24. 09. 2024
AUTHOR: Linda Kalcher, Neil Makaroff, and Aymeric Kouam
On Tuesday 17th September, Ursula von der Leyen presented the new European Commission’s structure and Commissioner designated for the different portfolios. The accompanying “mission letters” are highlighting her main priorities for 2024-2029 such as the Clean Industrial Deal, energy decarbonisation and what role the EU can play in the world.
Our report “Forging Economic Security and Cohesion in the EU” shows that an European industrial strategy that delivers a 90% climate target by 2040 can:
- Strengthen energy security by saving €856 billion on gas, oil and coal imports between 2025 and 2040,
- Mitigate the cost-of-living crisis by cutting energy bills for households by two-thirds by 2035, and
- Reindustrialise Europe by creating 2 million jobs in net-zero industries by 2040, of which 1.6 million by 2035.
To make it happen, Strategic Perspectives has put together a set of briefings with concrete policy recommendations, including six main priorities:
- Mobilising at least €668 billion dedicated to the net-zero industry and the decarbonisation of the energy-intensive industries in the Competitiveness Fund until 2040.
- Setting an ‘EU-value-chain bonus’ in public procurements, rewarding zero-emission products that have low emissions and a minimum number of manufacturing steps within the EU.
- Defining quotas for growing green products in lead markets to support the decarbonisation of the heavy industry (e.g quotas of green steel in the automotive or the wind industries).
- Set the path for full power decarbonisation by 2037 (with gas being phased out) and boost renewable energy deployment to reach the aspiration of a 45% target through an EU-wide tender that de-facto prioritises EU companies.
- Ensure that by 2027, Member States are required to turn their fossil fuel subsidies into support to make net-zero equipment (EVs, heat pumps,...) affordable, especially for low-income households.
- Ensures any new Memorandum of Understanding the EU signs with a third country on fossil fuel imports includes a “transition clause” that clearly sets out the anticipated decline of fossil fuels and the increase of zero-carbon technologies or energy sources.
Clean Industrial Deal
President von der Leyen has announced a Clean Industrial Deal during the first 100 days of the new European Commission. Designing the right policy recipe will be key to regain a competitive advantage in the new industrial era and to turn the net-zero transition into a reindustrialisation plan. As the Draghi report highlighted, unlocking EU investments of at least €668 billion by 2040 in strategic sectors will be key. Introducing new public procurement rules and lead markets that stimulate innovation and more circular and sustainable products can also help European companies to compete with Chinese companies on another level than only cost.
Check out all our recommendations on the Clean Industrial Deal here.
A net 90% climate target for 2040
As companies and investors seek predictability and a stable policy frameworks, setting a new 2040 climate target comes at the right time. The economic gains in terms of reduced fossil fuel imports, lower electricity prices and more productivity are significant as our report shows.
In sync with the Clean Industrial Deal, a net 90% target can guide investment choices, establish an enabling environment for business to thrive. Given uncertainties remain about costs, feasibility and scalability of natural and technological carbon removals, Strategic Perspectives recommends to set three specific sub-targets for emission reductions, natural and technological removals.
Check out all our recommendations on the 2040 climate target here.
A new strategy for energy
In the next mandate, the EU has a perfect opportunity to reshape its energy systems in response to import dependencies highlighted in recent years. Rising energy prices and supply disruptions underscored the need for reducing the EU’s reliance on fossil fuels. The incoming Commission can focus on robust electrification and a renewable energy expansion to enhance energy security and lower prices. Key priorities include achieving 50% electrification of the economy by 2040, phasing out coal and gas by 2030 and 2037 respectively in the power sector, and ensuring that new fossil fuel agreements with third parties include transition clauses towards zero-carbon technologies. This comprehensive approach aims to bolster energy sovereignty while mitigating the impact of volatile fossil fuel markets.
Check out all our recommendations on energy here.
Accelerating the global energy transition
At the 28th UN climate summit in Dubai in 2023, all countries agreed to transition away from fossil fuels as well as collectively triple renewable energy and double energy efficiency. This has been a significant diplomatic success for Commission president von der Leyen, as these goals are now agreed by all countries in the final outcome. Building on this success, Strategic Perspectives recommends establishing a Global Energy Transition Forum. Such a forum to bring together governments, institutions (International Renewable Energy Agency, International Energy Agency), business and financial actors (banks, investors,...) to discuss how to achieve collective tripling of renewables and doubling energy efficiency. The EU can improve its cooperation with other countries on accelerating the global energy transition if Global Gateway gets upgraded into a proper financial instrument.
Check out all our recommendations on energy and climate diplomacy here.
