European Climate Law

The European Climate Law sets the 2050 climate neutrality target in EU law and raises the 2030 GHG reduction target from 40% to 55% compared to 1990 levels. The regulation aims to make the EU's transition to climate neutrality irreversible, provide long-term direction for fair and cost-effective policy alignment, offer clarity for economic actors, and establish a monitoring system for future actions.

To meet regulatory targets, the Commission began a major legislative review in July 2021, including new laws and revisions in energy, climate, and transport fields. The notable Fit for 55 package started in July 2021, while the Hydrogen and Decarbonised Gas package launched in December 2021. These include revisions of various acts:

• EU Emissions Trading Scheme;
• Effort Sharing Regulation;
• LULUCF Regulation;
• Renewable Energy Directive;
• Energy Efficiency Directive;
• Regulation on Alternative Fuels Infrastructure (instead of the current directive);
• Regulation for CO2 emissions of new passenger cars and new light commercial vehicles;
• Energy Taxation Directive;
• Energy Performance of Buildings Directive
• Gas market Directive and Regulation;

New proposed legislation includes:

• Fuel EU Maritime Regulation;
• Regulation on Carbon Border Adjustment Mechanism;
• ReFuel EU Aviation Regulation;
• Social Climate Fund Regulation;
• Regulation on methane emissions reduction in the energy sector;

All of these files have since been adopted through the EU’s legislative processes, except the revision of the Energy Taxation Directive. To ensure that Member States are on track to progress towards the climate neutrality and adaptation objectives, the Commission is undertaking periodic assessments, starting in 2023 in its Climate Action Progress Report. Similarly, the Climate Law also put obligations on the Member States to elaborate on their approach to comply with the common ambition and objectives, by revising their National Energy and Climate Plans (NECP). 

 

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What's in it for hydrogen?

The goal of climate neutrality represents a paradigm shift, as opposed to any other climate ambitions because it requires all sectors to consider the technological change required to minimise or even eliminate all emissions. The EU Climate Law sets the path for climate neutrality: it defines both the ambition and pace. It therefore provides additional predictability for clean technology investors. The upward revision of the target to 55% GHG emissions reduction by 2030 provides even more incentive to boost research, scale up and roll out clean breakthrough technologies that would help reach the EU's climate ambitions.

The revision of all relevant climate-related policy instruments and the introduction of new ones includes the reform of the EU ETS, connected with the establishment of the CBAM, and, more broadly, a coherent and effective carbon pricing policy that is climate-aligned. Concretely, the adoption of the more ambitious 2030 emission reduction target will lead to the alignment of the ETS to comply with the upward revision and, therefore, to a stronger reduction in allocated EU Allowances and increased carbon market prices.

In this context, hard-to-abate sectors and mobility areas will have to find solutions to decarbonise, in which clean hydrogen will play a substantial role. Clean hydrogen is featured as a clear high-potential solution to reach climate targets within the Climate Law. The Commission is planning on an accelerated deployment of clean hydrogen technologies in both ETS and non-ETS sectors, which provides for many opportunities for the industry across various applications.

The holistic policy framework provided by the Climate Law was key in establishing a regulatory basis that enables and incentivises the development and scale up of novel, clean technologies in the EU.  

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Links to Legislation and additional information:
EU Green Deal Communication COM (2019) 640 final

Climate Action Progress Report 2023EU-wide assessment of the draft updated National Energy and Climate Plans European Climate Law

Communication on European Green Deal Investment Plan COM(2020) 21 final