The acceleration of Europe’s green energy transition is the challenge of the decade. Now it’s time to turn the Green Deal into reality, and the European Commission is on the case.
With the unveiling of the ‘Fit for 55’ legislative package, the European ‘green’ 20’s have officially started, with the climate package setting out the blueprint for the EU to become the world’s first mover in achieving net zero emissions.
This will result in a radical transformation of European society and its economy, which will not be an easy task, but through the cross-cutting set of legislative proposals, Europe is taking a major step in the right direction to meet its ambitious climate targets while undertaking a robust growth strategy.
Addressing climate change entails a deep transformation of our way of living, moving and producing: the changes will be tangible in our cities, on roads, in our homes and offices. The ‘Fit for 55’ measures represent a major transformative moment for Europe, with clean electrification to get the lion’s share.
The EU’s green master plan includes several provisions to boost electrification.
First, we welcome the fact that renewables and energy efficiency targets have been toughened up under the European Commission’s proposal. As a Renewables Super Major, Enel has spent the past few years investing heavily both in renewable expansion and in end-use electrification. Greater ambition in these sectors, which are vital for emission reduction, will reinforce Europe’s competitive position and incentivize industry to make bigger changes. In this regard, however, complex, slow, lengthy or opaque permitting procedures are one of the biggest barriers to the full and fast deployment of renewable investments. What we urgently need in this respect are uniform and harmonized conditions for authorization at EU level. If Europe really wants to achieve the 40% renewables target by 2030 and fast-track its clean energy future while creating hundreds of thousands of new jobs, it will need to take prompt action on permitting by cutting red tape in order to encourage investments.
Unlocking the potential of renewables also requires an electric grid that is up to the challenge. To achieve the ‘Fit for 55’ objective, by 2030 65% of electricity must come from renewables, requiring the installation of over 500 GW of renewable capacity across the EU, approximately doubling the current renewable installed capacity. According to Bloomberg NEF, 65% of this new capacity will be connected to distribution grids. It is quite clear that this huge effort requires significant amounts of innovation and additional investments in modernizing Europe’s grid infrastructure. The grids of the future will be smarter, more flexible and efficient grids to get the most from the further developments in renewables, energy efficiency and electric mobility. Towards this aim, investments in grids in Europe will have to quadruple, from 12.8 billion euros per year to 43.8 billion euros per year.
Beside renewables, energy efficiency will be key and the European Commission seems to fully acknowledge this with the reform of the Energy Efficiency Directive. This will foster renovation investments for all types of buildings, making them greener, more efficient and lowering energy costs in the medium term.
Another positive feature of the package concerns transport. The de facto phase-out of new combustion engine cars by 2035, together with the binding targets for the expansion of charging infrastructures at national level might scale up the transition to electric mobility in a way as to be equally profitable and beneficial for car manufacturers, charging point operators and end-users.
The ‘Fit for 55’ package may represent an incentive for Europe’s industrial development. There is a policy tool proposed by the European Commission, the Carbon Border Adjustment Mechanism (CBAM), which is useful for creating a level playing field at global level and preventing the emission reduction targets from harming the competitiveness of EU industries. The CBAM mechanism is therefore important in adequately rewarding carbon-free technologies and boosting clean investments also outside the EU.
We all must strive to ensure that the transition is fair and just for all the actors involved. The long-term gains of the energy transition are worth the effort, but like any societal transformation, it involves some up-front costs both for companies and for customers. That is why the European Commission has wisely planned the launch of a new ‘Climate Action Social Fund,” which, alongside the Just Transition Fund, is another valuable financial tool that will help to manage the transition and households’ switch to cleaner fuels.
For Europe, the energy transition represents a now or never chance to take the lead in the climate race by leveraging on its technological and industrial expertise.
The ‘Fit for 55’ package is not only Europe’s climate master plan, but also and above all its sustainable growth strategy. If Europe succeeds, then others can follow its far-reaching guide. The end result will be a more resilient, more advanced and cleaner society.