On Thursday 17 September, the European Commission presented the results of its impact assessment of the feasibility of a 55% reduction in the European Union’s greenhouse gas (GHG) emissions by 2030 (compared to 1990 levels), as well as its 2030 climate plan.
More specifically, this analysis compared the impact of a 50 to 55% reduction in GHG emissions (the current target is a 40% reduction), under different scenarios that depend essentially on two variables: the degree of increase in the ambition of EU climate policies and the degree of strengthening of the Union’s Emissions Trading Scheme (ETS).
The study concludes that such an increase in the EU’s climate ambition “is possible in a responsible manner and in the context of sustainable economic growth”.
While the President of the Commission, Ursula von der Leyen, proposed on Wednesday to set a target of “at least 55%” (see EUROPE 12561/5), the assessment indicates that the economic risks of a 55% reduction in emissions “are limited”.
According to the document, such a goal would help accelerate the energy transition. To achieve this, the share of renewable energy in the EU’s energy mix would need to reach a level between 37.9 and 38.7% (depending on the scenario) by 2030 (the current target is a share of 32%).
The improvement in energy efficiency would have to be between 39.2% and 40.1% in terms of primary consumption (the current target is an improvement of 32.5%) and between 35.5 and 36.6% in terms of final consumption.
In an even more ambitious scenario (an emission reduction of 57.9%), the Commission has estimated these targets at 40.4%, 40.6% (primary consumption) and 36.7% (final consumption) respectively.
Another beneficial effect of a 55% reduction on the environment would be to further reduce air pollution, to achieve a total reduction of 60% by 2030 compared to 2015.
Costs
Although the study points out that a reduction of 50 to 55% by 2030, if effectively achieved, “does not pose a risk to the EU’s economy”, costs are obviously to be expected.
According to the study, the greatest challenge lies in “how to considerably step up investments in the clean energy transition”.
To achieve a 55% reduction in emissions, the EU will need to invest an additional €356 billion annually over the 2021-2030 period compared to the 2011-2020 period, in a scenario that combines increased regulatory intervention and carbon pricing (ETS), the report estimates.
This represents an increase of about €90 billion per year in additional to the investments needed to meet the current climate and energy targets for 2030.
The share of energy expenditure in household income is expected to increase from around 7% in 2015 to between 7.5% and 7.9% by 2030, the impact study further states.
This will affect low-income households more, the Commission goes on to say, as they tend to have higher energy bills due to poorly insulated houses and may not have the capital to invest in energy efficiency.
Asked at a press conference about the socio-economic risks of a 55% reduction in emissions, the Executive Vice-President in charge of the European Green Deal, Frans Timmermans, replied that the presence of risks should not lead us to do nothing. In his view, the absence of climate action would be worse than anything else, because, in such a case, it will be “the most vulnerable” who will pay the full price for the consequences of climate change.
Carbon sinks
Another point to be highlighted is that the 50-55% reduction analysed by the Commission takes into account CO2 emissions and removals related to land use, land-use modifications, and forestry (Regulation 2018/841, known as the LULUCF Regulation).
The Commission thus considers the restoration and growth of natural carbon sinks “essential to achieving our climate objectives”.
However, without taking into account CO2 absorption, the reduction is 53%, said a European official.
For Greenpeace, the Commission thus wants “to artificially inflate the target to 55%”. Indeed, the NGO believes that “these carbon removals cannot replace real emission reductions”, especially as the carbon storage capacity of EU forests has been declining in recent years, mainly due to logging.
Questioned on this subject, Frans Timmermans challenged the idea that the targeted emission reduction would actually be lower than 55%. “Carbon sinks play a role, as they remove CO2 from the atmosphere”, he said.
Sixty-five percent, an unrealistic target for the Commission
While environmental NGOs are calling for a target of at least 65%, this scenario was not assessed in the impact assessment.
Indeed, the Commission indicates that it has committed itself to “evaluating an increase in the GES reduction goal for 2030 to be achieved in a responsible manner”.
It further stresses that this increase “should reflect the rigidities, long lead times and general inertia of the energy system and heavy industry” where change can only be “gradual”.
“We have come to the conclusion that this was simply not possible, for a number of reasons”, Timmermans said at a press conference.
‘2030 Climate Target Plan’
With regard to the ‘2030 Climate Target Plan’, very few changes are to be noted compared to a draft version previously detailed in our articles (see EUROPE 12559/7).
However, it should be noted that, in the paragraph dealing with the border carbon adjustment mechanism, the Commission now specifies that an impact study is under way “with a view to presenting a legislative proposal in the first half of 2021”. With this mechanism, the Commission hopes to combat carbon leakage.
Finally, it should be noted that the institution has also amended its ‘climate law’ proposal, currently being examined by the co-legislators, to include the new 2030 objective of reducing emissions by at least 55%.
See the impact study and the ‘2030 Climate Target Plan’: https://bit.ly/3c7qFWl ; https://bit.ly/33FrtxE (Original version in French by Damien Genicot)