The EU Green Deal significantly increased the EU’s climate ambition and set unprecedented emission reduction targets to be reached over the next decades. In particular, the EU is aiming for a 55% decrease in emission levels by 2030, compared to 1990 levels. The ultimate objective is to create the first climate neutral continent by 2050.

Following the EU Green Deal published in 2019, the Commission has issued multiple pieces of legislation to turn this vision into reality. The cornerstone of the emission reduction ambition is the Fit for 55, split into two packages published in June and December 2021. Below is a short update on the files most relevant to the Tourism sector.

 

Revised Energy Efficiency Directive
Aim
The Energy Efficiency Directive (EED) was originally in place to help EU member states increase energy efficiency by at least 20% by 2020. While in 2018 this target was raised to 32.5% by 2030, with the EU Green Deal the ambition was bolstered once again. The Commission has proposed to increase the energy efficiency target to 36% by 2030 in final energy consumption and 39% in primary energy consumption.

State of Negotiations
The Council’s position has maintained the Commission’s proposed EU-level targets of reducing energy consumption. The Parliament has yet to formally adopt its position on this file. The ITRE committee, which is responsible for drafting the position, has finalized its report to be voted on in Plenary this September. ITRE is seeking to increase the ambition of the legislation, putting forward a reduction target for energy consumption of at least 40% by 2030 in final energy consumption and 42.5% in primary energy consumption.

Relevance to Hospitality Sector
While the figures quoted above are EU-wide targets to be met collectively, each member state will allocated its own indicative energy efficiency target. Improvements in energy efficiency shall be met through investments in both public and private sectors. Schemes promoting the uptake of more energy efficient technologies are already being promoted by Maltese Government agencies.

 

Revised Renewable Energy Directive II
Aim
The Renewable Energy Directive II (RED II) sets the legal framework to increase the share of renewable energy production and consumption in the EU. Prior to this revision, the EU target was a renewable energy share of 32% by 2030. This directive is being revised to match the EU’s ambition in the Green Deal, with a new target of 40% by 2030.

State of Negotiations
The Council has once again maintained the Commission’s originally proposed EU-level, while it has slightly increased sub targets relating to aspects such as transport and heating and cooling. As with the EED, the Parliament has still yet to adopt its position on the RED II file. The ITRE committee has approved its report on the revised RED II and will submit it for plenary adoption in September. ITRE MEPs here also voted to further increase the climate ambition of the proposal, by setting a 45% target for renewable energy in the EU’s final energy consumption by 2030.

Relevance to Hospitality Sector
While the figures quoted above are EU-wide targets to be met collectively, each member state will allocated its own indicative renewable energy target. Given its geographic limitations, it is expected that Malta’s share will be minimal. Improvements in renewable energy generated shall be met through mainly through public projects, but also through private investment.

 

ReFuelEU Aviation
Aim
A significant reduction in the emissions generated by the transport sector is required to achieve the climate ambitions set out in the EU Green Deal. All forms of transport will have to contribute towards the 90% GHG emission reduction in transport set out in the Deal. The proposal aims to increase the share of Sustainable Aviation Fuels (SAF) overtime to phase out fossil fuel use and reduce emissions generated by the aviation sector.

State of Negotiations
In its position, the Parliament increases further the Commission’s proposal concerning the minimum share of a SAF that should be made available at EU airports. The Parliament’s figures are a 2% share in 2025, 37% in 2040 and 85% in 2050. The Commission’s original figures were 32% for 2040 and 63% for 2050. MEPs have also amended the definition of SAF to also include certain recycled carbon fuels produced from waste processing gas, and exhaust gas deriving from production process in industrial installations. On its part, the Council largely supports the objectives of the Commission proposal but stresses the importance of maintaining connectivity and the competitiveness of European aviation. The Council has excluded biofuels produced from food and feed crops from qualified as SAFs for the purposes of this legislation but have included recycled carbon aviation fuels.

Relevance to Hospitality Sector
SAFs are currently significantly more expensive than conventional aviation fuels. While prices are expected to decrease as technology and production improves, airlines are anticipating higher fuel prices in the meantime. This transition is expected to lead to higher flight prices. Malta is particularly sensitive to these developments, given its double insularity and heavy reliance on air connectivity for travel.

 

FuelEU Maritime
Aim
Similar to the REFuelEU Aviation proposal, FuelEU Maritime aims to promote the use of sustainable fuels, this time in the maritime sector. The aim is thus to propose a common EU framework on the use of renewable and low-carbon fuels in maritime transport.

