Fit for 55: Climate and Buildings (cepPolicyBrief)

“The new emissions trading scheme, EU ETS II, effectively and efficiently reduces total CO₂ emissions in the road transport and buildings sectors,” says cep economist Martin Menner, who analysed the EU's “Fit for 55” package on climate protection and buildings, including the Energy Performance of Buildings Directive (EPBD), with cep energy expert Götz Reichert. The CO₂ price will set incentives for alternative fuels, energy-efficient renovations, more efficient new buildings and for heating systems with lower CO₂ emissions. It will also prevent rebound effects. According to Menner, the EU should not limit the EU ETS II to commercial users, as demanded by the European Parliament, and should also abstain from a price cap so that emissions trading would really cut CO₂ emissions effectively.

Indeed, rising energy prices are already leading to social hardship. However, according to Reichert, emissions trading could be cushioned socially. “The social use of auctioning proceeds is crucial for public acceptance. They should not flow into the EU budget. Rather, the Member States should be obliged to use most of them for direct income support instead of financing climate protection measures,” Reichert demands. The Member States should set up systems for per-capita transfers to pay out income subsidies. For hardship cases, there would then be targeted money from the climate social fund.

Due to the hardened fronts between Council and Parliament, the cep experts expect difficult trialogue negotiations. In the run-up, Poland, for example, had demanded that the planned introduction of emissions trading for buildings and road transport was completely cancelled.

Menner pleads for a transitional solution if failure of negotiations should be imminent. He proposes to start only with commercial and private transport, which has been the only sector with rising CO₂ emissions so far. Then, however, the building sector would have to be given a precise start date.