Fit for 55’s Impact on the European Food Value Chain

Report summary

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.