What is the Green Deal all about?
Launching the Green Deal, a new strategy for green growth, on 11 December, the European Commission made a powerful move to voice out its ambition for establishing Europe as the first net-zero greenhouse gas emissions continent and climate neutral economy by 2050. The newly adopted communication of the College of EU Commissioners sets out a roadmap with a sequence of measures and policies that should “enable European citizens and businesses to benefit from the sustainable green transition.“
With robust support of the European public, of which 93% agree that the climate change is a serious issue to be tackled, the Commission plans to review all EU laws and regulations to achieve alignment with climate goals. In addition to that, the upcoming changes in policies and laws will be accompanied by a robust investment strategy focused on green technologies and sustainable solutions for European businesses.
It is important to note at this point that the Green Deal is a strategy which builds importantly upon a series of already-existing policies in support of the green economy. This specifically includes the Action Pack for Circular Economy with a related Single-Use Plastics Directive, the Action Plan on Sustainable Finance and the non-financial reporting directive which is going to be updated and reinforced.
The Deal itself contains measures ranging from a creation of new opportunities for innovations in clean energy up to more sustainable food systems.
What can be particularly relevant for the private sector?
Construction and renovations
Buildings are responsible for 40% of the EU’s total energy consumption. According to official communication of the European Commission, the renovation rate of buildings currently stands at around 1%. The current data indicate that especially the heating sector will have to make very important contributions. As such, increasing the number of renovations with focus on energy and water efficiency is one of the flagship goals of the Deal.
Currently, around 20% of the EU’s emissions come from its industries. In reaction to that, the Green Deal proposes the development of new markets for circular products and importantly, decarbonisation and modernisation of energy-intensive industries such as steel and cement. So-called ‘sustainable products’ policy which is expected to be presented in 2020, will prioritise reducing and reusing rather than just recycling. Similarly to that, new legislation on recyclable and reusable batteries is expected to be implemented in the same year.
Transport and transport-related industries are the third most substantial pollutants accounting for around a quarter of the Union’s greenhouse gas emissions and their impact continues to grow. The automobile sector currently accounts for approximately 70% of these emissions. The Commission plans to tackle this with the deployment of 1 million public charging points for electric cars by 2025. The Deal further previews 13 million zero- and low-emission vehicles on EU roads by the same year. This will be accompanied by stricter standards on traditional cars.
Farm to fork strategy
The new strategy for greener and healthier agriculture aims to reduce the “dependency, risk and use of chemical pesticides, as well as of fertilisers and antibiotics.” This will be supported by the development of innovative farming and fishing techniques and enhanced focus on R&D. Member States will be obliged to submit new national strategic agricultural action plans in 2020 and these will be subsequently reviewed for compliance with the Green Deal.
As a part of the Green Deal, Member States are expected to update their national energy and climate plans in alignment with so-called Clean energy initiative. Relevant energy legislation, including so-called TEN-T regulation, should be reviewed already by 2021. As a part of these efforts, the Commission requires rapid phasing out of coal and decarbonising gas, intense integration of renewables as well as the boost of innovations for enhanced access to alternative energy sources and regional cooperation.
Financing of the Green Deal will come party from incomes stemming from the revised Energy Taxation Directive. The main comprehensive solution for financing the transition will be however presented in the third quarter of 2020 when the European Commission will present its Sustainable Finance Strategy and when the College will propose the Sustainable Europe Investment Plan.
Aligning its policies with the Green Deal, Germany agreed to quit coal by 2038. The EU’s biggest economic player gets currently from coal 35% of its energy. Activist networks and think tanks, lead by organizations such as Greenpeace and the World Resource Institute, criticize the Deal as insufficiently ambitious. Others, especially the private sector, worry that innovations and investments in R&D will remain ineffective as the rest of the world will refuse to follow. As much as the Green Deal appears as a breaking point, its real impact is yet to be judged.
Deloitte GREEN: How can we help you?
- Non-financial reporting and follow up process optimaliztion in line with identified opportunities&challenges
- Regulatory compliance with EU directives on sustainable development: Single-use plastics, Action Plan for Circular Economy
- Getting ready for SREP: stress tests, compliance with Action Plan for Sustainable Finance