How the E.U. Plan to Cut Emissions Will Affect Businesses

The far-reaching plan to reduce the trade bloc’s carbon footprint includes tougher mandates for automakers, steel makers, airlines, energy producers and other industries.,

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How the European Union’s plan to cut emissions will affect businesses.

An Ionity electric vehicle charging station near Dresden, Germany. The European Union's network of charging stations is concentrated in Germany, France and the Netherlands.
An Ionity electric vehicle charging station near Dresden, Germany. The European Union’s network of charging stations is concentrated in Germany, France and the Netherlands.Credit…Annegret Hilse/Reuters
  • July 14, 2021, 8:31 a.m. ET

FRANKFURT — The sale of new cars with internal combustion engines would be banned in the European Union by 2035 as part of a far-reaching plan to slow down climate change that also includes tougher mandates for steel makers, airlines, energy producers and many other industries.

The plan unveiled Wednesday by the European Commission, branded “Fit for 55,” calls for its 27 members states to cut their output of greenhouse gases 55 percent by 2030, compared with 1990 levels.

The E.U.’s target is more aggressive than that of the United States, which committed to reduce emissions by 40 to 43 percent over the same period, but behind Britain, which pledged a 68 percent reduction. China, the world’s largest emitter, has only said it aims for emissions to peak by 2030.

Here’s how the plan would affect industries in Europe:

  • Most automakers have announced plans to shift to electric vehicles, but many have resisted putting an expiration date on the fossil-fuel powered vehicles that still generate the most profits. The European Commission plan would effectively require them to do so by 2035.

  • Airlines would be compelled to begin mixing synthetic fuel with the fossil fuels they now use, and steel makers and other manufacturers would need to pay more for emissions credits.

  • Electricity producers will be pushed to speed up the switch to wind, solar and hydropower instead of coal.

  • Shipping companies would not be able to dock at European ports unless they shift to cleaner fuels.

The plan also provides financial incentives that may be welcomed by industry, for example money to build a more comprehensive network of charging stations for electric cars. The current network is concentrated in Germany, France and the Netherlands and it can be difficult to find a place to charge an electric vehicle in, say, Italy or Poland.

There will also be cash for groups hit by the new mandates. European Union governments will be able to draw on a fund worth 750 billion euros, or $890 billion, to help farmers, small businesses and low-income households make the transition to cleaner energy.

Given how many interests are at stake, the plan is likely to face furious lobbying by industry representatives as it makes its way through the legislative process in Brussels. The commission’s proposals require endorsement by the European Parliament and leaders of European national governments before they become law, a process that is expected to take around two years.

The plan could also meet resistance from major trading partners like the United States and China, because it would penalize imports from countries seen as having lower environmental standards.

Ursula von der Leyen, the president of the European Commission, has made the “European Green Deal” one of her top priorities and can tap support from Europeans increasingly alarmed by wildfires, record hot summers, severe storms and other tangible evidence of the toll of climate change.

Monika Pronczuk contributed reporting in Brussels.

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