The European Commission has published a detailed impact assessment on possible pathways to reach the agreed goal of making the European Union (EU) climate-neutral by 2050. Based on this impact assessment, the Commission recommends a 90 percent net greenhouse gas (GHG) 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.
The Commission’s recommendation is in line with the advice of the European Scientific Advisory Board on Climate Change (ESABCC) and the EU’s commitments under the Paris Agreement.
It also sets out several enabling policy conditions which are necessary to achieve the 90 percent 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, United Arab Emirates (UAE) 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.
We have just lived through the hottest year on record. The case for climate action is beyond doubt and requires planning now. Going forward, we will have to stand more firmly on two legs: a safe and healthy climate for all to live in, and a strong, resilient economy, with a bright future for business and a just transition for all. This communication we are presenting today is also a message to our partners around the world that Europe continues to lead the way in global climate ambition. Tackling the climate crisis is a marathon, not a sprint. We need to make sure everyone crosses the finish line, and nobody is left behind, said Wopke Hoekstra, Commissioner for Climate Action.
Predictability and sustainability for EU’s economy and society
According to the Commission, 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, minimizing the risks of stranded assets.
With this forward-oriented planning, it is possible to shape a prosperous, competitive, and fair society, to decarbonize 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 percent of GDP in 2022 as Europe 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 EUR 170 billion.
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 percent by the end of the century.
The energy sector is leading the way in Europe’s decarbonization and emissions reduction, and we must continue on this path towards 2040. In the 2030s we should see major progress in the transition away from fossil fuels and an increasing share of renewables in our energy mix. We are sending a clear signal to investors that Europe is staying the course and offering them long-term predictability and stability. For our citizens, we are giving a clear sign that cleaner solutions are on the way and that we are accompanying them in the transition, said Kadri Simson, Commissioner for Energy.
Establishing the conditions for achieving the recommended target
The Commission notes that achieving a 90 percent emissions reduction by 2040 will require several enabling conditions to be met.
The starting point is the full implementation of the existing legislation to reduce emissions by at least 55 percent 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 decarbonization deal that builds on existing industrial strengths, like wind power, hydropower, and electrolyzers, 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 critical
The Commission will set up a dedicated taskforce to develop a global approach to carbon pricing and carbon markets. Europe will also need to mobilize the right mix of private and public sector investment to make our economy both sustainable and competitive.
A European approach to 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 Europe’s 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 that will already help citizens, regions, businesses, and workers in this decade.
The EU will continue to develop the right framework conditions to attract investment and production. A successful climate transition should go hand-in-hand with strengthened industrial competitiveness, especially in clean tech sectors.
A future enabling framework for industry decarbonization should build on the existing European Green Deal Industrial Plan. Public investment should be well-targeted with the right mix of grants, loans, equity, guarantees, advisory services, and other public support.
Carbon pricing should continue to play an important role in incentivizing investments in clean technologies and generating revenues to spend on climate action and social support for the transition.
Achieving the 90 percent recommended target will require both emissions reductions and carbon removals.
It will require the deployment of carbon capture and storage (CCS) technologies, as well as the use of captured carbon in industry.
The EU’s Industrial Carbon Management strategy will support the development of carbon dioxide (CO2) supply chains and the required CO2 transport infrastructure. Carbon capture should be targeted to hard-to-abate sectors where alternatives are less economically viable.
Carbon removals will also be needed to generate negative emissions after 2050.
Open dialogue with all stakeholders
Finally, open dialogue with all stakeholders is a crucial precondition to delivering a clean transition.
The Commission has already established formal dialogues with industry and agricultural stakeholders, and the coming months of political debate in Europe are an important opportunity to secure public engagement on the next steps and policy choices.
Structured dialogue with social partners should be strengthened to ensure their contribution, focusing on employment, mobility, job quality, and investments in reskilling and upskilling.
This ongoing outreach will help the next Commission to table legislative proposals for the post-2030 policy framework which will deliver the 2040 target in a fair and cost-efficient manner.
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.
Picking up the pace
The Commission notes that the pace of decarbonization will depend on the availability of technologies that deliver carbon-free solutions, and also on an efficient use of resources in a circular economy.
The energy sector is projected to achieve full decarbonization 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 percent fall in their consumption of 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 decarbonize through a combination of technological solutions and carbon pricing.
Europe has already made a strategic decision to invest in an innovative, sustainable, and globally competitive economy, centred around agile clean industries. Today, we are taking the next step to achieve just that, with an overarching aim to bring long-term prosperity, stable jobs, and the EU’s greater economic security. We see industrial leadership and just transition as two sides of the same coin. As a strong global player in net-zero technologies, the EU will continue to keep fairness and solidarity front and centre of the European Green Deal, said Maroš Šefčovič, EVP for European Green Deal, Interinstitutional Relations and Foresight.
