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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

{SEC(2020) 301 final} - {SWD(2020) 176 final} - {SWD(2020) 177 final} -

{SWD(2020) 178 final}

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

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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

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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

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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

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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

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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

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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

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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

While any structural changes will pose challenges, the analysis shows that
overall the economy and citizens will benefit from these investments,
especially considering the dire consequences of non-action. For instance, for
those lower income households and fossil fuel dependent and energy-intensive
sectors, which will be particularly challenged, targeted policies will need to
promote just transition head on. In this way, Europe will set a practical
example for all other regions around the world on how accomplishing the
Paris Agreement objectives will lead to a more prosperous, fair, resilient and
healthy world. In this respect, economic impacts will be more positive if the
regulatory tools allow for appropriate price signals and a tax shift, with carbon
pricing revenues being used to reduce distorting taxes or to invest in

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innovation and modernisation towards a green economy.

3. Ambitious Action in all sectors of the EU economy

Achieving 55% greenhouse gas emissions reductions will require actions in

all sectors as illustrated in the graph above. A climate-neutral transition can
only be accomplished with contributions from everyone.

CO2 emissions from the burning of fossil fuels are the largest source of
greenhouse gas emissions in the EU. Together with fugitive non-CO2
emissions in the energy system, they are responsible for just over 75% of EU
greenhouse gas emissions. This underlines the energy system’s central role in
the transition to a climate neutral economy. It will need to be fully
decarbonised, while respecting technological neutrality.

Most other emissions are process CO2 emissions from industry and non-CO2
emissions from agriculture and waste. Reducing all emissions as much as
possible will be crucial to limit the need to balance any remaining emissions
to become climate neutral. In this context, the EU land use sector is of
particular importance, given that it presently provides for the largest source of
net removals of CO2 from the atmosphere that humans can impact. Much
more is now also possible with widespread use of digital technologies, which
could help reduce overall emissions considerably. 4

Based on the analysis in the Impact Assessment, the Commission has reached
the view that the following contributions by different sectors would enable us
to reach a 55% emissions reduction by 2030 in a responsible way.

Energy system transformation including buildings, transport and industry

In order to reach the 55% greenhouse gas emissions reduction target,

buildings and power generation can make the largest and most cost-efficient
emissions reductions, in the order of 60% and more compared to 2015. Rapid
penetration of renewable energy, which is becoming the most cost-effective
electric power source, the application of the energy efficiency first principle,
electrification and energy system integration will drive the change in both
sectors.

By 2030, the share of EU renewable electricity production is set to at least

double from today’s levels of 32% of renewable electricity to around 65% or
more. The expansion in renewable electricity production will provide many
opportunities for European renewable energy sources to be fully harnessed,
for instance offshore wind energy. Renewables will lead to a high degree of
decentralisation providing opportunities for consumers to get engaged, for
prosumers to generate, use and share energy themselves, and for local and
notably rural communities to encourage local investments in renewables. It
will also trigger new employment locally.

The deployment of renewable electricity provides a major opportunity for the

decarbonisation of other sectors such as heating and cooling in buildings and

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industry. The impact assessment highlights that renewables in heating and

cooling would achieve around 40% penetration in 2030. Beyond the direct use
of renewable energy and electrification, renewable hydrogen will also be
required to replace fossil fuels in some carbon-intensive industrial processes,
for example as a feedstock for certain chemical processes, and to deliver high-
temperature heat.

The building sector, currently responsible for 40% of final energy and 36% of
greenhouse gas emissions in the EU, has a large cost-effective potential to
reduce emissions. Today, 75% of the EU’s building stock is energy inefficient
5
. Many homes are still heated with outdated systems that use polluting fossil
fuels such as coal and oil. To fully tap into this potential for improvement
would require the renovation rate, which is around 1% today, to double and
more in the period up to 2030. In particular, deep renovations addressing
building shells, smart digitalisation and the integration of renewable energy
together need to increase strongly.

The transport sector had the lowest share of renewable energy in 2015, with
only 6% 6 . By 2030, this has to increase to around 24% through further
development and deployment of electric vehicles, advanced biofuels and other
renewable and low carbon fuels as part of a holistic and integrated approach.
Secure access to batteries will be critical to rolling out electric vehicles, while
clean hydrogen will be crucial for decarbonising heavy-duty transport and,
through its derivatives, in the aviation and maritime sector. The
decarbonisation of the transport fuel mix by 2050 will also be supported by
greater use of rail and other sustainable transport modes such as inland
waterways and short sea shipping, in particular for freight transport.

Projected increases in bioenergy use by 2030 are limited compared to today.

