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The EU's new climate law

How does EU's Climate Act affect your business operations?

On June 24th 2021, the European Parliament adopted the Climate Act for the EU. Through this law, the EU is aiming to achieve its goal of becoming climate neutral by 2050. So how does this affect your business? Read further to learn. 

New goals require changes in EU policy

To reach the goal of zero emissions in the EU, the EU Commission has decided that EU countries must reduce their emissions of greenhouse gases (not just CO2) by a minimum of 55% by 2030, compared with figures from 1990. This is an adjustment from the previous target of 40%.

Achieving a climate-neutral EU by 2050 will require changes in EU policy related to industry, energy, transportation, and housing. The European Commission will therefore present proposals for new rules for, among other things, stricter standards for CO2 emissions from new cars and more ambitious targets for renewable energy. A new scheme for carbon tariffs, changes in the quota market, the establishment of a social climate fund to support those hit the hardest by increased energy prices, and energy taxes are steps that have been proposed.

Also read: EU taxonomy: Sustainability becomes a prerequisite for finance

environmental certifications when doing business in norway

Focus on reducing emissions

The European Parliament also got approval for a limit on how much carbon uptake in forests should be able to count in the net calculation of emissions. The justification for this restriction is that the efficiency of carbon uptake is uncertain, and the EU member states should not rely too heavily on metaphorical “band aids” to fix the climate. The Parliament has emphasized that the focus should be on reducing emissions.

Impact on Norwegian businesses

The fact that the EU has increased the target for emission cuts from 40% to 55% for 2030 through new legislation will not have a direct impact on Norway through the EEA agreement. The new EU Climate Act is considered to fall outside the scope of the EEA Agreement, as it only applies to the EU and follow-up at EU level. Norway and the EU have separate climate goals through the Paris Agreement, and Norway will not be bound by legislation within the EU.

According to the Norwegian Climate Act § 3, the Norwegian goal is for greenhouse gas emissions in 2030 to be reduced by «at least 50 and up to 55 per cent from the emission level in the reference year 1990». According to section 4 of the Act, Norway aims to become a «low-emission society by 2050», where the goal is a reduction in greenhouse gas emissions of 90-95%.

Also read: Doing business in Norway - subsidies for businesses looking to go green

Indirect consequences

The EU's law on climate will affect the policy pursued internally in the EU, which in turn could have consequences for Norway. Concerns have been expressed in particular about the EU's introduction of a possible carbon tariff, which could lead to companies with large emissions moving their production out of the EU.

The specific measures that will be implemented to ensure an emission cut of 55% by 2030, and climate neutrality by 2050 are still uncertain. The legislation nevertheless sets a strict threshold that future sustainable measures must reach. For this reason, it is particularly important for companies that will operate within the EU / EEA to think long-term, and to facilitate a sustainable model. The alternative can be climate fines, loss of reputation or exclusion from a number of business sectors.

If you need any specific tips on how to ensure that your business meets the requirements for sustainability, you can download our environmental guide:

environmental certifications when doing business in norway

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