EU

The European Union has taken major steps in climate mitigation over the past year, showing leadership ahead of COP26. One important element of the European “Green Deal” was the strengthening of the EU’s emissions reduction goal under the Paris Agreement, which is backed with concrete policy measures and financial resources to reach it. The EU has also adopted the European Climate Law which made both the new emissions reduction target and the climate neutrality goal binding.

Nonetheless, the EU’s climate action still leaves room for improvement, especially around the acceleration of the coal phase-out, increasing finance for climate action abroad and going beyond the current 55% by 2030 emissions reduction goal. The latter can be achieved by policy measures that would reflect the “at least” part of the goal, e.g. a significant increase of the renewable energy and energy efficiency goals.

The EU also needs to ensure that climate policy measures adopted in Brussels are implemented by the member states. So far, action in individual member states tends to vary, and many of them have not yet implemented sufficient measures to meet the EU-wide targets. We rate the EU as “Insufficient” overall.

In December 2020 the EU submitted an updated NDC with a more ambitious emissions reduction target of at least 55%, including emissions sinks in the land use, land-use change, and forestry sector (LULUCF).

In June 2021 the European Climate Law, which made both the new target, and the goal of reaching climate neutrality by 2050, binding, was adopted. In July 2021 the European Commission presented its “Fit for 55” package of policy proposals to achieve this new goal. In the first months of 2021 all member states ratified the EUR 750bn NextGenerationEU recovery fund, at least 37% of which has to be spent on climate action. Finally, in July 2021 the European Commission approved the first National Recovery and resilience plans submitted by the member states as the basis for spending the resources.

At the same time, many EU member states still do not have a coal phase-out plan by 2030. Other countries are planning to replace coal with natural gas, and are pushing for using EU funds to co-finance investments in natural gas infrastructure. While the share of electrically-chargeable vehicles doubled in the first half of 2021 compared with the same period last year, most of these vehicles are plug-in hybrid vehicles, which still often use a combustion engine, while at the same time benefitting from generous state support. The plan to double the renovation rate in the buildings sector would lead to a deep renovation of 2% of all homes every year, significantly behind what is needed under Paris Agreement-compatible scenarios.

The CAT rates EU’s climate targets, policies, and finance as “Insufficient”. The “Insufficient” rating indicates that the EU’s climate policies and commitments need substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit. The EU’s 2030 emissions reduction target and its policies and action are consistent with 2°C of warming when compared to modelled domestic pathways. The EU is also not meeting its fair-share contributions to climate action.

To improve its rating, the EU should strengthen its emissions reduction target to at least 62% below 1990 levels, adopt policies necessary to reach this goal, and significantly increase its support for climate action in developing and least developed countries.

We rate the EU’s policies and action as “Almost sufficient”. The upper bound of our policies and action emissions projection range is based on policies reported by member states in March 2020, which would result in an emissions reduction of around 36%, even after factoring in the effect of the pandemic. The bottom end of the range is based on policies adopted at the EU level, which would result in reducing emissions by around 47%. Due to the delay in reporting on policy implementation by member states, we consider the lower bound to be more likely and have based the CAT range on this estimate.

The policies and action currently being undertaken are not enough to meet the EU’s new emissions reduction target of “at least 55%” by 2030 below 1990 levels. Additional measures are needed.

The legislative process to agree on the package between the European Parliament and the Council that would allow the EU to meet its new emissions reduction target is underway and will possibly continue until 2023. To reflect the “at least” aspect of the goal, many elements of the package should be strengthened or designed in a way that allows for the overachievement of the sectoral targets. This could be the case for the share of renewable or energy efficiency targets, or a much deeper reduction in the EU ETS sector resulting from a faster coal-phase out, decreasing role of natural gas, and application of breakthrough technologies in the industry sector.

In addition to implementing policies adopted at the EU-level, member states also need to adopt additional measures. This especially concerns the coal phase-out by 2030 at the latest and phasing out natural gas soon afterwards. Instead, some countries are lobbying for EU funds to be spent on the development of natural gas infrastructure. Currently the EU is working on the revision of the Trans-European Networks for Energy (TEN-E) Regulation, which determines which transboundary projects can be labelled as Projects of Common Interest, giving them access to the EU funds. One outcome of this revision could see the EU continuing to fund some natural gas infrastructure from public money instead of focusing investment into zero emission sources of energy and smart energy solutions.

The full policies and action analysis can be found here.

The EU’s new goal of reducing emissions by at least 55% (including LULUCF) submitted to the NDC is a step in the right direction, especially as it opens the possibility of meeting Paris Agreement goal. This could be the case if the adopted measures allow the EU to significantly exceed the 55% emissions reduction target. This was already the case for the preceding “at least 40%” reduction target in the previous NDC, which was increased in 2018 with the adoption of renewable energy and energy efficiency goals. However, at this stage there is no clear indication that the EU will go significantly beyond the 55% reduction target. For this reason, its current goal is rated only as “Almost sufficient”.

Due to the inclusion of LULUCF emissions, the new emissions reduction target cannot be directly compared with the earlier one adopted in 2015. When accounting for a sink of 225 MtCO₂e—maximum amount that, according to the European Climate Law, can be used to account for meeting this goal—the goal is weakened to 52.8%. However, if intra-EU aviation and navigation is excluded from this goal, it increases to around 54%. When it comes to LULUCF, the Commission’s proposal would oblige member states to increase the total emissions sink to a least 310 MtCO₂e—whereas only 225 MtCO₂e can be accounted to meeting this goal. This creates an additional sink of 85 MtCO₂e, which is not considered in this assessment.

When measured against a fair-share emissions allocation, we rate the EU’s emissions reduction target as “Insufficient”. The “Insufficient” rating indicates that the EU’s fair share target in 2030 needs substantial improvement to be consistent with the Paris Agreement’s 1.5°C temperature limit. Some of these improvements should be made to the domestic emissions target itself, others could come in the form of additional support for emissions reductions achieved in developing countries in the form of finance. If all countries were to follow the EU’s approach, warming would reach up to 3°C.

The EU’s international public climate finance contributions are rated as “Insufficient”. The EU has committed to increase its climate finance, but contributions to date have been low compared to its fair share. To improve its rating, the EU needs to ramp up the level of its international climate finance contributions in the period post-2020 and accelerate phase out of fossil finance.

The EU’s climate finance is not sufficient to improve the fair share target rating, and the CAT rates the EU’s overall fair share contribution as “Insufficient”.

We evaluate the net zero target as “Acceptable”. The EU’s climate neutrality goal performs moderately in terms of its architecture, transparency, and scope, with a regular review and assessment process. A provision for an intermediate target in 2040 is to be set following the Paris Agreement’s Global Stocktake, an exclusion of reductions or removals achieved outside of its territory, and clear analysis underpinning the target. At present, a clear separation of the contributions from emissions reductions versus removals is missing, although this is an element that is required of the forthcoming 2040 target.

The full net zero target analysis can be found here.