Current energy and climate policies of EU Member States are not sufficient to achieve the EU’s 2030 climate target. This is one of the conclusions from the European Commission’s assessment of the draft National Energy and Climate Plans (NECPs) published just before Christmas. A tough message, especially as the EU is grappling with a wave of European and national elections, a lack of global industrial competitiveness and the requirement to set a more ambitious climate target for 2040 after COP28. Can (and will) EU Member States rise to the challenge?
How aligned are the Member State’s plans with the EU’s 2030 climate targets and ready for 2040?
In its assessment, the European Commission thoroughly addressed the draft plans of 21 EU Member States; Austria, Belgium, Bulgaria, Ireland, Latvia, and Poland’s plans were too delayed to be fully considered. Based on these plans, the European Commission projects a 51% reduction in GHG emissions, short of the 55% required by European Climate Law. The contribution of land sinks (which absorb atmospheric emissions, the ‘net’ part of our emissions target) would only lead to a total of -51.7% of emissions, still falling short. Interestingly, the European Commission specifically points to a lack of climate action regarding land policies, a touchy subject for Member States, which must grapple with the concrete consequences for farmers that come with changes to agricultural business models. The other problem child remains the transport sector, where emissions continue to be high but where reductions will require expensive changes too.
Diving into the five most populous Member States included in the NECPs, ambition on energy and climate targets varies significantly and a clear picture for a 2040 climate target is lacking (as demonstrated below). Many countries are awaiting the European Commission’s communication on the 2040 climate target, expected on 6 February, before speaking out, apart from Denmark and Poland who have already embraced a -90% GHG emissions target as proposed by the European Scientific Advisory Board for Climate Change.
The figures between brackets are the targets that the EU Member States are legally required to reach by 2030.
Are national adaptation strategies enough to counter upcoming climate risks identified by the EU?
Next to improving climate change mitigation policy, EU Member States are also increasingly grappling with the real-time impacts of climate change. Heatwaves, floods and droughts, heavy rainfall and wildfires are all becoming more frequent and affecting both people and infrastructure. This further incentivizes all EU Member States to adopt and update their adaptation plans in line with the requirements under the EU Climate Law.
Where climate change is felt the hardest in the health, agriculture, forestry, biodiversity, energy, and water management sectors, robust sectoral impact assessments are lacking, as well as investment needs and dedicated budgets. Nature-based solutions are also not yet a comprehensive part of national strategies, as outlined in by the European Commission in its accompanying Staff Working Document on climate change adaptation progress.
From the assessment, it becomes clear that spatial planning and planned relocations due to climate change threats are some of the most complex issues to address. While centralisation of industry, for example in Net-Zero Industry Valleys, would simplify issues such as access to energy and water, it would also cause great shifts in the European job market. Overall, we can therefore see adaptation policy increasing in political importance both in Member States and at European level.
In the next months, the European Environmental Agency will publish a European Climate Risk Assessment (Spring 2024) and the European Commission is preparing a communication on managing climate risks in the EU as a response. Additionally, a Water Resilience Initiative is expected to be released by the European Commission in March, which will set out the EU’s priorities for water management followed by a major water conference scheduled for 29-30 May during the EU Green Week to discuss the next steps.
Are EU Member States backtracking on their ambition since the energy and cost-of-living crises?
In 2023, we saw a whirlwind of national elections in EU Member States including Estonia, Bulgaria, Finland, Greece, Luxembourg, Spain, Poland, and the Netherlands. While some results such as Poland’s were positively surprising for the climate transition, most countries shifted further to the right, signalling less ambitious sustainability policy. 2024 is even more densely packed with elections in Austria, Belgium, Croatia, Finland, Iceland, Ireland, Lithuania, Portugal, Romania, Slovakia and to top it all off, we have the European Elections in June.
Interestingly, the Commission’s assessment does express some concern that Member States are backtracking on their ambition, especially regarding the phasing out of fossil fuels. Seven Member States have decided to postpone their phase-out (Croatia, France, Germany, Greece, Hungary, Italy, and Slovakia) while four additional Member States (Cyprus, Estonia, Finland and Romania) do not provide any date. This puts the credibility of the EU’s push to phase out fossil fuels as part of international COP negotiations on the line. Additionally, the European Commission warns that the fossil fuel phase-out requires more detailed planning by EU Member States, especially on incentiviszing demand-side response and energy storage.
Lastly, the European Commission argues that any phase-out must be accompanied by a timely end to fossil fuel subsidies. This is line with the priorities of the current climate commissioner, Wopke Hoekstra, who advocated for this during his European Parliament hearing last September. Nevertheless, seeing the lack of progress on the Energy Taxation Directive revision so far, this would require significant political effort in the next mandate.
Which industries are being identified as net-zero priorities?
The NECP’s provide a fascinating glimpse of what the EU’s future industrial landscape could look like based on which industries are being incentivised through target-setting and roadmaps.
Overall, the European Commission compliments Denmark, Germany, Estonia, France, and Lithuania on their detailed plans for supporting key technologies and achieving a net-zero circular economy, signalling that they could be frontrunners in the upcoming implementation of the Net-Zero Industry Act.
Diving more specifically into the different technologies, patterns start to emerge. On renewable energy sources, Estonia, Croatia, Italy, Portugal, and Sweden are capitalising on the ‘renewable acceleration areas’ which would speed up permitting and facilitate the deployment of renewables in line with the revised Renewable Energy Directive. Portugal is also addressing more innovative energy sources by setting a 0.2GW target for ocean energy. Southern European countries (Spain, Greece, Portugal) are frontrunners on energy storage with concrete targets and plans, such as the Iberian Energy Storage Research Center.
EU Member States are also focusing their attention on decarbonising heavy industry. Plans to capture CO2 are included by eight Member States making up 39.3 Mt of annual injection capacity by 2030, reflecting concrete progress towards the 50 Mt target that will be a key requirement under the Net-Zero Industry Act. Hopefully, the EU’s industrial carbon management strategy (expected on 6 February) will support and push other EU Member States to step up too. Furthermore, Denmark, Germany, the Netherlands, Spain and Portugal are frontrunners in the development of 38-40 GW of electrolyser capacity with several more countries developing joint hydrogen infrastructure projects.
Lastly, Member States are assessing how to diversify their energy mix with 10 countries expressing interest in nuclear Small Modular Reactors (SMRs) and France, Italy, and Denmark developing biomethane capacity.
All in all, progress among Member States varies, but does confirm that EU Member States are committed to the transition. In this race to net zero, Member States are also choosing their national champion technologies and favouring some solutions to others. This is a natural result of the EU’s high climate ambitions as without concrete plans, the 2030 target will be missed. The next EU legislative mandate 2024-2029 will be crucial to effectively implement the EU Green Deal and solve any roadblocks, chief among them being investment in the transition and industrial competitiveness. These are some of the questions that are currently under consideration in the upcoming report on the EU Single Market by Enrico Letta and the report on EU competitiveness by Mario Draghi, so perhaps they can shed some light on what the EU can do next this respect. Nevertheless, EU Member States will first hit the deadline for the final NECP’s in June 2024, let’s see if the final twenty-seven editions will help us reach the targets after all.
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