FIT FOR 55

Climate change, one of the most pressing global challenges facing today, necessitates transformation in numerous areas, from energy policies and industry to transportation and agriculture. The Paris Agreement, adopted in 2015, specifically mandated governments to reduce greenhouse gas emissions and limit global temperature rise to 1.5–2°C. Within this framework, the European Union (EU), one of the world’s largest economies, has assumed a leading role in combating climate change. The EU’s goal of becoming a climate-neutral continent by 2050 sets a decisive vision not only for Europe but also for global environmental policies.

The European Green Deal provided the fundamental roadmap for this vision, but binding interim measures were needed to achieve this long-term goal. In this context, the “Fit for 55” package, announced in 2021, emerged as a revolutionary set of policies encompassing multiple sectors, aiming to reduce the EU’s greenhouse gas emissions by 55% by 2030 compared to 1990 levels. “Fit for 55” is not only a set of environmental regulations but also a comprehensive transformation program intertwined with economic competitiveness, energy security, social justice, and global trade relations.

Drawing its legal basis from the European Climate Law, Fit for 55 has made the EU’s climate targets legally binding. The Climate Law sets the goal of achieving climate neutrality by 2050 and mandates a 55% emissions reduction by 2030. The package, prepared by the European Commission, was negotiated in the European Parliament and the European Council and entered into law. Within the EU’s multi-layered governance structure, Fit for 55 was shaped by the responsibilities of both supranational institutions and member states, making it both a technical and a political process.

The most notable of the regulations comprising the package is the reform of the Emissions Trading System (ETS). The ETS, the world’s largest carbon market, has been implemented within the EU since 2005. With Fit for 55, the scope of the ETS has been expanded, particularly by including the maritime and aviation sectors. This will lead to a significant cost shift in the global transportation sector. Furthermore, with the gradual reduction of free allowances, carbon prices will have a stronger impact on the market, forcing companies to focus on green investments.

Another critical element is the Carbon Border Adjustment Mechanism (CBAM). By imposing additional financial obligations on carbon-intensive products imported into the EU (such as cement, iron and steel, aluminum, fertilizer, and electricity), the CBAM aims to align EU producers’ carbon costs. This aims to prevent carbon leakage. This regulation is considered a significant turning point in the global trading system, and its compatibility with World Trade Organization rules is being debated. Developing countries argue that the CBAM imposes unfair costs on their industries. 

The Renewable Energy Directive (RED III) and the Energy Efficiency Directive stand out in the energy aspect of the package. The aim is to increase the share of renewable energy in total energy consumption to 40% and to increase energy efficiency obligations. These regulations aim to strengthen the EU’s energy supply security, reduce dependence on fossil fuels, and achieve leadership in clean energy technologies.

The transportation sector, meanwhile, comprises one of the most ambitious transformations of Fit for 55. By 2035, all new cars sold in the EU are planned to be zero-emission. This goal necessitates a radical transformation of the automotive industry, leading to the rise of electric vehicles and hydrogen fuel technologies. The update of the Energy Taxation Directive has also tightened the taxation of fossil fuels and introduced tax incentives for renewable energy sources.

To offset the social impacts of this transformation, the Social Climate Fund has been established. This fund, worth approximately €72 billion, aims to prevent low-income households and small businesses from being negatively impacted by the energy transition. Thus, Fit for 55 is a policy package that considers not only environmental but also social justice. The Fit for 55’s objectives are clearly defined: reducing greenhouse gas emissions by 55% by 2030, achieving the vision of a climate-neutral Europe by 2050, ensuring energy security, increasing global competitiveness in clean technologies, and safeguarding social justice throughout the transformation process. These goals align the EU with the obligations of the Paris Agreement and reinforce its claim to global climate leadership.

However, Fit for 55 is not merely a regulation addressing the EU’s domestic policy; it is a strategy with global repercussions.

This strategy is primarily a strategy. It has direct impacts primarily on trade relations. Thanks to the CBAM, countries trading with the EU are forced to internalize their carbon costs, which translates into additional costs, particularly for countries with carbon-intensive industries. Countries such as China, India, Russia, and Turkey are among the actors most affected by the CBAM. This mechanism enables low-carbon production to become a competitive advantage on a global scale.

In terms of industrial policies, Fit for 55 also supports the EU’s goal of global leadership in the green economy. The aim is to establish a strong position for the EU in areas such as renewable energy technologies, electric vehicles, and hydrogen solutions. This also leads to the creation of new balances in global industrial competition. 

In the context of global climate governance, this move by the EU puts pressure on other major economies. The US’s Inflation Reduction Act, China’s green technology investments, and Japan’s carbon neutrality targets have all been partially influenced by the EU’s Fit for 55 process. Therefore, the package fosters a collective transformation by creating a domino effect in global climate policies.

However, Fit for 55 is not immune to criticism. First and foremost, the issue of costs is frequently raised. Both businesses within the EU and third countries argue that these regulations will create an economic burden. It is also argued that CBAM is problematic in terms of global justice.

Developing countries claim that they bear less responsibility for historical emissions, yet they are exposed to unfair costs due to CBAM. Rising energy prices also increase the risk of social inequality for low-income segments. Implementation challenges are another point of contention; the expansion of the ETS, the implementation of CBAM, and the reform of energy taxation create complex bureaucratic processes.

Despite all these controversies, Fit for 55 represents a radical transformational mandate in the fight against climate change. The package claims to align environmental sustainability with economic competitiveness and strengthens the EU’s global leadership position. Its long-term success will depend on member states’ adaptive capacity, the speed with which businesses shift towards green investments, and whether global actors take similar steps.

Ultimately, Fit for 55 can be considered not just an EU climate policy, but a catalyst for global environmental, economic, and social transformation. This package, which redefines how carbon-intensive economies and international trade operate, is a concrete demonstration of a paradigm shift in the fight against climate change.

Sources

• European Commission. (2021). Fit for 55 Package. Brussels.
• European Commission. (2020). European Green Deal. Brussels.
• IEA (International Energy Agency). (2022). World Energy Outlook. Paris.
• UNCTAD. (2021). Trade and Environment Review. Geneva.
• WTO. (2022). Carbon Border Adjustment and Trade. Geneva.
• EEA (European Environment Agency). (2021). Greenhouse Gas Emissions Trends. Copenhagen.
• Zachmann, G., & McWilliams, B. (2021). “The European Union’s Fit for 55 Package: A Guide.” Bruegel Policy Brief.
• Oberthür, S. (2022). “EU Climate Policy after the Fit for 55 Package.” Journal of European Public Policy, 29(10), 1575-1594.
• Piebalgs, A. et al. (2022). EU Energy and Climate Policy. Springer.
• Helm, D. (2021). Net Zero: How We Stop Causing Climate Change. HarperCollins.