To ensure the land use sink can continue to strengthen and improve, biomass
for energy use in the EU should be produced sustainably, and environmental
impacts should be minimised. To limit impact on biodiversity, the use of
whole trees and food and feed crops for energy production – produced in the
EU or imported – should be minimised. Any unsustainable intensification of
forest harvesting for bioenergy purposes should be avoided. Instead,
bioenergy production should come from better use of biomass wastes and
residues and a sustainable cultivation of energy crops, rather replacing the
production of first generation food-crop-based biofuels and be in line with the
sustainability criteria of the Renewable Energy Directive. The promotion of
sustainable forest management, a strong enforcement of the existing
legislation and a quicker implementation of the sustainability criteria in the
Renewable Energy Directive can play a key role in this regard alongside the
foreseen review and potential revision of the latter Directive.

The Commission’s Impact Assessment indicates that final and

primary energy consumption would further reduce in 2030, achieving
savings of 36-37% for final energy consumption (total energy
consumed by end users) and 39-41% for primary energy consumption
(total energy used to meet final energy needs, e.g. gas used to produce
electricity). This reduction will require policies that address non-

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economic and local barriers. For instance, EU product efficiency

standards have already reduced energy needs for the products in
question by about 15% and cut total EU greenhouse gas emissions by
7% while creating hundreds of thousands additional jobs 7 . Actions
of this kind will need to be intensified.

Achieving 55% greenhouse gas emissions reductions would result in a new

and greener energy mix. By 2030, coal consumption would be reduced by
more than 70% compared to 2015, and oil and gas by more than 30% and
25%, respectively. Renewable energy instead would see its share increase. By
2030, it would reach 38% to 40% of gross final consumption. Overall, this
would lead to a balanced path towards climate neutrality by 2050.

Some sectors have a smaller, yet still significant, cost-effective emissions

reduction potential by 2030. Today, road transport accounts for a fifth of the
EU’s greenhouse gas emissions and increased its emissions by over a quarter
since 1990. It may see a decrease in emissions of only around 20% between
2015 and 2030, underlining the increased focus the sector will require to
achieve increased decarbonisation.

All transport sectors - road, rail, aviation and waterborne transport - will have
to contribute to the 55% reduction effort. A smart combination of
vehicle/vessels/aircraft efficiency improvements, fuel mix changes, greater
use of sustainable transport modes and multi-modal solutions, digitalisation
for smart traffic and mobility management, road pricing and other incentives
can reduce greenhouse gas emissions and at the same time significantly
address noise pollution and improve air quality. In addition, new sustainable
mobility services and increased use of the existing urban bus and rail services
can reduce emissions, congestion and pollution while improving road safety,
especially in urban areas. The upcoming Strategy for a Sustainable and Smart
Mobility will set a pathway for the sector to master the twin green and digital
transitions building a resilient and sustainable transport system for generations
to come.

To achieve climate neutrality and ensure that sectors with emissions that are
more difficult to abate have access to sufficient quantities of renewable and
low carbon fuels, conventional cars will need to gradually be displaced by
zero emissions vehicles and greater use should be made of sustainable
collective transport services. The Impact Assessment projects reduction levels
in 2030 corresponding to a decrease of around 50% of the CO2 emissions per
kilometre for passengers cars, as compared to the 2021 targets. The
production and sales of electric vehicles are already taking off, and hydrogen
promises new ways of propulsion, particularly for heavy duty trucks,
indicating that this is a realistic scenario.

Both the aviation and maritime sectors will need to scale up efforts to improve
the efficiency of aircraft, ships and their operations and to increase the use of
sustainably produced renewable and low-carbon fuels. This will be assessed in
greater detail in the context of the ReFuelEU Aviation and FuelEU Maritime
initiatives that aim to increase the production and the uptake of sustainable

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alternative fuels for these sectors. The necessary technology development and
deployment has to happen already by 2030 to prepare for much more rapid
change thereafter.

Similarly, industry may see emissions reductions of up to around 25% by

2030 compared to 2015. Best practices can further reduce greenhouse gas
emissions, thus improving overall efficiency, by using waste heat and
increasing electrification through continued incremental improvements.
However, to allow industry to truly decarbonise after 2030, zero or very low
carbon technologies and business concepts, including system integration,
access to sustainable resources and increased circularity, medium and high
heat electrification, hydrogen and carbon capture, utilisation and storage, will
need to be developed and tested at scale in this decade. To kick-start this and
facilitate the development of appropriate supply and demand based support
for zero or very low-carbon technologies and create markets for low-carbon
products, EU certification systems based on the greenhouse gas performance
for low-carbon basic materials and for carbon removals should be developed 8
. In addition, changes in corporate governance rules and practices, including
on sustainable finance, will make company owners and managers prioritise
sustainability objectives in their actions and strategies.

Appropriate infrastructure to maximise the benefits of the clean energy

transition and to deploy alternative emissions-free fuel and feedstock is
critical for both sectors. Heat networks, hydrogen pipelines, electric
recharging and hydrogen refuelling infrastructure are all examples of
infrastructure that will need to be developed and will require careful planning.

Non-CO2 emissions

Non-CO2 emissions of methane, nitrous oxide and so-called F-gases represent

almost 20% of the EU’s greenhouse gas emissions. By 2030, these can be
reduced effectively by up to 35% compared to 2015.

