European Climate Law Package Announced... Which Industries Are Affected and Benefited?

Transportation Industry Faces Cost Challenges
Eco-friendly Industry Sees Rising Expectations... "Interest in European Building Material Companies and Smart Grid Development Firms"

[Asia Economy Reporter Gong Byung-sun] A package of bills to respond to the European Climate Law has been announced, and transportation industry costs are expected to increase. However, expectations for the eco-friendly industry are also growing.

According to DB Financial Investment on the 17th, Europe announced the bill package "Fit for 55" on the 14th (local time). This package was created to respond to the European Climate Law, which includes achieving carbon neutrality by 2050.

The main contents of the package are ▲ reduction of emission caps under the European Union (EU) Emissions Trading System (ETS) ▲ strengthening of automobile emission regulations ▲ introduction of a carbon border adjustment mechanism (CBAM) and a social fund for energy transition. If implemented as per the bill, the sale of new internal combustion engine vehicles will be banned in the EU starting in 2035, and the emission limits for new vehicles will rapidly decrease. Plans for infrastructure development for electric vehicles and hydrogen vehicles, which will become widespread, were also presented. The EU plans to install electric charging stations every 60 km on highways and hydrogen charging stations every 150 km.

Additionally, to minimize damage to EU companies, carbon taxes are expected to be imposed on imports. Under the future EU carbon trading system, the total allowable carbon emissions for companies will be reduced compared to the current levels. The shipping industry will also be included in the EU ETS and must reduce carbon emissions, and separate emissions trading systems related to land transportation and building carbon emissions will be established.

As a result, the transportation industry is expected to face cost issues. Kang Dae-seung, a researcher at DB Financial Investment, said, “According to the bill, the blending ratio of sustainable aviation fuel must be increased, but currently, the price of biofuels or renewable fuels is about three times higher than conventional aviation fuel,” adding, “The shipping and land transportation industries will also face cost issues due to the bill.”

However, the eco-friendly industry is identified as a beneficiary. Green buildings are an example. As of 2019, greenhouse gas emissions from buildings within the EU accounted for about 36% of total greenhouse gas emissions, and energy consumption accounted for about 40% of the total. Accordingly, the EU plans to renovate 3% of public institution buildings annually to improve energy efficiency and encourage private sector participation. Researcher Kang predicted, “Market interest will grow in European building materials companies and smart grid construction companies.”

This content was produced with the assistance of AI translation services.