The EU Climate Law: What business leaders need to know

Hailed as the ‘Law of Laws’ by European Commission Vice President Frans Timmermans, the EU Climate Law seeks to enforce the targets outlined in the European Green Deal by making them legally binding. 

Here’s what you need to know:

• Climate neutrality

This ground-breaking law seeks to ensure that the European economy is climate neutral by the year 2050. Climate neutrality means, on the one hand, reducing greenhouse gas emissions as much as possible, whilst on the other hand acknowledging that some emissions may be hard to remove entirely – and in that compensating for any remaining emissions through carbon offsetting. This is what is now being referred to as “net-zero”.

The European target is to eliminate all net emissions by the year 2050. (A net-zero emissions balance is achieved when the amount of greenhouse gas released into the atmosphere is neutralised. This can be done by carbon sequestration, i.e., by removing carbon from the atmosphere, or through offsetting measures, which typically involve supporting climate-oriented projects.) An interim target has also been set – that of reducing net emissions by 55 per cent when compared to 1990 levels by the year 2030 – less than nine years from now!

• Mitigation

“Climate Change Mitigation refers to efforts to reduce or prevent emission of greenhouse gases. Mitigation can mean using new technologies and renewable energies, making older equipment more energy efficient, or changing management practices or consumer behavior. It can be as complex as a plan for a new city, or as a simple as improvements to a cook stove design. Efforts underway around the world range from high-tech subway systems to bicycling paths and walkways.”  (UNEP)

The EU Climate Law provides that avoiding greenhouse gas emissions at source should be a priority.

• Adaption

Adapting to climate change means taking action to prepare for and adjust to both the current effects of climate change, as well as the predicted impacts in the future.

Adaptation is a key component of the long-term global response to climate change. In line with the Paris Agreement – a legally binding treaty on climate change – Member States are required to ‘enhance their adaptive capacity, strengthen resilience and reduce vulnerability to climate change. Member States should adopt comprehensive national adaptation strategies and plans. Indeed, the EU already has its own Adaptation Strategy, which requires such adaption to happen smarter, swifter and in a more systemic way; and to also step up international action on adaptation to climate change.

• A policy overhaul

Whilst being a relatively short and straightforward legislative text, the implications of the EU Climate Law are huge! It is acknowledged that achieving the set targets will require a policy overhaul, primarily in four key areas: transport, construction, energy and industry.

• Scrutiny

By 30th September 2023, and every five years thereafter, the Commission will assess the collective progress made by all Member States towards the achievement of the set targets and objectives. It will, in particular, assess the adequacy and consistency of national measures, and may issue recommendations to Member States where it finds that measures are inadequate or insufficient.

Malta had already adopted a Climate Action Act back in 2015, and in 2019, Parliament had already declared a Climate Emergency. However, it is widely acknowledged that our efforts in this area leave much to be desired. It is now time to step up and transition towards this new green economy. In the words of Swedish MEP Jyttte Guteland: “Unless we rapidly cut our emissions, the science is crystal clear. The future will be catastrophic.”