The energy sector shows the largest potential in low-cost additional reductions
beyond existing policies, notably by avoiding fugitive methane emissions
from oil, gas and coal production and transport. These will be addressed
among others in the upcoming Methane Strategy.

The waste sector is expected to strongly reduce its emissions already under
existing policies, notably due to the obligation to separately collect bio-waste
as of 2024 and ban of bio-waste landfilling. Reductions will depend strongly
on fully enforcing existing legislation. In addition, there is a further cost-
effective reduction potential in wastewater treatment, notably through a better
management of sewage sludge. Finally turning waste into a resource is an
essential part of closing the loop towards a circular economy, reducing
emissions across the entire industrial value chain.

The majority of these emissions comes from the agriculture sector. Over the
past years, the decline of these emissions has stagnated and in some cases
emissions have even increased. In a business as usual situation, they are

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projected at best to slowly decrease by 2030. While these emissions can never
be fully eliminated under existing technology and management options, they
can be significantly reduced while ensuring food security is maintained in the
EU. Efficient use of fertilisers, adopting precision farming, a healthier herd
and the deployment of anaerobic digestion producing biogas and valorising
organic waste are examples of existing technologies. Alternative options
accelerating growth of sustainable shellfish and algae production could
produce protein with a low greenhouse gas emissions footprint. Furthermore,
by adapting its land use management and cultivating perennials on cropland in
a sustainable manner for use of the harvested biomass in buildings, industry
and energy, agriculture can greatly contribute to decarbonise other sectors.

The land use sector

Nature is a vital ally in the fight against climate change and halting the loss of
biodiversity. It regulates the climate, and nature-based solutions will be
essential for emissions reductions and adaptation to climate change. Restoring
and growing our land carbon sink – the ability to absorb CO2 by our natural
environment such as trees - is crucial to our climate goals.

The EU land use, land use change and forestry (LULUCF) sector both emits
greenhouse gases and absorbs CO2 in its soil and biomass. In total, it has been
a significant net sink in the past. However, over recent years the EU’s sink has
come under pressure from increased economic use and the adverse effects of
climate change. While it expanded in the two decades from 1990 to 2010 from
a net sink of around 250 million CO2eq to above 300 million tons CO2eq, it
has seen significant losses over the last five years. This resulted in a sink
reduced to 263 million tons CO2eq in 2018. This underlines the risks for the
magnitude of the sink, which is of crucial importance to achieve net zero
greenhouse gas emissions by 2050.

Unchanged land use practices and further increases in harvesting, in part

driven by age class impacts of maturing managed forests, could see the sink
potentially further decline to 225 million tons CO2eq by 2030. There are
significant risks for the sink of rising negative impacts from natural hazards
such as fires and pests due to a changing climate as well as increasing
economic demand for forest biomass, which also negatively affect
biodiversity.

We need a growing sink in order for the EU to achieve climate neutrality by

2050. Reversing the current trend requires significant short-term action due to
long lead times, especially in forestry. This includes improved and enforced
forest protection and more sustainable forest management as well as
sustainable re- and afforestation and improved soil management including
through the restoration of wetlands, peatlands and degraded land in line with
the Biodiversity Strategy 9 and contributing to its aims. Furthermore, a shift
towards growing woody biomass on cropland in a sustainable manner,
including as a feedstock for advanced biogas and biofuels, could alleviate the
situation. The Impact Assessment estimates that, if implemented swiftly in the
coming years, this could already reverse the current trend of a diminishing EU

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land carbon sink by 2030, increasing it again to levels above 300 million tons
CO2eq.

4. Updating the 2030 Climate and Energy policy framework

The analysis in the Impact Assessment has looked at the broad changes,
which, if any, would be required in the current policy framework to trigger the
sectoral contributions identified above, and that can only be delivered through
a whole of government approach. Key elements are summarised in the
following pages. Specific impact assessments and public consultations will be
carried out in the coming months to precisely determine the legislative
changes the Commission intends to propose in June 2021 to support the
enhanced 2030 climate and energy framework and their cumulative impacts
on the European economy. These will have to further assess sector specific
distributional and competitiveness impacts by exploring feasible targeted
solutions.

The EU is implementing its current 2030 climate target of at least 40%

greenhouse gas emissions reductions through three key pieces of climate
legislation:

ꞏ the Emissions Trading System Directive 10 , which sets up a cap and trade
system for large industrial and power sector installations and the aviation
sector to reduce emissions by 43% by 2030 compared to 2005;

ꞏ the Effort Sharing Regulation (ESR) 11 , with binding greenhouse gas

emissions pathways at Member State level for the remaining emissions,
adding up to a reduction of 30% by 2030 compared to 2005;

ꞏ the Land Use, Land Use Change and Forestry (LULUCF) Regulation 12
that obliges Member States to ensure that the net carbon sink from land
use does not deteriorate compared to how it would have evolved
continuing existing land use management practices.

