Minister Harakka: EU measures to reduce transport emissions must be effective and fair

Finland supports systematic measures for achieving climate neutrality in the European Union by 2050. Transport will play an important role in achieving this goal. Published on 14 July 2021, the Commission proposal on climate action covers road traffic, maritime transport and aviation.

The Commission is seeking to broaden the scope of emissions trading to include road and maritime transport, and to enhance existing aviation emissions trading. CO₂ emission performance standards are being tightened for new cars and vans, with efforts made to mainstream alternative fuels and propulsion systems.

Emissions trading revenues should also support transport climate targets

"A highly skilled Finland can emerge as a winner in the global transformation that makes mobility and transportation more climate-friendly. While European Union initiatives are welcome, we must ensure that measures are effective and fair. We shall carefully examine the Commission proposals," says Timo Harakka, Minister of Transport and Communications.

"Tighter emission standards for new motor vehicles will support Finland's roadmap to fossil-free transport, as will measures to increase the use of alternative fuels and propulsion systems in road, sea and air transport," Minister Harakka continues.

"Finland took steps in the spring to prepare for an enlargement of emissions trading. I am pleased that the Commission has proposed emissions trading for road transport and buildings that is separate from the current emissions trading scheme, making it easier to ensure that the instrument is effective. The impact of the Commission proposal on emissions and on businesses and households must be carefully assessed. I think emissions trading revenues must be used to support Finland's climate goals for traffic and haulage," Harakka notes.

Emissions trading in shipping must not impair Finnish competitiveness

Finland is also carefully assessing the Commission proposal on maritime emissions trading, which may impact Finnish competitiveness.

"Our sustained lobbying efforts to ensure proper consideration of winter navigation and the special conditions of Finland will continue. I am not currently satisfied with the Commission proposal," Minister Harakka comments.

"Favourable experiences have been gained with aviation emissions trading, but the scheme should be enhanced. Safeguarding climate goals will be a major undertaking when air traffic begins growing again. The Commission proposal seems to provide a good foundation for upcoming negotiations," Minister Harakka observes.

The EU has tightened its targets, seeking a 55 per cent reduction in net greenhouse gas emissions compared to 1990 levels by the year 2030. The climate package has accordingly been dubbed "Fit for 55".

The key Commission proposals for transport

1. Road and maritime transport to be covered by emissions trading

Road transport is responsible for the bulk of EU transport emissions (about 70 per cent). Aviation is currently the only mode of transport that falls within the scope of EU emissions trading. The Commission is proposing a joint emissions trading scheme for road transport fuels and heating fuels for buildings that will be separate from the current EU emissions trading scheme. Fuel distributors would be required to obtain a permit for CO2 emissions as of 2025, with auctioning of allowances beginning in 2026. A Ministry of Transport and Communications working group is already engaged in assessing road transport emissions trading as a national implementation. The working group will consider the Commission proposal in its work, which is due for completion in autumn 2021.

As expected, the Commission is proposing to extend emissions trading to maritime transport. This extension would be integrated into the current European Union emissions trading scheme, with application to sea voyages both within the EU and in part also between the EU and third countries.

2. Enhancement of aviation emissions trading

The Commission is seeking to improve the efficiency of aviation emissions trading, which began in 2012, by reducing the number of allowances allocated free of charge to airlines. The proposal envisages an annual reduction in the free allocation, with all allowances becoming subject to auction in 2027. These measures will increase incentives for deploying energy-efficient technologies and introducing renewable aviation fuels.

The Emissions Trading Directive would also be amended to implement the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) developed by the International Civil Aviation Organisation (ICAO). EU emissions trading and CORSIA would be combined. It is the view of Finland that the effectiveness of emissions trading must be reinforced as a means of reducing aviation emissions in the EU. It is nevertheless also important to ensure that EU measures do not jeopardise global climate co-operation within the ICAO.

3. Alternative fuels for maritime and air transport

The Commission has also issued new initiatives to promote the use of alternative fuels in maritime and air transport.

The ReFuelEU Aviation initiative includes several measures that seek to increase the supply of renewable aviation fuels and demand for such fuels. The initiative includes a proposal for an EU-level admixture obligation for aviation. Finland has also supported ambitious implementation of this obligation. Under the Commission proposal, the obligation would not only apply to fuel producers, but airlines would also be subject to an obligation of use. It is proposed that admixture obligations will begin at 2 per cent in 2025 and gradually increase to 63 per cent by the year 2050. Electro-fuels would be subject to their own sub-obligation from 2030 onwards.

The Commission is further proposing measures to increase the use of alternative fuels in maritime transport. Requirements will be tightened from 2025 onwards. Certain vessels will also be required to use shore-side electricity while in port from 2030 onwards. Finland considers it necessary to speed up the introduction of alternative fuels in navigation. The impacts of the proposal must also be viewed as a whole, with attention paid to maritime emissions trading and the work of the International Maritime Organisation (IMO).

4. Tightening of emission limits for passenger motor vehicles and vans

The current emission performance standards regulation for new passenger cars and light commercial vehicles affects the types of vehicle that are available to consumers and businesses within the territory of the Union. An update of this legislation will seek to bring more zero- and low-emission vehicles onto the market.

The Commission ambitiously proposes tightening the year 2030 limit for new passenger cars to 55 per cent, meaning that automotive manufacturers will have to reduce their CO2 emissions by 55 per cent of the 2021 level. The current target is 37.5 per cent. The target for new vans would be 50 per cent instead of the current 31 per cent. The Commission further proposes a new limit of 100 per cent for both passenger cars and vans by the year 2035.

Finland shares the Commission's view that it is necessary to tighten CO2 emission limits for manufacturers of cars and vans. The details of the proposal have yet to be assessed. Finland has consistently called on the Commission to consider facilitating the production of gas-fuelled cars under the legislation, for example through a separate quota, as biogas is a climate-friendly alternative in terms of life cycle emissions. The Commission initiative does not take this into account. The limiting values proposed by the Commission are also likely to make it unprofitable in practice for automotive manufacturers to produce combustion-powered passenger cars and vans in the medium term.

5. Minimum number of alternative propulsion system distribution points

Developing a distribution infrastructure is a key condition for increasing the use of alternative fuels. This is the aim of the Alternative Fuels Infrastructure Directive, which the Commission is seeking to tighten. The proposal would set binding national targets for distribution and recharging points for road vehicles, vessels and aircraft using alternative propulsion systems.

What next?

The Ministry of Transport and Communications will carefully examine the Commission proposals, which will be communicated to Parliament in September. Finland will formulate its own position on each of the Commission's legislative proposals during the autumn, when Parliament has also returned from recess. Stakeholders will be heard in the course of this formulation.

Inquiries:

Requests to interview Timo Harakka, Minister of Transport and Communications: Marjo Jäppinen, Head of Communications, tel. +358 40 080 4730

Niina Honkasalo, Senior Specialist, tel. +358 29 534 2027, niina.honkasalo(at)lvm.fi