The chief executive officer of the Institutional Investors Group on Climate Change (IIGCC) has written to EU government leaders and ministers to outline the €51trn group’s support for ambitious and speedy resolutions to ongoing negotiations on key files in the European Commission’s ‘Fit for 55’ package.
Released in two batches in July and December 2021, the Commission’s ‘Fit for 55’ package is a set of interconnected proposals to underpin the bloc’s political pledge to cut greenhouse gas emissions by at least 55% in 2030 compared with 1990 levels.
The European Climate Foundation has described it as the EU’s “master plan against greenhouse gas emissions”.
Stephanie Pfeifer’s letter focuses on the EU Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM), energy efficiency and renewable energy, and the energy performance of buildings.
The letter was written in anticipation of EU Council meetings next week, with Pfeifer telling politicians that “the right enabling policy frameworks are essential if investors are to achieve net zero, to ensure that assets are resilient to the impacts of climate change, and to maximise the economic and investment opportunities presented by new technologies and business models”.
On the ETS and CBAM, points made by the IIGCC’s Pfeifer included that it was critical the latter should be designed and implemented as an alternative, rather than a complement, to the existing EU ETS carbon leakage rules, including free allocation. She also said surplus allowances needed to be eliminated from the market to reflect a robust carbon price.
On energy efficiency and renewables, Pfeifer said IIGCC and its members supported ambitious laws that “send clear policy signals to investors on what can constitute energy savings, a mandate for higher rates of renewables, and robust energy efficiency targets to support EU energy security”.
To support the allocation of capital towards clean energy, it was critical that the Commission’s REPowerEU recommendation to tackle slow and complex permitting for major renewable projects was implemented, and that guarantees of origin and certification schemes for renewable energy provided clear and comparable data based on whole life-cycle emissions.
Published in May, the Commission’s REPowerEU plan aims to rapidly reduce dependence on Russian fossil fuels. At the same time as announcing the plan, the Commission issued a recommendation on speeding up permit-granting procedures for renewable energy projects and facilitating power purchase agreements.
On the topic of energy performance of buildings, Pfeifer outlined IIGCC recommendations including requiring that a building’s energy use meets minimum performance standards based on building and country specific emission reduction curves developed by the EU and investor funded CRREM project, harmonising Energy Performance Certificates and checking embodied carbon.
Another recommendation set out in Pfeifer’s letter was to ensure that the renovation obligation for public buildings in both the Energy Efficiency and the Energy Performance of Buildings Directives cover all public buildings, including social housing.
Although many investors have made “net-zero” commitments, as members of investor groups such as the IIGCC they have also emphasised that the achievement of their goals is at least to a certain extent contingent on having an enabling policy environment.
Investors are increasingly flagging the importance of engaging not only with companies but with the policymakers that shape the environment in which corporates and investors operate.
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