Energy legislation and policies are also essential instruments contributing to

the achievement of this target with the 2030 EU binding targets of at least
32% of renewable energy sources in the EU’s energy mix and at least 32.5%
energy efficiency. The Renewable Energy Directive (RED II) 13 and the
Energy Efficiency Directive 14 and the Regulation on the Governance of the
Energy Union and Climate Action 15 capture these targets in legislation,
supported through sectoral legislation such as the Ecodesign directive 16 and
the Energy Performance of Buildings Directive 17 . A comprehensive set of
notably transport and other sectoral policies also contribute to the
achievement of the target.

Current projections indicate that, if current policies are fully implemented,

greenhouse gas emissions reductions 18 by 2030 would be around 45%
compared to 1990 levels when excluding land use emissions and absorptions,
and around 47% when including land use. However, it is clear that, while
current energy targets should allow us to surpass our current greenhouse gas

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emissions reduction target, this would not be sufficient to achieve a 55%

greenhouse gas emissions reduction target. To achieve this, both the climate
legislation as well as the energy policies need to be reviewed to deliver this
ambition increase.

This is also confirmed by the assessment of Member States’ final National

Energy and Climate Plans (NECPs) under the Governance Regulation 19 . The
Governance of the Energy Union and Climate Action establishes an iterative
process for close cooperation between the Union and Member States, relying
on draft and final NECPs. As set out in the Communication on an EU-wide
assessment of National Energy and Climate Plans 20 , Member States have
been ambitious when developing their national plans for the first time. The
Commission’s analysis indicates that aggregated final national plans would
surpass the renewable energy target at EU level by 1.7 percentage points
while underachieving on the energy efficiency target by around 3 percentage
points. Combined, this would result in around 41% greenhouse gas emissions
reductions (excluding land use emissions and absorptions) by 2030 for the EU
21
.

Higher ambition, therefore, requires adjustments to the current policy

framework, and this in turn would offer a more balanced pathway towards
climate-neutrality over the next 30 years, avoiding the need for sharp
reductions after 2030 and reaping earlier the opportunities for sustainable
growth and investment.

An increasing role for emissions trading and energy taxation

The EU Emissions Trading System (ETS) has proven to be an effective tool in

reducing greenhouse gas emissions. Emissions from stationary sources
declined by 33% between 2005 and 2018. With carbon prices increasing,
following the introduction of the Market Stability Reserve and the market
anticipating the impact of the reinforcement of the system, these emissions
saw a further drop by almost 9% year on year in 2019.

Other policies, most notably renewable energy and energy efficiency policies,
have contributed to the reductions in power sector emissions. However, it is
clear that when the carbon price is sufficiently robust, it becomes a strong
driver for immediate change (e.g. change of fuel used for electricity
generation), and a strong signal for low carbon investments, and thus
contributes decisively to the deployment of renewable energy and energy
efficiency technologies.

The Commission has assessed carefully the possibility of reinforcing and

expanding emissions trading as a tool to achieve greenhouse gas emissions
reductions at the EU level.

The Commission sees important benefits in expanding the use of emissions

trading in the EU, to deliver in an economically efficient manner an increased
climate ambition of 55% greenhouse gas emissions reductions. Emissions
trading can achieve greenhouse gas emissions reductions cost‑effectively. Its

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resulting carbon price internalises the climate externalities and gives

consumers incentives to reduce greenhouse gas emissions. It guarantees
environmental integrity in the form of the emissions cap and provides a strong
price signal that influences daily operational and strategic investment
decisions. At the same time, emissions trading raises revenues that can be re-
invested in the economy leading to better overall economic outcomes.

As already announced in the European Green Deal, a further expansion of the

system could include emissions from road transport and buildings. Already
now, the EU ETS directly or indirectly covers around 30% of buildings
emissions from heating 22 . Covering all emissions of fossil fuel combustion
and integrating them in the EU ETS would present important benefits in terms
of effectiveness and administrative feasibility. The Commission therefore
intends to pursue such an integrated approach and will look into incorporating
it in its legal proposal by next year June.

Next to extending the use of emissions trading also the revision of Energy
Taxation Directive could contribute to putting a price on carbon and reducing
emissions. Well-designed tax reforms can promote economic growth, job
creation and resilience and foster a just transition. At present, a wide range of
sectoral tax exemptions and reductions are de facto forms of fossil fuel
subsidies, which are not in line with the objectives of the European Green
Deal.

The Commission is aware that carbon pricing does not address all barriers to
the deployment of low and zero emissions solutions. Other complementary
policy actions are needed to ensure that the incentives align and to trigger
further investments in clean energy technologies and infrastructure or to
overcome financing difficulties for low-income households. In road transport,
emissions trading has the advantage of capturing fleet emissions under the cap
and simultaneously incentivising behavioural change with lasting effects on
mobility solutions through the price signal. At the same time, the CO2
emissions performance standards for cars are the main driver to ensure the
supply of modern and innovative clean vehicles, including electric cars.
Ambitious CO2 emissions standards for cars and vans will be needed to
ensure a clear pathway towards zero emissions mobility.

