EU

Russia’s illegal invasion of Ukraine has added new urgency to European climate action. The European Union is now at a turning point in terms of energy and climate policy: it can either replace dependency on fossil fuel imports from Russia with new reliance on other countries fossil fuels, or take decisive action and switch to domestic renewable sources of energy.

The REPowerEU Plan, put forward by the European Commission in May 2022, constitutes a step in the right direction. The plan includes a proposal to increase the share of renewables in final energy in 2030 from 40% to 45% and to reduce final energy consumption to 750 Mtoe instead of the 787 Mtoe included in the “Fit for 55” package from July 2021. This would result in an emissions reduction by 2030 of between 58–60% below 1990 levels, including LULUCF, and overachieve the EU’s target of “at least 55%” reduction.

Despite the potential for a higher emissions reduction goal resulting from the implementation of the REPowerEU Plan, the EU failed to agree to submit an updated NDC before COP27. Instead, the member states agreed to update the EU’s NDC after the “essential elements of the ´Fit for 55´ package” are adopted. This delay risks undermining the EU’s position as a leader in climate action and is a wasted opportunity to embolden other governments to increase their ambition. Now the EU needs to ensure that its delayed NDC goes significantly beyond the “at least 55%” emissions reduction goal.

The ongoing energy crisis has also facilitated a major rush for new investments in fossil gas infrastructure, especially new LNG import terminals and gas pipelines. The EU and its member states have been signing agreements for scaling up fossil gas imports from around the world, especially Algeria, Angola, Azerbaijan, Congo, Australia, and the United States. The planned expansion of import capacity only exceeds the fossil gas imports from Russia and most of the investments will only increase gas supply in two to three years time. This would be enough time to significantly reduce fossil gas demand in the EU. Instead, such investment will shift energy dependency from Russia to other countries, and result in carbon lock-in contrary to the EU’s emissions reduction goals.

Before the outbreak of the war in Ukraine, the European Commission sought to classify fossil gas under certain circumstances and nuclear as “sustainable” sources of energy under its investment taxonomy. At the background of the ongoing energy crisis driven by the EU energy dependency, classifying fossil gas in this way undermines the EU’s credentials as a global leader in climate action and will likely result in higher levels of stranded assets.

Contrary to the long-term trend, in the first nine months of 2022 the role of coal power plants in the EU electricity sector increased to compensate for a significant decrease in electricity generation from nuclear and hydropower plants. To prepare for any deficit in fossil gas supplies, many member states also decided to temporarily bring some coal power plants back into service or to keep them in reserve for the coming 2022/2023 winter. The current challenging circumstances are being used by member states to justify such temporary measures, but they need to be accompanied by an urgent and massive acceleration in the development of renewables and energy efficiency to avoid a repeat of such steps in the winter 2023/2024.

Apart from its disastrous impacts on the Ukrainian people, Russia’s unprovoked and illegal invasion of Ukraine and the resulting energy war and high energy prices pose a massive challenge to European citizens. While member states introduced numerous support programs to mitigate the impact of the rising energy costs, they should ensure that these measures do not extend their dependence on fossil fuels and instead facilitate investments in energy efficiency and renewables. This would reduce fossil fuel demand, and price. In the longer term, the EU and member states must steadily increase taxes on fossil fuels to generate funding for accelerating decarbonisation.

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 NDC 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% (excl. LULUCF) 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 2021 and by Denmark, Ireland, and Latvia in March 2022, which would result in an emissions reduction of around 35% (excl. LULUCF) below 1990 by 2030. 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 rating on this estimate.

The policies and actions currently in place are not enough to meet the EU’s emissions reduction target of “at least 55%” by 2030 below 1990 levels. However, the EU is currently discussing a number of policy initiatives which, if adopted and implemented by Member States, could result in emissions reductions overachieving the 55% reduction target.

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 fossil gas soon afterwards. Instead, some countries are lobbying for EU funds to be spent on the development of fossil gas infrastructure. The addition of fossil gas as “transition technology” into the EU taxonomy is not 1.5°C compatible. Gas remains a fossil fuel and must be phased out: it is not a transitional option.

The full policies and action analysis can be found here.

Contrary to the agreement reached in Glasgow, the EU has failed to submit an updated version of its NDC. The EU’s current NDC goal submitted in December 2020, is to reduce emissions by at least 55% below 1990 levels by 2030 (including LULUCF).

The renewable energy and energy efficiency targets tabled by the Commission in the May 2022 REPowerEU Plan, especially if ramped up during the subsequent legislative process by the European Parliament and the Council, create a viable opportunity for making EU’s domestic target 1.5°C compatible.

Due to the inclusion of LULUCF emissions, the EU’s binding emissions reduction target cannot be directly compared with its 2015 target. When accounting for a sink of 225 MtCO₂e—the 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%.

Reaching the goals proposed by the European Commission’s REPowerEU Plan of increasing the share of renewable energy in gross final energy consumption from 40% to 45% and reducing final energy consumption to no more than 750 Mtoe instead of 787 Mtoe suggested in the “Fit for 55” Package, would result in emissions reduction between 56 and 57% below 1990 by 2030.

In its positions preceding negotiations with the European Parliament adopted in June 2022, the Member States represented in the Council failed to recommend higher renewable energy and energy efficiency targets, as proposed by the Commission, and instead remained with the older targets suggested in the “Fit for 55” Package (Council of the European Union, 2022d). While it can be expected that this position will change during the ongoing negotiations with the European Parliament, adopting such unambitious goals does not reflect the significantly changed circumstances resulting from the worsening climate crisis and the Russian invasion of Ukraine.

In the framework of the package, the Commission also proposed to increase the total LULUCF sink to a least 310 MtCO₂e, out of which 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 combined with the renewable energy and energy efficiency targets proposed in the framework of REPowerEU Plan, it would result in emissions reduction by between 58–60% (incl. LULUCF).

When measured against a fair share emissions allocation, we rate the EU’s NDC target as “Insufficient”. The “Insufficient” rating indicates that the EU’s NDC target in 2030 needs substantial improvement to be consistent with limiting warming to 1.5°C. 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.