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Trade Agreements

The Future of EU Energy and Transportation

Energy Production

Nuclear and Advanced Reactors

Nuclear power has proven to be a reliable and emission-free energy source for decades, serving as the largest source of emissions-free energy in the United States and the second-largest globally, after hydropower.

Advanced nuclear reactor designs, like small modular reactors (SMRs), offer advantages such as lower costs, flexibility in placement, and quicker construction times. SMRs can contribute to meeting the increasing global demand for small-scale, zero-carbon power generation and can also help decarbonize sectors beyond power generation, such as clean hydrogen production, industrial processes, and desalination.

In Europe, the U.S. Government supports the European Union’s growing advancement of the nuclear industry and advanced reactor development. In 2020, the U.S. Department of Commerce launched the Small Modular Reactor Public-Private Program (SMR PPP) as a U.S. Government interagency initiative to support U.S. and European governments and companies in reaping the economic benefits of SMRs. In addition, the U.S. Department of Commerce launched a Small Modular Reactor Working Group to promote the deployment and export of U.S. SMRs and support key technical, regulatory, and financial steps to facilitate implementation. For more information, please visit the Small Modular Reactor Public-Private Program (SMR PPP).

Hydrogen

Right now, hydrogen makes up only a tiny part of Europe’s energy use, mostly used to make things such as plastics and fertilizers. However, most of this hydrogen is produced from natural gas, leading to significant CO2 emissions. The EU’s priority is to transition to renewable hydrogen, with the goal of producing and importing substantial amounts by 2030.

To achieve this, the EU has developed the REPowerEU plan, which supports the adoption of renewable and low-carbon hydrogen to decarbonize the EU and reduce reliance on imported fossil fuels. Hydrogen is also an important part of the EU strategy for energy system integration (COM/2020/299). The EU has launched and promotes several industrial, funding and research and innovation initiatives on hydrogen, including:

  • Clean Hydrogen Partnership: A joint public-private partnership supported by the Commission, through Horizon Europe. On March 1, 2023, the Commission and key stakeholders signed a joint declaration on renewable hydrogen research and innovation, committing to step up and accelerate joint action in research, development, demonstration and deployment of Hydrogen Valleys.
  • European Clean Hydrogen Alliance: Launched alongside the EU hydrogen strategy in 2020 as part of the new industrial strategy for the EU, it brings together industry, national and local authorities, civil society and other stakeholders. The alliance’s objective is to achieve an ambitious deployment of hydrogen technologies by 2030.
  • Hydrogen Public Funding Compass: An online guide for stakeholders to identify public funding sources for hydrogen projects, it provides information on all the EU programs and funds (2021-2027).

Clean Transportation

Electric Vehicles

Transportation accounts for a significant portion of the EU’s greenhouse gas emissions. The EU aims to reduce emissions from vehicles by 90% by 2050, putting forward a plan called Fit for 55, which aims to cut emissions by 55% by 2030 compared to 1990 levels.

As part of Fit for 55, the European Commission published the Regulation on the Deployment of Alternative Fuel Infrastructure (AFIR) in March 2023, which:

  • Identifies the electrification of transport as a key instrument in decarbonization.
  • Sets mandatory deployment targets for electric recharging and hydrogen refueling infrastructure for the road sector, for shore-side electricity supply in maritime and inland waterway ports, and for electricity supply to stationary aircraft.
  • Implements binding regulation requiring each member state to apply after entry into application.

AFIR also paves the way for an abundant, user-friendly recharging and refueling experience, with full price transparency, common minimum payment options, and coherent customer information across the EU.

Sustainable Aviation Fuels

Adopted in October 2023, the RefuelEU aviation regulation, also part of Fit for 55, will decarbonize the aviation sector in the EU by increasing both demand for and supply of sustainable aviation fuels (SAF), which have lower CO2 emissions than fossil fuel kerosene, while ensuring a level playing field across the EU air transport market.

The new legislation aims to put air transport on the trajectory of the EU’s targets for 2030 and 2050, as SAF is one of the key short- and medium-term tools for decarbonizing aviation. Main requirements of the new legislation include:

  • The obligation for aviation fuel suppliers to ensure that all fuel made available to aircraft operators at EU airports contains a minimum share of SAF from 2025, and, from 2030, a minimum share of synthetic fuels, with both shares increasing progressively until 2050. Fuel suppliers will have to incorporate 2% SAF in 2025, 6% in 2030, and 70% in 2050. From 2030, 1.2% of fuels must also be synthetic fuels, rising to 35% in 2050.
  • The obligation for aircraft operators to ensure that the yearly quantity of aviation fuel uplifted at a given EU airport is at least 90% of the yearly aviation fuel required, to avoid tankering practices which would bring additional emissions from extra weight.
  • The scope of eligible sustainable aviation fuels and synthetic aviation fuels includes certified biofuels, renewable fuels of non-biological origin (including renewable hydrogen) and recycled carbon aviation fuels complying with the Renewable Energy Directive (RED) sustainability and emissions saving criteria, up to a maximum of 70% with the exception of biofuels from food and feed crops, as well as low-carbon aviation fuels (including low-carbon hydrogen), which can be used to reach the minimum shares in the respective part of the regulation.
  • Rules on the competent authorities, to be designated by the member states to enforce this regulation, and rules on fines.
  • The creation of a Union labelling scheme about environmental performance for aircraft operators using SAF, which will help consumers make informed choices and will promote greener flights.
  • Data collection and reporting obligations for fuel suppliers and aircraft operators enabling to monitor the effects of this regulation on the competitiveness of EU operators and platforms.