Therefore, the existing regulatory and enabling framework will be further

developed in parallel. Renewable energy, energy efficiency and transport
policies and standards will be revised and, where needed, new policies will be
introduced. Sectoral ambitions will be set in light of the 55% economy wide
greenhouse gas emissions reduction target. The Commission will underpin
these ambitions with policies fostering a just transition, research and
development and sustainable finance and ensure an effective use of the
Union’s budget and recovery funds to support the transition.

Next steps on emissions trading

An expanded emissions trading system could be developed as an upstream

trading system regulating at the point of fuel distributors or tax warehouses

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and would need to appropriately address any risk of double counting, evasion
or loopholes in relation to entities covered by the existing downstream system
for the aviation, power and industrial sectors.

As the existing EU ETS has shown, the development of a new market requires
setting up functioning monitoring, reporting and verification and can benefit
from transitional arrangements or a pilot period before being gradually
integrated into the existing system.

Low-income households bear a higher burden of heating and fuels expenses

compared to wealthier households. This underlines that any expansion of
emissions trading will need to address distributional impacts, e.g. by using
part of the corresponding auction revenues. This will depend on the revenue
allocation between the EU and national level and on its well-targeted use (e.g.
Modernisation Fund and Innovation Fund). 23

Increasing the EU’s 2030 climate ambition will also require a strengthened
cap of the EU ETS to create the necessary long-term carbon price signal and
drive further decarbonisation.

This will require revisiting the linear reduction factor that defines the annual
reduction of the cap beyond its current level of 2.2% to guarantee that the
sectors covered by the EU ETS deliver the necessary emissions reductions.
Considering that the nominal cap is currently higher than actual emissions, a
change in the linear reduction factor could potentially be combined with a
one-off reduction of the cap that would put it closer to the actual emissions
level. The Commission will further assess how to strengthen the cap in the
context of an extension of the system and next year’s review of the
functioning of the Market Stability Reserve. Similarly, the Commission will
further assess the combined impact of an expanded system and a strengthened
cap on the free allocation available for industry to effectively address the risk
of carbon leakage. The Impact Assessment already estimates that, at first
sight, a significant amount of free allocation would still be available, even
with the necessary strengthening of the cap.

Furthermore as the EU is increasing its climate ambition, the Commission is

working on introducing a carbon border adjustment mechanism in certain
sectors to address the risk of carbon leakage. It is considering several options
as an alternative to the current measures addressing that risk as part of an on-
going impact assessment with a view to table a legislative proposal in the first
half of 2021.

Emissions trading: maritime and aviation

EU international emissions from navigation and aviation have grown by more

than 50% since 1990. Action in these sectors is urgently needed, including as
they recover from the current crisis. The EU has a legislative framework in
place that covers all greenhouse gas emissions except from maritime
transport, for which the current regulation focuses solely on monitoring,
reporting and verification of emissions. For aviation, the application of the EU

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ETS is currently suspended in relation to flights to countries outside the

European Economic Area to allow for the development of corresponding
international instruments.

For both sectors, in accordance with its international commitment to

economy-wide action under the Paris Agreement, the EU should continue to
regulate at least intra-EU aviation emissions in the EU ETS and include at
least intra-EU maritime transport in the EU ETS 24 . For aviation, the
Commission will propose to reduce the free allocation of allowances,
increasing the effectiveness of the carbon price signal in this sector, while
taking into account other policy measures such as energy taxation and the
ReFuelEU initiatives.

International cooperation on maritime transport and aviation is desirable.

International instruments negotiated or under negotiation in the International
Maritime Organization (IMO) and the International Civil Aviation
Organization (ICAO), such as the Carbon Offsetting and Reduction Scheme
for International Aviation (CORSIA),should promote effective action in this
context. In the light of progress at global level, the Commission will give
fresh political consideration to the international aspects of the EU ETS,
taxation and fuel policies for aviation and maritime to ensure the gradual
decarbonisation of all fuel use from transport relating to the EU with the
ambition to include international emissions from aviation and navigation into
the EU ETS.

Agriculture, Land Use, Land Use Change and Forestry sector

The Land Use, Land Use Change and Forestry sector’s emissions and
removals will be fully integrated into the proposed 2030 EU greenhouse gas
target as reported under the UNFCCC inventory.

This will be the starting point of the pathway between 2030 and 2050 for
achieving climate neutrality and allow monitoring progress towards net zero
greenhouse gas emissions by 2050 in a fully coherent manner. Corresponding
targets need to be set in the Effort Sharing Regulation and under the EU ETS,
to ensure that in total, at least the economy wide 2030 greenhouse gas
emissions reduction target of 55% will be met.

The Land Use, Land Use Change and Forestry Regulation currently requires
EU Member States to maintain their natural carbon sink according to existing
land use practices. It covers the activities of both the forestry and agriculture
sectors.

