COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people

 COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people

The 2030 Climate target plan

1.Addressing the Climate crisis with increased resolve

The climate crisis remains the defining challenge of our time. The past five years were the warmest on record. Global average temperature increased by 1.1°C above pre-industrial levels by 2019. The impacts of global warming are beyond dispute, with droughts, storms, and other weather extremes on the rise. We must take urgent and sustained action to preserve the health, prosperity, and well-being of people in Europe and all over the world. The recent reports of the IPCC on climate change and 1.5°C global warming, land, ocean and cryosphere underlined the dire impacts if climate change would not be halted. EU citizens are increasingly, and rightly, worried. Nine out of ten see climate change as a serious concern. The EU leads the global fight against climate change and the Commission is determined that the EU takes further action now.

The President of the Commission has made the European Green Deal 1 the top political priority, with the aim of transforming the EU into a fair and prosperous society with a modern, resource-efficient and competitive economy. We need to protect, conserve and enhance the EU's natural capital, and protect the health and well-being of citizens from climate- and environment-related risks and impacts and ensure an inclusive transformation based on a just transition so as to leave no one behind. Today, the Commission sets our continent on a sustainable path to make this a reality and achieve climate neutrality by 2050.

The world is currently experiencing a health crisis with an unprecedented socio-economic impact. This requires urgent attention, but our efforts to tackle one crisis must not hasten or worsen another. Postponing climate action or rolling back measures is not an option for the European Union. If left unchecked, the unfolding climate crisis will have existential consequences for our natural environment, our health, and our livelihoods way beyond the scale of the current health crisis. The long-term economic disruptions and adverse social consequences resulting from inaction would far outweigh the costs of investing in ambitious climate action today.

The unprecedented European economic response to COVID-19 offers a unique opportunity to accelerate the transition to a climate-neutral economy investing in the necessary transformation and ensure it takes place in a just and socially fair manner. Next Generation EU and the Multiannual Financial Framework for 2021-2027, with their combined weight of over 1.8 trillion euros, provide significant firepower to help deliver the twin green and digital transitions that Europe aspires to. Effectively addressing the economic crisis while reaping the gains from accelerating the shift to a clean and sustainable economy requires that these ambitions are also fully transcribed in Member States’ Recovery and Resilience Plans.

In the coming decade, the EU will continue building on a strong track record of climate action and parallel economic growth. In 2019, EU emissions, including removals, were down by an estimated 25% compared to 1990, while over the same period the economy has grown by 62%. This proves that we can tackle climate change and ensure sustained economic growth and job creation at the same time. The Impact Assessment accompanying this Communication demonstrates that an emissions reduction of 55% by 2030, compared to 1990 levels, is both economically feasible and beneficial for Europe, with proper policies in place.

The EU’s current policy framework alone would not allow us to reach our 2050 goals and meet our commitments under the Paris Agreement. Projections show that simply continuing to implement the legislation currently in force would see the EU achieving a 60% reduction of greenhouse gas emissions by 2050. The EU needs to raise its ambitions for this decade now and avoid leaving a heavier workload for future generations. The less action the EU takes in the next ten years, the steeper and more challenging the reduction path after 2030.

The Commission therefore proposes to change the current emissions reduction pathway to reach climate neutrality by 2050 and reflect this in the proposal for the European Climate Law.

In the Impact Assessment and a broad consultation process conducted over the past year, the Commission has thoroughly examined the effects on our economy, society and environment of reducing emissions by 50% to 55% by 2030, compared to 1990 levels. The Impact Assessment has carefully considered the mix of policy instruments available and how each sector of the economy can contribute to these targets. A balanced, realistic, and prudent pathway to climate neutrality by 2050 requires an emissions reduction target of 55% by 2030.

The present Communication therefore:

1.Presents an EU-wide, economy-wide greenhouse gas emissions reduction target by 2030 compared to 1990 of at least 55% including emissions and removals.

2.Previews a set of actions required across all sectors of the economy and the launch of revisions of the key legislative instruments to achieve this increased ambition.

