Fit for 55’s Impact on the European Food Value Chain
The Fit for 55 proposals are an extensive legislative package intended to facilitate the ambitious target to reduce greenhouse gas (GHG) emissions by 55% from 1990 levels by 2030. The package is one element of the European Commission’s Green Deal and comprises 13 proposals, which are expected to become legislation by the end of 2022 or in 2023. Food and agribusinesses across the European food value chain can expect to be impacted by the regulations. The level (direct or indirect) and intensity (high or low) of these impacts will differ by sector and company.
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While the exact impacts are still unclear, there are some that can already be anticipated:
• Packaging materials, energy, transportation, and fertilizers will become more expensive. As a result, input costs for farmers and food processors will increase.
• Some food processing and beverage companies that are high-intensity energy users will also be directly affected by the rise in GHG emissions costs. Therefore, they will have to invest in emissions-reducing technologies and/or emission allowances
• Farmers will have to reduce GHG emissions by more than 20%, while carbon sequestration in forests, farmland, and other land uses will have to increase by approximately 25% by 2035 compared to today’s level.
• The use of agricultural products for first-generation fuels will decline over time as the transportation sector moves away from fossil fuels toward other technologies, such as electrification, green hydrogen, and advanced biofuels (second-generation and of non-biomass origin). Exceptions may be made for certain markets, such as used cooking oil and animal fats, which will be in high demand for advanced biofuels in aviation.
• The transition toward a carbon-neutral economy will also provide opportunities. The European Union will be a fertile ground for innovation. It will be an attractive and stimulating place for technology players that can provide solutions that lower the need for and/or offer alternatives to fossil fuels, reduce emissions of methane and nitrous oxide (the most important gas emissions in the agriculture sector), sequester carbon, and/or increase resource efficiency in general.
Overall, companies should plan for the possible impacts of Fit for 55 on their business and form a strategy to become profitable in a sustainable way.