What is the EU's Fit-for-55 package?

What is the EU's Fit-for-55 package?

EU legislation has received an ambitious update in the form of the Fit for 55, a package that specifically aligns EU policies with the European Parliament and the Council’s agreed climate goals. This update took the form of new initiatives and a link with the European Green Deal -  for example, the EU’s target of reducing greenhouse gas emissions by 55%, which aligns with the European Green Deal’s central aim of transitioning Europe towards climate neutrality.  

What are the objectives of Fit-for-55?

The Fit-for-55 has ambitious sustainability targets. We look at some of the objectives the package hopes to achieve.  

1. Standards for certification 

Fit-for-55 enforces strict certification standards to hold industries accountable for carbon emissions. High-emission producers, such as transport manufacturers, will be responsible for ensuring their products meet stringent environmental criteria.

For example, automobile manufacturers must comply with emission production standards, ensuring new vehicles meet set requirements. Independent third-party testing will verify compliance, and manufacturers failing to meet the standards will face penalties.

2. Metrics and methodologies 

To achieve its goal of reducing climate change impact by 55% by 2030, the Fit-for-55 framework is based on a structured set of methodologies:

• Ensuring a socially fair transition – Implementing policies that support economic and social fairness in the transition to sustainability.

• Maintaining EU sector competitiveness – Creating a level playing field while ensuring that third-world operators remain competitive.

• Strengthening the EU’s leadership in global climate action – Positioning Europe as a global leader in combating climate change.

Fit-for-55 is a comprehensive plan designed to drive environmental progress while balancing economic and social factors, ensuring a sustainable and competitive future for the EU.

How does the EU's Fit-for-55 certification framework support climate action? 

Fit-for-55 has been structured around a specific certification framework to ensure its success, and this certification framework can be a crucial tool in the battle against climate change.  

1. Carbon pricing mechanisms (ETS reform) 

A carbon market known as the EU emissions trading system (EU ETS) has helped the EU decrease its emissions by 41% since 2005. This market will be pushed to higher limits as part of the Fit-for-55 package, including phasing out emissions allowances for certain industries. Global carbon offsetting for the aviation industry will also be introduced and implemented, as well as funding opportunities for modernisation.  

 2. Renewable energy directives 

The renewable energy directive will also undergo a shakeup, with the current 32% target of renewable energy sources by 2030 increased to 40%. Specific targets will also be established for different sectors, with slow-to-adopt industries such as the built environment and industry being targeted.  

 3. Energy efficiency targets 

New updates will be implemented to the EU energy efficiency directive, to reduce consumption by 2030 by 11.7%. Adopted in 2023, European countries will have mandatory energy efficiency targets, including both commercial and public sector remits.  

4. Sustainable transport initiatives 

Sustainable transport initiatives apply to most transport methods as part of the package, but the one sector of note in the case of the Fit-for-55 package is aviation. Often overlooked from a sustainability perspective due to the sheer amount of emissions the sector generates, the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) was implemented in 2022 to help offset emissions for the aviation industry. To further reduce aviation's carbon footprint, the ReFuelEU Aviation proposal has also been created.   

5. Carbon Border adjustment mechanism (CBAM) 

In 2023, the Carbon Border Adjustment Mechanism (CBAM) was implemented to help balance EU carbon emission reductions with potentially increasing carbon emissions by EU members relocating production to neighbouring, non-EU border countries that are not adhering to carbon reduction methods. This involves tackling the import and export of high-emission services and products by EU members from non-EU countries.  

What is the impact of EU's Fit-for-55 on different sectors?

While the Fit-for-55 package has been architected to have a positive effect on the world in general, new legislation will undoubtedly benefit and challenge sectors in different ways: 

How Fit-for-55 affects businesses?

The Fit-for-55 package introduces significant changes that will affect businesses across various industries. To support those most impacted, the Social Climate Fund aims to create a level playing field, particularly for:

• Vulnerable households

• Vulnerable micro-enterprises

• Vulnerable transport users

This fund will help offset rising operational costs related to buildings and transport, ensuring compliance with carbon emission targets while reducing economic burdens.

Fit-for-55 and the challenges and opportunities for the transport industry

The transport sector, a major contributor to EU emissions (responsible for approximately 15%), will see both challenges and opportunities under Fit-for-55.

• The package mandates a 100% reduction in carbon emissions for all new cars and vans by 2035, a policy approved by the European Parliament in 2022.

• A new emissions trading system will be introduced for fuels, buildings, and road transport, adding further regulatory requirements for businesses.

While these changes drive sustainability, they also require businesses to adapt, innovate, and invest in greener solutions to remain compliant and competitive.

What are the implications of Fit-for-55 on other sectors?

Beyond carbon emissions, the Fit-for-55 package also targets methane reduction, as methane is the second most impactful greenhouse gas after carbon dioxide.

Focus on methane reduction

Efforts to cut methane emissions are already underway. In 2021, over 100 countries committed to reducing methane emissions by 30% by 2030 under the Global Methane Pledge, announced at the COP26 UN Climate Conference.

Impact on the agricultural industry

The agriculture sector is expected to experience significant changes as it is one of the largest contributors to methane emissions. New policies will likely require farmers and agribusinesses to adopt sustainable practices to meet EU climate goals.

By addressing methane alongside carbon emissions, Fit-for-55 reinforces the EU’s commitment to comprehensive climate action across all sectors.

What are the challenges of the EU's Fit-for-55 package?

New compliancy requirements will mean certain industries are positively or negatively impacted by the Fit-for-55 package. We look at two of these key hurdles and how they might be combatted. 

Economic impact and competitiveness concerns 

One of the hurdles to the EU's competitiveness in relation to carbon emission reduction is the drawback of current transport alternative fuelling infrastructure. The alternative fuels infrastructure (AFIR) has been created to ensure businesses and individuals have appropriate infrastructure to charge electric vehicles.  

• In relation to alternative fuels, hydrogen refuelling stations will be installed from 2030  

• In relation to electric vehicles over 60km distances, a recharging station will be available for vans and cars 

• Payment systems for hydrogen and electric vehicles will be simplified  

Social implications and fairness 

The Social Climate Fund, designed to support businesses and individuals that might be impacted by the Fit-for-55 package, aims to make the policy adjustments fairer. As well as helping mitigate operational costs associated with carbon emission reductions, the fund will also temporarily cover direct income support, which will be funded by the EU. 

As the Fit-for-55 package reshapes industries, businesses must adapt to new policies, carbon reduction targets, and certification standards. While it presents challenges, it also offers opportunities for innovation and economic growth, positioning the EU as a global leader in climate action.