Over time, the sector should do more. The current trend of a decreasing land
carbon sink needs to be stopped and reversed. The Biodiversity Strategy, the
Farm to Fork Strategy, the forthcoming Forest Strategy, EU Nature
Restoration Plan and the new Adaptation Strategy will all put strong policies
in place to protect and enhance the natural sink and resilience of the EU’s
forests to climate change, restore degraded land and ecosystems, rewet
wetlands and promote the bio-economy, including the use of durable

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harvested wood products, in full respect of ecological principles fostering

biodiversity.

The sector will have to provide for food, feed and materials for a growing
world population in a climate-neutral economy. Strong synergies and trade-
offs with biodiversity aspects exist. The direction should be to increase the use
of sustainably produced biomass and minimise the use of whole trees and
food and feed-based crops to produce energy. Addressing this includes
reviewing and revisiting, as appropriate the biomass sustainability criteria in
the Renewable Energy Directive, which are also used in the EU ETS,
following the ongoing Commission’s assessment of the EU and global
biomass supply and demand and related sustainability.

Biomass-related aspects will need to be assessed in a coherent manner with

other fuel initiatives, e.g. the Renewable Energy Directive, the Fuel Quality
Directive and the upcoming initiatives promoting sustainable aviation and
maritime fuels. A fuel policy coherent with the overall climate and energy
policy will be essential for those sectors with hard to abate emissions, be it to
produce biogas and biofuels or hydrogen or e-fuels.

Land Use, Land Use Change and Forestry presently removes more CO2 by
storing it in biomass or in soil carbon than it releases to the atmosphere. This
sink needs to be maintained and even enhanced to balance any remaining
emissions in the economy with carbon dioxide removals and to achieve net
zero GHG emissions by 2050. Increased flexibility between the Land Use,
Land Use Change and Forestry Regulation and the Effort Sharing Regulation
could be a way to strengthen incentives for removals in the land use sector
itself. An ambition increase in the Land use, Land use change and Forestry
sector beyond the current requirements needs to be assessed carefully given
the diverse situation across Member States. This would benefit from the
detailed analysis and elaboration of policies implementing the biodiversity
and forestry strategies, which in principle will drive some of the additional
actions reducing emissions in the sector. The Commission will reflect upon
these options when coming forward with a legislative proposal to update the
Land Use, Land Use Change and Forestry Regulation and the Effort Sharing
Regulation next year.

To make removals happen in practice, individual farmers or forest managers

need to be directly incentivised to store more carbon on their land and their
forests. Currently this depends strongly on Member States action but carbon
farming and certification of carbon removals should increasingly be deployed
in the run up to 2030.

A further step to enhance removals could be to integrate agriculture non-CO2

greenhouse gas emissions into the land use, land use change and forestry
sector and to create a new regulated sector covering agriculture, forestry and
land use. Such a sector would have the potential to become rapidly climate-
neutral by around 2035 in a cost-effective manner, and subsequently generate
more removals than greenhouse gas emissions. This would require a novel
policy approach that would (i) set national and sub-sectoral targets and

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benchmarks, (ii) create flexibility across the EU ensuring cost-effective

incentives and mobilise the necessary financial resources, as well as (iii)
develop the certification of carbon removals. An EU carbon farming initiative
under the Climate Pact will demonstrate and promote such new business
models.

Over time, the Commission clearly sees merit in the creation of an

Agriculture, Forestry and Land Use sector with its own specific policy
framework covering all emissions and removals of these sectors and to
become the first sector to deliver net zero greenhouse gas emissions.
Subsequently, this sector would generate carbon removals to balance
remaining emissions in other sectors induced by a robust carbon removal
certification system.

Effort Sharing Regulation

Introducing emissions trading for a significant share of the existing Effort

Sharing Regulation sectors and eventually folding agricultural non-CO2
emissions into the land use sector would have consequences for this
Regulation. The Commission will give consideration to different options in
light of an expansion of emissions trading to all fossil fuel use.

If, on one hand, the scope of the Regulation were to be maintained creating
overlap between the sectors covered by the EU ETS and the Effort Sharing
Regulation, this would provide an incentive for Member States to take
subsidiary action strengthening the regulatory framework for sectors such as
buildings and road transport. If, on the other hand, the scope were to be
reduced, and in case of a full transition to an EU ETS covering all fossil fuel
combustion emissions, the Regulation would predominantly cover non-CO2
emissions. Its role and purpose would be further reduced in case of a move of
agriculture non-CO2 emissions towards an agriculture and land use sector. If
all other objectives of the Regulation were sufficiently targeted by other
legislative instruments, the Regulation could even be repealed as a whole in
the future.

Considering the need to maintain strong incentives and accountability for

Member States to ensure action at national level, the Commission will use the
upcoming impact assessment for both the review of the Emissions Trading
System and the Effort Sharing Regulation to further consult the public on the
role of the Effort Sharing Regulation and the related Governance Regulation.
At the same time, Member States have different capabilities to reduce
greenhouse gas emissions. The EU budget together with the Next Generation
EU package can be a strong driver for transformation and leverage sustainable
private and public investment, if resources are well-deployed. It will remain
essential to address distributional concerns between Member States in order to
ensure a fair transition.