3.Prepares the ground for a public debate in autumn 2020 to increase the EU’s contribution to the Paris Agreement before the end of the year and set the stage for the Commission to make detailed legislative proposals by June 2021.

The EU can and should set itself a 55% target based on the following three key considerations.

First, large emissions reductions have come from closing coal power stations and cleaning up of energy-intensive industry, while it proved harder to reduce emissions from transport and agriculture and in buildings, where particular challenges exist. Yet, reaching climate neutrality requires to significantly step up EU action in all sectors. Long lead-times in crucial sectors such as land use and transport require action to be stepped up already over the coming decade, otherwise the changes required after 2030 would have to happen unrealistically fast.

Secondly, risks of carbon lock-in in the coming decade are too high. This is due to the current legislative set-up as well as a natural short-termism in economic decisions in the midst of the COVID-19 crisis. Clearer and stronger investment signals are urgently needed for today’s investment planning and decisions to be coherent with the transition to climate neutrality.

Finally, science indicates that climate risks are firmly on the downside. Recent IPCC special reports found greater risks at lower temperatures of Earth system tipping points than in its 5th assessment report, such as a slowdown of the Gulf Stream or instability of the Greenland and West Antarctic ice sheets. The climate crisis is also intrinsically linked with the global loss of biodiversity and solutions must address consistently both challenges. The only responsible course of action is therefore to move now when we still have the freedom to choose how, instead of inching forward until it may be too late.

We have a responsibility to act decisively in the interest of future generations. If the EU shows that it can be done, many governments and citizens around the world will see that growing prosperity can be combined with a pathway that limits global climate change to well below 2 °C and pursues efforts to limit it to 1.5 °C, safeguarding the future of our planet. Yet, even with global action, some of the adverse effects of climate change will continue. That is why the EU is also pursuing its efforts on climate change adaptation, in Europe and globally. Finally, achieving climate neutrality in Europe requires investing in technologies, business models, skills, infrastructures and changes in behaviour. The green transition will modernise our economy, make it more innovative, circular and resilient and sustain its global competitiveness and prosperity in the years to come.

2.The Economic and Social Benefits of Increased climate ambition

On the basis of the analysis carried out in its Impact assessment, the Commission concludes that achieving 55% greenhouse gas emissions reductions by 2030 would not only put the EU firmly on track to achieve climate neutrality, but would also make EU business and industry global trailblazers. The analysis also confirms that this increase of greenhouse gas emissions reductions target is possible in a responsible and socially fair manner. It can spur sustainable economic growth and accelerate the clean energy transition, while adverse social consequences need to be addressed and adequate policies be deployed both at EU and Member State level. Achieving 55% greenhouse gas emissions reductions by 2030 would also improve the wellbeing of EU citizens by delivering significant co-benefits in terms of health, improved air quality and reduced environmental degradation, and it would strongly support the COVID-19 recovery and the longer-term competitiveness and resilience of the European economy.

Reaching a 55% emissions reductions target will be a significant investment challenge for EU industry, services, transport, and energy sectors. However, the return on investment from meeting this challenge is nothing less than the ability for EU businesses to compete and our citizens to prosper. The COVID-19 crisis has severely hit the EU economy. It has not significantly altered the investments needed to reach an increased 2030 greenhouse gas emissions reduction target, but, likely, worsened the conditions for such investments to take place, which has to be countered by strong policy initiatives on EU and national level. The EU recovery plan, with its recovery and resilience facility, is critical for these investments underpinning the green transition to happen. Despite net greenhouse gas emissions in 2020 being estimated to drop to 30 to 35% below 1990 levels, the economic rebound from the COVID-19 crisis is also estimated to bring emissions back to previous levels, unless additional action is taken. The dial has not been reset on global warming. To achieve climate neutrality by 2050, over the coming decade we will still need to construct new wind turbines, clean our industries and renovate buildings to make them energy- and resource-efficient. For this purpose, we will need to enable EU companies to get into the pole position developing, deploying and commercialising low-carbon solutions. Mobility will still have to be made substantially cleaner, with zero emissions vehicles well on their way to replace conventional ones, strong development of public transport and greater use of sustainable transport modes and multi-modal solutions through a large and well-integrated range of clean mobility options. Digital technologies will be key part of making sure the EU reaches climate neutrality and strengthens its competitiveness globally. The digital and green transitions must be made mutually reinforcing.

