The EU is set to transform every corner of its economy – from how people heat their home to the cars they drive – as the bloc uses a massive overhaul of rules to position itself as a global leader on climate change.

Every industry would be forced to accelerate its shift away from fossil fuels to cut pollution by at least 55% from 1990 levels by 2030, according to proposals to be unveiled on Wednesday, putting the EU on a path to eliminate greenhouse gas emissions by mid-century. The Fit for 55 package would expand the world’s largest carbon market to include shipping companies, eliminate new combustion-engine cars and slap a levy on imports of steel, cement and aluminium...