European Commission’s New Carbon-Reduction Proposals Would Impact HVAC&R Industry

August 02, 2021

The European Commission (EC) is launching a package of 13 legislative proposals today (July 14) aiming to reduce the bloc’s CO₂e emissions by 55% in 2030, including several proposals that would affect the heating and cooling industry.

The package, dubbed “Fit for 55,” is part of the European Green Deal, published at the end of 2019.

Some of the HVAC&R-related proposals in Fit for 55 include:

• Revision of the Energy Efficiency Directive: In 2012, the EU set a target to increase energy efficiency by at least 32.5% by 2030, with an interim target of 20% by 2020. These targets are currently not binding, but the new proposal would make them so. Furthermore, an assessment made in 2019 showed that the goals could not be achieved with the current plans. The proposed revision, among other things, looks at the definitions of energy efficient district heating and cooling.
• Carbon Border Adjustment Mechanism: A new proposal aims to prevent environmental dumping, or carbon leakage, by companies relocating production facilities outside the bloc in search of lower production costs. The proposal covers commodities like electricity, steel, iron and aluminum. Before the mechanism was officially proposed, concerns had already been raised about its compatibility with World Trade Organization (WTO) rules and about how it may affect developing countries.
• Revision of the Renewable Energy Directive: A proposal that would, among other things, introduce higher minimum levels of renewable energy to be used in buildings. If the EU is to reach its target to become net-zero by 2050, it will require a large increase of renewables in the energy mix. Currently renewables are about 20%; that will have to increase to around 38-40%, according to the EC. The revision also looks at what energy sources would qualify as renewable, with concerns being raised about energy from biomass, and the environmental impacts from producing it. Another concern has been raised about the EC opening a potential backdoor for fossil fuels — in the form of gas — by designating it a “low-carbon” fuel. This could potentially reduce the replacement of boilers by heat pumps. The proposed revision also looks at measures to promote the use of waste heat, and other carbon-neutral fuels in buildings.
• Reform of the EU Emissions Trading System: The trading system caps the total amount of CO₂ the EU can emit, and companies can buy and sell emission permits. The current cap is set to meet the old 40% emissions target. The EC is planning to adjust the total cap to meet the new 55% reduction target, meaning fewer and smaller emissions permits.