Repowering Europe

Europe has been a front-runner in climate protection and a driver of the global environmental agenda, with the region aiming to become the first climate-neutral continent by 2050. It continues to develop a solid policy system to meet this target through its flagship European Green Deal (EGD), its July 2021 legislation package - Fit for 55’ - and its recently introduced REPowerEU.

In response to the ongoing energy price crisis, which has been exacerbated (and brought to the fore) by the situation in Ukraine, the EU published the REPowerEU plan on 22 March 2022. Dubbed the ‘REPowerEU strategy’ the proposal is geared towards making Europe independent from Russian fossil fuels and accelerating the green energy transition. Both investors and developers have had a strong positive reaction to the proposal for joint European action for more affordable, secure, and sustainable energy that is not tied to Russia

EU Green Deal, Fit for 55 and REPowerEU: A virtuous circle

The combination of Fit for 55 and REPowerEU is expected to initiate a virtuous circle that will both accelerate the transition and cut the EU’s reliance on Russian hydrocarbons:

On the one hand, full implementation of the Fit for 55 proposals would lower gas consumption by 30 percent by 2030, consequently reducing hydrocarbon imports.
On the other hand, REPowerEU may boost the Fit for 55 proposals regarding earlier and more ambitious targets for renewable energy and energy efficiency.
Fit for 55 is the EU’s most ambitious initiative to reduce its impact on the environment by transforming the workings of the economy, industry, and society. The revised EU ETS now includes maritime transport and a new system, ETS2, will cover buildings, road transport, and small industry starting in 2027.
Fit for 55, finalized in 2023, includes binding legislation on carbon pricing, energy efficiency, and renewable targets, accelerating the EU’s path to climate neutrality.

Fit for 55 will play a critical role in helping the EU achieve its REPowerEU objectives. Full implementation of the Fit for 55 proposals would boost energy efficiency, thus reducing gas consumption by 30 percent by the end of this decade.

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Europe intends to become the world’s first climate-neutral continent by 2050. To achieve this target, the European Commission (EC) has developed its ambitious ‘European Union (EU) Green Deal climate targets, which will illustrate the EU member states’ commitment to a green transition. In 2024, the European Commission proposed a 2040 climate target of 90% net GHG reduction compared to 1990 levels, setting the stage for the final push toward climate neutrality.

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The EU Green Deal introduced the following targets, which engage all participants in this pursuit:

At least a 62 percent reduction in GHG emissions by 2030, compared to 2005 levels, as revised under the 2023 Fit for 55 updates.
More than 32 percent share of renewable energy in the energy mix.
Minimum 32.5 percent improvement in energy efficiency.

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Fit for 55, embedded into the EU Green Deal in 2021, is a set of proposals to revise and update current EU legislation to accelerate the path to reaching the minimum 55 percent emissions-reduction target. These legislative proposals and policy initiatives highlight key policy developments in the making and their potential impact.

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To gather the support of EU member states for this action plan, the EC has created the Green Deal Investment Plan, which aims to mobilize EUR 1.5 trillion in sustainable investment by 2030, including new instruments under the Strategic Technologies for Europe Platform (STEP). This plan includes the ‘Just Transition Mechanism’ to support EU economic regions heavily reliant on carbon-intensive activities, helping to ensure that the European transition towards a climate-neutral economy happens fairly, leaving no one behind.

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To provide necessary feedback and participate effectively in public consultations, the EC proposes, together with each policy change, the inception of Impact Assessments. These Impact Assessments examine whether there is a need for EU action and the impact of available or proposed solutions. Informing citizens and stakeholders of the impact of the proposed changes provides support in the decision-making processes. Under the Corporate Sustainability Reporting Directive (CSRD), large companies must disclose energy use, climate risks, and transition plans starting FY2024.

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With its unprecedented effort, firm policy, and series of developments, Fit for 55 can keep the movement primarily focused on targeted areas, including finance, energy, transport, mobility, agriculture, corporate governance, forestry, and biodiversity. The EU has also launched a Hydrogen Bank and adopted the Critical Raw Materials Act to secure supply chains essential for clean energy technologies.

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Fit for 55 aims to play a critical role in achieving the REPowerEU objective of phasing out the EU’s dependence on the Russian energy supply. Full implementation of Fit for 55 proposals should trim the EU’s annual fossil gas consumption by 30 percent by 2030.

The plan has put the EU climate policy into motion.