The EU multiannual budget, together with the Next Generation – EU, will dedicate at least 30% of its firepower to climate-relevant spending, and all expenses will be consistent with the Paris Agreement and respect the “do no harm" principle. National recovery and resilience plans and related spending will have to effectively contribute to the green and the digital transitions or to addressing the challenges resulting from them. Targeted use of these funds can trigger significant private sector investments. We must combine recovery spending with ambitious climate action to avoid wasted money and stranded assets, leading to additional resource needs later on. In short, in times of increasingly scarce liquidity, we should not invest in the old carbon-fuelled economy by reflex, but encourage investment in innovative and low-carbon technologies, making Europe a modern and green economy. We must save and create new jobs and incomes not only for months or years but for decades.

The recovery as well as the greening of our economy can also benefit from structural policies and policy reforms that incentivise competition in product markets, address the matching of skills and deliver the necessary education and training.

A key feature of the green transition is upgrading the EU’s capital stock, requiring higher upfront investments, with associated fuel savings that over time will pay back the initial investments. Energy-related investments need to increase. Annually in the period 2021-2030 the EU will need to invest € 350 billion more than it did in the period 2011-2020, an increase of around € 90 billion per annum compared to the investments needed to achieve current 2030 climate and energy targets. In addition to public support, the sustainable finance initiative will guide private investments towards green recovery. The EU taxonomy the EU Green Bond Standard and climate benchmarks will be essential tools to bring finance closer to the needs of the real economy.

Considering our large domestic market, accelerating the transition will help modernise the whole EU economy, increasing the opportunities for our clean technologies leadership and for gaining competitive advantage on the world markets. Developing new value chains and expanding others will also improve the open strategic autonomy of Europe’s industrial ecosystems. This will contribute to moving to a truly circular economy, which together with digitalisation, will be at the heart of the modernisation required to improve the overall efficiency and resilience of the European economy.

Our citizens want to live in a modern, sustainable, fair and resilient Europe. They are crucial partners in the fight against climate change, and can support it through political mobilisation and consumer choices. They can greatly contribute to decarbonisation by making more sustainable purchase decisions and lifestyle choices, but need to be assisted by actionable and reliable information.

Buildings and transport are, alongside industry, the main energy users and source of emissions. Decarbonising both energy supply and demand is key to becoming climate-neutral and can actually be achieved while enhancing the well-being of our citizens drawn from transport and housing

Increasing our 2030 climate ambition in the buildings sector can and should be socially just and fair. For example, low-income households bear a higher burden of heating expenses compared to wealthier households. The use of highly polluting fuels like coal is also more common among lower income households and particularly high in specific regions in Europe. They may thus be more negatively impacted by the transition, in particular if emitting carbon becomes more costly and low-carbon solutions are not available to them. In order to avoid negative impacts on vulnerable consumers, social and energy efficiency policies are important to target the renovation of their houses and keep the impact on their heating and electricity bills in check.

Renovating Europe’s buildings not only lowers energy bills and greenhouse gas emissions, but it also improves living conditions and creates local jobs. The forthcoming Renovation Wave will address the twin challenge of energy efficiency and affordability in the building sector. It will focus on the worst performing buildings and tackle the energy poverty as well as on public buildings, notably schools, hospitals and care facilities. When renovating, particular attention will be required as regards financing the up-front investments and the capacity of households to manage them. In particular, targeted support for energy efficiency investments of lower-income households and for social housing will be needed. We must therefore devise policies, earmark budgets, and propose different and innovative ways to organise the greening of houses and mobility, whilst helping vulnerable social groups. The Commission’s Impact Assessment shows that a 55% cut in emissions achieved through increased use of carbon pricing, while recycling revenues to low income households can address income impacts for these households and at the same time still stimulate a switch to low-carbon technologies. Clean and efficient private and public transport will bring major benefits to individual citizens and communities. Increasing the modal shares of public transport and active mobility, namely walking and cycling, as well as automated, connected and multimodal mobility, combined with more stringent air pollutant and CO2 emissions standards for vehicles, will drastically lower pollution from transport, especially in cities.

