EC Proposes Climate Law, Sets Climate Neutrality Target for 2050
EC presents a proposal for the first European Climate Law that aims to enshrine in legislation the political commitment of EU to be climate-neutral by 2050. The European Climate Law sets the 2050 target and the direction of travel for all EU policy. EC also launched a public consultation on the future European Climate Pact, which is open until May 27, 2020. The inputs from this public consultation will be instrumental to shape the Climate Pact before its launch later in 2020. In addition, the questions and answers (Q&A) on European Climate Law and Climate Pact, along with the remarks of the EC President Ursula von der Leyen, were published.
With the European Climate Law, EC proposes a legally binding target of net zero greenhouse gas emissions by 2050. The EU institutions and the member states are collectively bound to take the necessary measures at the EU and the national levels to meet the target. The Climate Law includes measures to keep track of progress and adjust actions accordingly. Progress will be reviewed every five years, in line with the global stocktake exercise under the Paris Agreement. The Climate Law also addresses the pathway to get to the 2050 target:
- Based on a comprehensive impact assessment, EC will propose a new 2030 EU target for greenhouse gas emission reductions. The Climate Law will be amended once the impact assessment is completed.
- By June 2021, EC will review, and where necessary propose to revise, all relevant policy instruments to achieve the additional emission reductions for 2030.
- EC proposes the setting of a 2030-2050 EU-wide trajectory for greenhouse gas emission reductions, to measure progress and give predictability to public authorities, businesses, and citizens.
- By September 2023, and every five years thereafter, EC will assess the consistency of EU and national measures with the climate-neutrality objective and the 2030-2050 trajectory.
- EC will be empowered to issue recommendations to member states whose actions are inconsistent with the climate-neutrality objective and member states will be obliged to take due account of these recommendations or to explain their reasoning if they fail to do so. EC can also review the adequacy of the trajectory and the Union wide measures.
- Member states will also be required to develop and implement adaptation strategies to strengthen resilience and reduce vulnerability to the effects of climate change.
The public consultation on the new European Climate Pact is a broad initiative to give citizens and stakeholders a voice and role in designing new climate actions, sharing information, launching grassroots activities, and showcasing solutions that others can follow. The inputs will be used to shape the Climate Pact, which will be launched before the United Nations Climate Change Conference that is expected to take place in Glasgow in November 2020. Additionally, EC is officially launching the work on two important policy instruments under the European Green Deal with the publication of the inception impact assessments on the Carbon Border Adjustment Mechanism and the review of the Energy Taxation Directive.
Related Links
- Press Release and Related Documents
- European Climate Law
- European Climate Pact
- Q&A
- Remarks of EC President
Comment Due Date: May 27, 2020 (European Climate Pact)
Keywords: Europe, EU, Banking, Insurance, Securities, Climate Change Risk, ESG, European Climate Law, European Climate Pact, Paris Agreement, Q&A, EC
Featured Experts
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
PRA Amends Pillar 2 Capital Framework for BanksRelated Articles
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
ISSB Standards Shine Spotlight on Comparability of ESG Disclosures
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
EBA Issues Several Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
BCBS Proposes to Revise Core Principles for Banking Supervision
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
US Proposes Final Basel Rules, Transition Period to Start in July 2025
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
FSB Report Outlines Next Steps for Climate Risk Roadmap
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.