Renewable energy policies

Renewable energy plays a fundamental role for delivering the European Green

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Deal and for achieving climate neutrality by 2050.

Based on the assessment carried out, it is clear that the EU needs to transit
from today’s energy system to an integrated energy system largely based on
renewables already by 2030. The greenhouse gas emissions reduction target of
55% achieved through the combination of intensified policies and the
extension of the EU ETS is assessed to reach a share of renewables of around
38.5%.

Renewables will need to be deployed at larger scale to contribute to the higher

climate ambition and to promote the Union’s industrial leadership on
renewable technologies. An increased renewables target will provide the
necessary predictability and investment certainty for further renewable energy
deployment across all sectors.

The transition to climate neutrality requires a competitive, secure and

sustainable energy system and a robust internal market framework. The
existing framework and recent EU strategies on Energy System Integration,
on Hydrogen and on Batteries set important enabling conditions for the uptake
of renewable energy carriers. To go further, relevant legislation will be
reinforced and supported by the forthcoming Commission initiatives on a
Renovation Wave, an Offshore Energy strategy, alternative fuels for aviation
and maritime as well as a Sustainable and Smart Mobility Strategy.

EU action will focus on cost-effective planning and development of renewable

energy technologies, eliminating market barriers and providing sufficient
incentives for demand for renewable energy, particularly for end-use sectors
such as heating and cooling or transport either through electrification or via
the use of renewable and low-carbon fuels such as advanced biofuels or other
sustainable alternative fuels. The Commission will look into capacity building
schemes to implement citizen-driven renewable energy communities financed
by the EU and self-consumption models enabling higher consumer uptake and
faster development of decentralised renewable energy technologies.
Continuous support for corporate sourcing of renewable energy, and
establishing minimum mandatory green public procurement criteria and
targets in relation to renewable energy may also be needed.

Specifically in the fossil fuel dominated heating and cooling sector, the
Commission intends to assess the nature and the level of the existing,
indicative heating and cooling target, including the target for district heating
and cooling, as well as the necessary measures and calculation framework to
mainstream further renewable and low carbon based solutions, including
electricity, in buildings and industry.

For transport, the Impact Assessment demonstrates that there is a clear role for
electrification as a key avenue for decarbonisation. However, some transport
sectors heavily depend on high energy density fuels, such as the aviation and
maritime. Alongside the sustainable alternative fuels initiatives for these
sectors, ReFuelEU Aviation and FuelEU Maritime, the Commission will
propose an updated methodology to promote, in accordance with their

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greenhouse gas performance, the use of renewable and low-carbon fuels in the
transport sector set out in the Renewable Energy Directive.

In addition, a comprehensive terminology for all renewable and low-carbon

fuels and a European system of certification of such fuels, based notably on
full life cycle greenhouse gas emissions savings and sustainability criteria, and
existing provisions for instance in the Renewable Energy Directive would
support the further development of renewables. Large-scale deployment of
renewables also requires the necessary infrastructure. A holistic approach to
large-scale and local infrastructure planning, protecting and enhancing the
resilience of critical infrastructures is needed and will guide the forthcoming
revisions of the TEN-E and TEN-T regulations, and of the Alternative Fuels
Infrastructure Directive. Modern low-temperature district heating systems
should be promoted, as they can connect local demand with renewable and
waste energy sources, as well as the wider electric and gas grid in order to
optimise supply and demand across energy carriers.

Energy Efficiency policies

The EU has a comprehensive framework for a wide range of energy efficiency

measures across different sectors 25 . A rigorous enforcement of existing
legislation on energy efficiency is necessary but insufficient to reach the
increased climate target. The Impact Assessment shows that energy efficiency
improvements will need to be significantly stepped up to around 36% in terms
of final energy consumption 26 .

Achievement of a more ambitious energy efficiency target and closure of the

collective ambition gap of the national energy efficiency contributions in the
NECPs will require actions on a variety of fronts, largely through the
legislative policy initiatives already announced by the European Green Deal
for June 2021. Therefore these initiatives will identify the precise policy
options available as well as the exact level of new targets.

However, the analysis accompanying this Communication already indicates

that most savings would need to come from buildings. The forthcoming
Renovation Wave will therefore launch a set of actions to increase the depth
and the rate of renovations at single building and at district level, switch fuels
towards renewable heating solutions, diffuse the most efficient products and
appliances, uptake smart systems and building-related infrastructure for
charging e-vehicles, and improve the building envelope (insulation and
windows). Action will be taken not only to better enforce the Energy
Performance of Buildings Directive, but also to identify any need for targeted
revisions. The possibility of establishing mandatory requirements for the
worst performing buildings and gradually tightening the minimum energy
performance requirements will also considered as a means to ensure a suitable
minimum pace for the improvement of the building stock.

