The European Commission has published a detailed impact assessment on possible pathways to reach the agreed goal of making the European Union climate neutral by 2050. Based on this impact assessment, the Commission recommends a 90% net greenhouse gas emissions reduction by 2040 compared to 1990 levels, launching a discussion with all stakeholders; a legislative proposal will be made by the next Commission, after the European elections, and agreed with the European Parliament and Member States as required under the EU Climate Law.
“Today’s communication also sets out a number of enabling policy conditions which are necessary to achieve the 90% target. They include the full implementation of the agreed 2030 framework, ensuring the competitiveness of the European industry, a greater focus on a just transition that leaves no one behind, a level playing field with international partners, and a strategic dialogue on the post-2030 framework, including with industry and the agricultural sector. The outcome of COP28 in Dubai shows that the rest of the world is moving in the same direction. The EU has been leading the way on international climate action, and should stay the course, creating opportunities for European industry to thrive in new global markets for clean technology,” a release shows.
Predictability and sustainability for economy and society
Setting a 2040 climate target will help European industry, investors, citizens and governments to make decisions in this decade that will keep the EU on track to meet its climate neutrality objective in 2050. It will send important signals on how to invest and plan effectively for the longer term, minimising the risks of stranded assets. With this forward-planning, it is possible to shape a prosperous, competitive and fair society, to decarbonise EU industry and energy systems, and to ensure that Europe is a prime destination for investment, with stable future-proof jobs.
It will also boost Europe’s resilience against future crises, and notably strengthen the EU’s energy independence from fossil fuel imports, which accounted for over 4% of GDP in 2022 as we faced the consequences of Russia’s war of aggression against Ukraine. The costs and human impacts of climate change are increasingly large, and visible. In the last five years alone, climate-related economic damage in Europe is estimated at €170 billion euros. The Commission’s impact assessment finds that, even by conservative estimates, higher global warming as a result of inaction could lower the EU’s GDP by about 7% by the end of the century.
Establishing the conditions for achieving the recommended target
Achieving a 90% emissions reduction by 2040 will require a number of enabling conditions to be met. The starting point is the full implementation of the existing legislation to reduce emissions by at least 55% by 2030. The ongoing update of the draft National Energy and Climate Plans (NECPs) is a key element in monitoring progress and the Commission is engaging with Member States, industry and social partners to facilitate the necessary action.
The Green Deal now needs to become an industrial decarbonisation deal that builds on existing industrial strengths, like wind power, hydropower, and electrolysers, and continues to increase domestic manufacturing capacity in growth sectors like batteries, electric vehicles, heat pumps, solar PV, CCU/CCS, biogas and biomethane, and the circular economy. Carbon pricing and access to finance are also critical for the delivery of emission reduction targets by European industry. The Commission will set up a dedicated taskforce to develop a global approach to carbon pricing and carbon markets. Europe will also need to mobilise the right mix of private and public sector investment to make our economy both sustainable and competitive. A European approach on finance will be needed in the coming years, in close cooperation with Member States.
Fairness, solidarity and social policies need to remain at the core of the transition. Climate action has to bring benefits to everybody in our societies, and climate policies need to take into account those who are most vulnerable, or face the greatest challenges to adapt. The Social Climate Fund and Just Transition Fund are examples of such policies which will already help citizens, regions, businesses and workers in this decade.
The energy sector is projected to achieve full decarbonisation shortly after 2040, based on all zero and low carbon energy solutions, including renewables, nuclear, energy efficiency, storage, CCS, CCU, carbon removals, geothermal and hydro. The Industrial Alliance on Small Modular Reactors, launched today, is the latest initiative to enhance industrial competitiveness and ensure a strong EU supply chain and a skilled workforce. An important benefit of these efforts is a lower dependence on fossil fuels thanks to an 80% fall in their consumption for energy from 2021 to 2040. The post-2030 policy framework will be an opportunity to develop these policies further and complement them with social and industrial policies to ensure a smooth transition away from fossil fuels.
The transport sector is expected to decarbonise through a combination of technological solutions and carbon pricing. With the right policies and support, the agriculture sector can also play a role in the transition, while ensuring sufficient food production in Europe, securing fair incomes and providing other vital services such as enhancing the capacity of soils and forests to store more carbon. A holistic dialogue with the broader food industry, also beyond the farm gate, is crucial to success in this area and to the development of sustainable practices and business models.
