The European Commission has unveiled a roadmap for its new ambitious 2030 emission reduction targets of -55% compared to 1990 levels (up from – 40%), called “Fit for 55”.
Fit for 55 is a package of legislative proposals, impacting every aspect of the economy, from energy production, the future of buildings, transport and agriculture. The major legislative proposals impacting the agricultural sector are as follows:
- A revision of the Effort Sharing Regulation: Increasing the emission reduction targets for the non-ETS sector (which includes agriculture, transport and waste) to -40% (compared to 2005) by 2030, with Ireland’s country specific target increased from -30% to -42%.
- A revision of the LULUCF Regulation: This regulation sets a target for carbon sinks, with the ambition again increased by 15%, to the aim of removing 310 Mt of CO2 equivalent from the atmosphere by 2030. Ireland’s national target here is just under 4 Mt. This regulation sets a further target however beyond 2030, and is pushing for the land use sector (including non-CO2 agricultural emissions from livestock) to be climate neutral by 2035 and deliver negative emissions beyond. One of the main tools being promoted by the EU to achieve these targets is Carbon Farming, with a new regulation for the creation of a private market of carbon credits in the pipeline.
- A revision to the Emissions Trading System: The scope of the ETS has been extended to the maritime and aviation sectors and a “second ETS” created for the building and road transport sectors, meaning these sectors will be limited in their carbon emissions and required to trade in carbon credits if they cannot reduce their emissions. This entails indirect impacts on agricultural production costs, as the cost of logistics, trade, and construction will likely increase.
- Carbon Border Adjustment Mechanism: This is essentially a carbon tax on imports into the EU, which is planned to be applied from 2023 on select goods. While it is intended to prevent carbon leakage from the EU, it is not foreseen as being applied to imported food products. However, imports of fertilisers have been targeted by the European Commission for inclusion, together with imports of iron, steel, cement, aluminium, and electricity. Therefore, in its current format this tool will do little to prevent carbon leakage in the agri-food sector, rather it will increase the cost of inputs for farmers and particularly hit Irish farmers and those prioritising grass-based production.
Alison Graham – European Affairs Executive
24 Nov 2022