06. 02. 2024
AUTHOR: Linda Kalcher and Neil Makaroff
Strategic Perspectives welcomes the European Commission’s climate target proposal of a 90% net reduction in greenhouse gas emissions by 2040 compared to 1990 levels. It is a feasible and compelling target that can guide strategic decisions for the EU in the coming decade. As Strategic Perspectives’s 90% scenario showed, this target can solidify the EU’s position as a leader in the net-zero industrial race.
- The proposed pathway acknowledges the economic security benefits of achieving a 90% net reduction. Investments at the scale of at least €1.5 trillion a year will be required but the EU could €2.4 trillion in economic losses in 2031-2050 and net costs for fossil fuel imports by €2.8 trillion over the same time.
- There is a strong emphasis on how this trajectory can support European industry to compete against the net-zero manufacturers in the US and China.
- An 80% reduction in fossil fuel use for energy is included by 2040 but without individual trajectories for coal, oil and gas. This is a positive initial step on energy security, yet more is feasible. Our report shows that the power sector can be free of gas and largely based on renewables by 2037 which is key to decarbonising the sectors that electrify.
- The Commission included 280 million tonnes of abatement technologies such as carbon capture and storage, direct air capture or carbon usage for e-fuels. Our analysis limits this to around 130 million tonnes CO₂ equivalent.
"The European Commission’s proposal is ambitious but realistic. It makes a strong economic case for reducing the EU’s fossil fuel dependence in the wake of COP28 in Dubai. Cutting fossil fuel use by 80% is an important first step to strengthen energy security. Setting clear end dates for coal, oil and gas is essential for a just transition in the energy sector and can make the EU a pioneer on an orderly fossil fuel phase out." - Linda Kalcher, Executive Director of Strategic Perspectives
"The 90% target is not just a climate target, it's the first brick of a reindustrialisation plan that completes the Green Deal and has the potential to bring investment, factories and jobs back to Europe. By being the first to decarbonise, European businesses have the opportunity to lead the global net-zero industrial race. The next mandate can turn the climate target into a proper industrial decarbonisation deal." - Neil Makaroff, Director of Strategic Perspectives
Regarding the debate on abatement technologies, Kalcher comments:
"By proposing such heavy reliance on abatement technologies, the European Commission is betting on the wrong horse. Our own scenario includes about half of the amount for carbon capture and storage (CCS) in energy intensive industry as well as for e-fuels in aviation and shipping. CCS is too expensive in the power sector and other technologies are not mature enough to be considered at this scale."
On the next steps for adopting the 2040 climate target, Makaroff analyses that:
"European leaders now have the opportunity to position Europe at the forefront of the new net zero industrial race by adopting the 90% climate target for 2040. It is undoubtedly a critical choice for our economic security. The so-called Strategic Agenda is the right place for this decision as it defines the priorities for the next mandate."
Media contact: Thomas Willems | Brussels