State of Negotiations
The Council revised the scope of the requirements governing shore power supplies, enabling member states to extend obligations existing for ships at berth to also cover ships anchored in ports. The Council has also rejected the creation of an Innovation Fund supported by fines for non-compliance, instead favouring that the funds are distributed among member states. Nonetheless, these should still be used as support for the energy transition of the maritime sector. The European Parliament’s TRAN committee is yet to approve its report, scheduling committee and plenary votes in October this year.

Relevance to Hospitality Sector
As with SAFs, sustainable maritime fuels are currently more expensive than conventional maritime fuels. This is expected to result in higher transport costs by sea, at least in the medium term.

 

Emission Trading System
Aim
The EU Emission Trading System (ETS) is a carbon market established to reduce greenhouse gas emissions from some of the worst emitting sectors and place a price on carbon. The revision aims to increase the ambition of the ETS to match the 55% emission reduction target by 2030 placed by the EU Green Deal, and to extend the system to even more sectors such as aviation, maritime, buildings and road transport (ETS II).

State of Negotiations
On the proposal to extend the ETS to the aviation section, the Parliament’s adopted position states that it shall apply to all flights departing from an airport located in the European Economic Area (EEA) and that free allocations to the aviation sector should be phased out by 2025. On the Council’s side, it has agreed to phase out free emission allowances for this sector gradually by 2027 and align the proposal with CORSIA. Thus, EU ETS will apply for intra-European flights (including the United Kingdom and Switzerland), while CORSIA will apply to EU operators for extra-European flights to and from third countries participating in CORSIA. The Council agreed to set aside 20 million of the phased-out free allowances to compensate for the additional costs associated with the use of SAFs. The Council also considers specific geographical circumstances and proposes limited transitional derogations.
With regards to the ETS II, this will apply to distributors that supply fuels for consumption in buildings and road transport. The Council has argued to delay by a further year (2027) the start of this new system. On the other hand, the Parliament would like ETS II to commence in 2024 for commercial buildings.

Relevance to Hospitality Sector
Under the current proposal, free emission allowances granted to airlines will be gradually reduced, and completely phased out by 2027. This means that additional emission allowances will have to be auctioned, ultimately increasing the price of aviation (fossil) fuel. This is working in tandem with the ETD and REFuelEU Aviation proposals to gradually phase out the use of fossil fuels in aviation in favour of more sustainable fuels. With regards to buildings, this will affect the fuel used to generate heat in buildings. In the Maltese context, this will primarily impact establishments using fossil fuel boilers to heat water.

 

Revised Energy Tax Directive
Aim
The Energy Tax Directive (ETD) entered into force in 2003 and lays down structural rules and minimum excise duty rates for the taxation of energy products used as motor fuel and heating fuel, and electricity. Individual Member States are then free to set their own rates if those minimum rates are respected. The main objective of the revision is to introduce a new structure of tax rates and to broaden the taxable base.

State of Negotiations
Negotiations in Council are still ongoing. As this is a taxation file, the Parliament only has a consultative role in the process

Relevance to Hospitality Sector
The Revised ETD will work in tandem with the ETS II, REFuelEU aviation, and FuelEU Martime proposals to place a higher price on the use of polluting aviation and maritime fuels and incentivise a shift towards more sustainable fuels. The Revised ETD will thus remove tax exemptions on fossil fuel (e.g. kerosene and heavy oil) used in aviation and maritime, increase the cost of using these fuels.

 

Revised Energy Performance of Buildings Directive
Aim
The overall objective of the revised EPBD is to increase renovation rates of existing buildings in Europe and achieve a zero-emission building stock by 2050. This is defined by the Commission as a building with a very high level of energy performance, while meeting its energy demands through renewable sources. This will require a largescale renovation of national stocks of existing buildings across Europe, and the upgrading of technical standards for new buildings.

State of Negotiations
Negotiations in Council and Parliament are still ongoing.

Relevance to Hospitality Sector
Obligations will be placed on almost all buildings, with targets differing according to its use (e.g. residential vs non-residential). Consequently, new buildings and renovation works will have to account for the new standards which will be introduced by the Revised EPBD. Existing buildings will also have to be gradually improved to meet minimum performance standards over the next decades.

 

This update was brought to you by the Malta Business Bureau Brussels office. For more information infobrussels@mbb.org.mt

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