The European Commission has recommended that the bloc reduce net greenhouse gas emissions by 90 % by 2040, according to a report by Clean Energy Wire. Politicians from member states such as Poland and Germany welcomed the proposal as a step to ensure a competitive European economy while aiming for climate neutrality, but cautioned that it was the starting point for a debate, not a final decision. Industry associations such as Germany’s BDI called the target ‘highly ambitious,’ while environmental NGOs criticised the proposal for its lack of ambition and a fossil fuel phase-out target. It is a first recommendation by the outgoing Commission to start discussions, with EU institutions set to make a final decision next year, well into the new term after the 2024 EU elections.

The Commission said its 90 % target is in line with the Paris Climate Agreement, and forms the foundation for the EU to continue to lead the way on international climate action, while creating opportunities for European industry to thrive in new global markets for clean technology. For this to happen, the bloc’s sustainable growth strategy, the Green Deal, would have to become ‘an industrial decarbonisation deal’, it said.

German and European industry representatives warned that the ambitious targets must not put EU companies at a disadvantage internationally, and that coming EU leadership should place companies front-and-centre. “The highly ambitious European climate protection target” must “not come at the expense of the competitiveness of the European economy”, said Holger Lösch, deputy managing director at industry association BDI. “Technical feasibility, economic efficiency and security of supply must be the focus of policy”, Lösch continued, adding that the climate-neutral transition would require enormous investment in a very short time.

The EU is aiming to make Europe the first climate neutral continent by 2050 and has decided to reduce greenhouse gas emissions by 55 % by 2030, compared to 1990 levels, as a stepping stone. To reach the 2030 target, the EU spent the past four years overhauling its energy and climate legislation – such as on emissions trading, renewables buildout or emissions standards for vehicles.

However, it does not yet have an interim target for 2040, which is required by the EU climate law. It would “guide the right mix of policies and investments to shape Europe as a competitive and sustainable economy that delivers for the quality of life of people and society,” the Commission said.

Today’s recommendation by the Commission is only an early step in a long process of deciding on the target and making it legally binding, which could stretch well into 2025. This June, EU citizens will elect a new parliament, and then a new Commission is going to be formed, which has a prominent role in shaping the policy direction for the next five years across the bloc – including the official legislative proposal for a 2040 target. Parliament and member state governments in the EU Council will eventually have to agree the target, and later the post-2030 policy framework, to help reach it.

Measures outlined

To reach the target the Commission is asserting the need to fully implement the agreed policies to reach 2030 targets, whilst ensuring the competitiveness of the European industry, focus heavily on a just transition. The Commission also emphasised the need for a strategic dialogue on the post-2030 framework, including with industry and the agricultural sector.

The Commission also suggested than an additional 1.5 % of GDP compared to the 2011-2020 decade should be invested annually in the transition, with the largest part coming from the private sector. Energy system investment needs amount to close to €660 bn (equivalent to 3.2 % of GDP) per annum on average, and yearly spending on transport of about €870 bn. The Commission also warned of the costs of inaction, if climate change effects lead to deaths and damage, and it emphasises that the transition can generate “major new opportunities.”

Renewables must be expanded, whereas the consumption of fossil fuels for energy by 2040 is expected to reduce by approximately 80 % compared to 2021 and coal will be phased out. The electricity sector would have to be fully decarbonised in the second half of the 2031-2040 decade and transport emissions should decrease by close to 80 % by 2040.