climate action. With green energy and CO2 offsetting, the law addresses two fields of action in which companies can already become active and make an impact today.

The law mandates a 55 percent reduction in greenhouse gas emissions by 2030 compared to 1990 levels, before the EU becomes climate-neutral by 2050. Accordingly, the motto is fit for 55". But even if this is significantly more than the previous law´s target, in order to comply with the Paris Climate Agreement and to limit global warming to 1.5 degrees Celsius, a 65 percent reduction in emissions would actually be necessary. So, we would have to reduce as many emissions in the next ten years as in the past 30!

Fit for 55" is good, but fit from 65" is better

The climate law raises the carbon dioxide limits for cars, industry receives fewer pollution allowances under the European emissions trading scheme, a CO2 border adjustment mechanism is introduced to protect against climate-damaging products produced abroad, and the expansion of renewable energy is to be accelerated. It also explicitly addresses the compensation of greenhouse gases. This is to be done, for example, by planting three billion trees, and using and securing peatlands as natural CO2 sinks. The goal: to sequester a total of 310 million tonnes of CO2 emissions by 2030.

So the direction we are moving in is a good one, but all parties must be involved and brought to a joint understanding: politics, the economy, and consumers. However, to achieve this, the law would have to go much further, make stricter specifications, and create additional incentives. It is not just about key figures and benchmarks, but also about a cultural change; the transformation of industries that have until now been geared towards resource consumption, to be redirected towards the promotion of climate-friendly behaviour and corresponding values.

The carbon footprint as a starting point for sustainability and innovation

For companies, the law gives rise to two important areas of action where they can have an impact. Firstly, they can support the expansion of renewable energy by switching to regenerative energy. How this can be done is explained in our current Climate Action Insights article on the topic of green energy.

Secondly, through the compensation of CO2 emissions, the law addresses a concept with which companies can recognise and use levers for improvement. It includes the cycle of emissions calculation, reduction, and avoidance, as well as compensation, and is an effective bridge to more climate action, possible innovations, and ultimately green transformation. 

The measures presented by the EU Commission still have to be negotiated and adopted by the European Parliament and the Council of Member States. In the best-case scenario, the law could come into force at the end of 2022. However, those who opt for the concept of CO2 offsetting can make an effective contribution to climate action now. This is necessary, because we have long since run out of time to wait.