Our citizens have a lot to gain through ambitious and decisive climate action. Reducing greenhouse gas emissions improves living conditions and health, can create employment, and lowers energy bills.

Climate change and energy policies supports clean air policy in improving the health of EU citizens. This matters particularly in a number of Central and Eastern European Member States suffering from relatively high pollution levels. Achieving 55% greenhouse gas emissions reductions could contribute to further decrease air pollution, reaching a total reduction of 60% by 2030 compared to 2015. This would reduce health damages compared to 2015 levels by at least € 110 billion. Increased climate action would additionally reduce air pollution control costs by at least € 5 billion in 2030 and contribute to mitigating other environmental concerns like acidification.

In relation to food and agriculture, the Impact Assessment shows that by 2030 emissions reductions stemming from changing consumer choices towards healthy diets could be of the same order of magnitude as technical options available to reduce emissions in the sector 2 . In line with the Farm to Fork Strategy 3 , consumers should be facilitated to choose sustainable and healthy food and diets. This would not only help the agricultural and food sector to reduce emissions, but also improve consumers’ health and reduce health-related costs for society and food waste.

The increased climate ambition in the above areas can have positive impacts on GDP and total employment in the EU. The Impact Assessment indicates that in particular in situations where the economy is performing below capacity, GDP will increase due to the investment stemming from increased climate ambition. Similarly, the use of carbon revenues in general could lead to a reduction of labour taxation with positive effects on employment. Investing in a modern, circular economy will help provide durable and new green jobs in a climate constrained world.

Not all Member States, sectors and households start the transition towards climate-neutrality from the same point or have the same capacity to respond to the challenges of the transition. A more ambitious climate target is likely to be more challenging in Member States and regions with a higher share of fossil fuels in the energy mix, higher greenhouse gas emissions, energy intensity and lower GDP per capita. Certain carbon-intensive sectors and regions with a significant share of their economies depending on these will see substantial transformations. Distributional aspects will need to be addressed in order to ensure that nobody is left behind. New and upgraded skills will be needed underlining the need to keep investing in lifelong learning using all possible instruments and ensuring a diverse and inclusive workforce. In regions where carbon-intensive industries are currently of greater importance, focused policies and investments are needed, supported by the Just Transition Mechanism.

As a result of these transitions, the EU’s energy system will be much more secure and resilient. Fossil fuels, while so engrained in our way of life for over 150 years, are exposed to volatile fuel prices and supply disruption. More than half of EU energy needs are covered by imports. Renewable energy generated in the EU reduces this exposure, thereby increasing security of supply. Net energy imports are projected to decrease by more than a quarter in the period 2015-2030. Increasing the climate ambition from the current 2030 target to 55% and achieving climate neutrality by 2050 would save on the EU’s import bill EUR 100 billion over the period 2021-2030 and up to 3 trillion by 2050.

In short, increasing the EU’s climate ambition for 2030 generates both economic opportunity and a cleaner and healthier environment for our citizens as we steadily move towards climate neutrality by 2050. It matches desires of citizens and stakeholders, according to the replies to the public consultation process organised by the Commission for this initiative and empowers regional and local authorities to participate and benefit from the green transition. It ensures durable jobs, improves the EUs energy security, resilience and independence, stimulates innovation and lays a solid foundation for economic prosperity.

Figure 1: The EU’s pathway to sustained economic prosperity and climate neutrality, 1990-2050