3 consequences of the European Green Deal that will affect all organisations

The European Green Deal is an extensive policy program of the European Commission with the aim of making Europe a sustainable continent. In concrete terms, the Green Deal must ensure that Europe has reduced CO2 emissions by 55 percent by 2030 compared to 1990, and that it will then be completely climate neutral by 2050. To achieve this, the Green Deal includes a large number of measures that will have a major impact on everyone and everything in the EU: governments, consumers and businesses.

In particular, the climate package Fit for 55 presented on 14 July 2021 will have a major impact on companies. Sectors such as transport, energy, agriculture and construction in particular will need major reforms, but as these sectors are intertwined with the entire economy, and the new regulations will affect all sectors, all companies will suffer the consequences to a greater or lesser extent. experience this. In this article we list the most important opportunities and threats that will apply to all companies.

Europese Green Deal

European Green Deal

1. Emissions of CO2 will become a lot more expensive

In order to ensure that CO2 emissions go down, there will be more tax on CO2 emissions. In this regard, the Fit for 55 package mainly contains two measures that will have a significant impact. The first is the review and extension of the European Emissions Trading System (ETS) for industry. By reducing the number of emission allowances, the Commission wants to increase their price, so that the price of CO2 emissions will automatically increase. The system will also soon be used for road transport, maritime transport and construction. There are also proposals to phase out the aviation exemption.

A second measure being taken to reduce global CO2 emissions is a new carbon correction mechanism at the border. This means that imports of polluting products, such as steel, iron and cement, will be taxed. This prevents carbon leakage.

These two measures will of course have a (very) large impact in particular on the industrial, construction and transport sectors, but will be felt by all companies. Taking serious steps now to reduce CO2 emissions in the supply chain and getting started with Responsible Procurement is a smart way to avoid high costs in the future.

2. Circularity becomes the standard

When we can use waste as a raw material for new products, we have to throw away less and we need fewer raw materials. Not only do we reduce the waste mountain in this way, but we also ensure that net CO2 emissions are reduced. That is why the ‘Circular economy action plan for a cleaner and more competitive Europe’ presented in 2020 is also part of the Green Deal. The aim of the plan is for sustainable, circular products to become the norm. It includes a large number of new rules to promote circularity.

The circularity plan focuses primarily on sectors where a lot of profit can be made. These are sectors that require a lot of raw materials, such as construction, the food industry, clothing, packaging, electronics, vehicles and plastics. All companies with, for example, business premises, a company canteen, company clothing and products that are packaged are logically also affected by this. Circular procurement and ensuring that, for example, no microplastic or cotton without a GOTS quality mark is used in your supply chain is still an option, but will no longer be the case in the future.

3. Stricter Energy Efficiency Guidelines

An important part of Fit for 55 is a revision of the Energy Efficiency Directive (EED). The aim of this directive is to reduce the total energy consumption of a country, in order to also reduce CO2 emissions. While 32.5 percent was agreed in 2018, this was adjusted to 36 percent last summer. To be able to continue doing the same (or rather more) with less energy, efficiency is the magic word. In other words: waste as little energy as possible.

Buildings, production processes and transport in particular must become much more energy-efficient in the coming years. To achieve this, energy requirements for companies are being tightened. For example, there will be an efficiency first principle, which means that when investing in, for example, machines or vehicles, the energy performance of those purchases must be taken into account. This also applies to the construction of offices and commercial buildings. In addition, the purchase of an energy management system will be mandatory for large companies (from 100 TJ consumption per year) and small and medium-sized companies (from 10 TJ consumption) will be obliged to have an energy audit performed.

In short: new challenges for entrepreneurs, but certainly also opportunities. Anyone who already invests in sustainability now will have a competitive advantage when the new regulations come into effect. In addition, the Green Deal naturally offers great opportunities for companies with innovative services, products and business models.

Would you like to know more about the European Green Deal and what this means for your company? Mail to martin.dejong@empact.nu.

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