Building on the existing framework and the long-term renovation

strategies, other measures will be identified to remove the main
barriers to building renovation and reinforce the pull factors for faster

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and deeper renovations. The Renovation Wave will address the

necessary elements to achieve and sustain higher renovation rates,
including regulatory strengthening. It will foresee adequate financial
instruments, for instance to facilitate de-risking and incentivising the
measurement of actual energy savings, and other facilitating
measures, such as fostering training in the required skills. Indicative
milestones for 2030, 2040 and 2050 and with measurable progress
indicators will be set up.

Over and beyond the contribution from the building sector, other
efforts will be needed to achieve a more ambitious energy efficiency
target.

The existing energy efficiency requirements and product standards

will be reviewed in the first half of 2021. In addition, the forthcoming
Sustainable Product Legislative initiative announced in the Circular
Economy Action 27 Plan will look into widening the Ecodesign
approach to other product categories.

The higher ambition level will also require to better promote energy efficiency
wherever cost-effective in all areas of the entire energy system as well as in all
relevant sectors where activity affects demand for energy, such as transport
and the agriculture sectors. In this context, the Commission will present
dedicated guidelines in the first quarter of 2021. Considering that the
Information and Communication Technologies (ICT) sector accounts for
between 5 and 9% of global electricity consumption and more than 2% of
global greenhouse gas emissions, the EU Digital Strategy 28 announced a
commitment to make data centres climate-neutral by 2030, with actions to be
put in place in 2021 to 2022.

Road transport CO2 vehicle standards

For road transport, CO2 and vehicle standards have proven to be an effective
policy tool. In parallel to applying emissions trading to road transport at the
level of the fuel supplier and road pricing in line with the ongoing revision of
the Eurovignette Directive , only stringent CO2 emissions performance
standards ensure the supply of modern and innovative clean vehicles,
including vehicles that see strong reductions in fuel consumption and drive
trains such as battery or fuel cell electric vehicles with no tank to wheel
emissions at all. By June 2021, the Commission will therefore revisit and
strengthen the CO2 standards for cars and vans for 2030.

This work has to look beyond 2030. The Impact Assessment indicates that to
reach the overall climate neutrality target in 2050, nearly all cars on the roads
must be zero emissions by that time. This transition needs to be flanked by the
appropriate roll out of infrastructure for recharging and refuelling of those
vehicles. The upcoming revision of the Alternative Fuels Infrastructure
Directive is a key initiative in this regard. The development and testing of new
automotive technologies have long lead times and cars are on the roads
between 10 and 15 years. The Commission will also assess in the coming

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months what would be required in practice for this sector to contribute to

achieving climate neutrality by 2050 and at what point in time internal
combustion engines in cars should stop coming to the market.

Mainstreaming of climate action across all policies

Many other EU policies have been put in place, or are being reoriented to
contribute to the ‘do no harm’ principle and the transition to climate
neutrality. Mainstreaming of climate policy objectives into other EU policies
is a key enabler and will allow for an inclusive transformation based on a just
transition.

The Sustainable Europe Investment Plan aims at boosting sustainable

investments. Its Just Transition Fund (the first pillar of the Just Transition
Mechanism) addresses head on the acceleration of the transition in coal, peat,
oil shale and carbon-intensive regions. The InvestEU programme focuses on
attracting private investments, and it has been proposed to use at least 30% of
its overall financial envelope to contribute directly to achieving the climate
objectives. The Modernisation Fund will support the transition of the energy
system in lower income Member States. The European Regional Development
Fund and the Cohesion Fund will support complementary investments in
energy efficiency, renewables, innovation and research. The European Social
Fund Plus will provide comprehensive support for up- and re-skilling of
workers. Moreover, the Commission will propose in May 2021 an Action Plan
for the implementation of the European Pillar of Social Rights promoting just
transitions, access to training and essential services including energy, mobility
and housing for all. The Commission’s Long-term Vision on rural areas to be
launched next year will pay specific attention to promoting sustainability for
citizens living in remote, rural areas.

Horizon Europe, the new research and innovation framework programme,

with inter alia a dedicated Climate, Energy and Mobility cluster, will see at
least 35% of its funds supporting the achievement of the climate goals. The
Innovation Fund will support the demonstration of breakthrough technologies
at commercial scale in the energy and industry sectors.

The Renewed Sustainable Finance Strategy with its envisaged legislative and
non-legislative initiatives will guide private investments more towards green
recovery and sustainable economic activities. Among other initiatives, the EU
sustainable finance taxonomy, the EU Green Bond Standard and climate
benchmarks will play a crucial role in fostering investment closer to the needs
of the real economy for the benefit of the planet and society.

To achieve climate neutrality, a 90% reduction in overall transport emissions

by 2050 compared to 1990 levels will be one main objective of the
forthcoming Sustainable and Smart Mobility Strategy while addressing
recovery of the sector.

Industry must lead change as Europe embarks on its transition towards climate
neutrality and digital leadership, while leveraging the impact of its single

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market to set global standards. Both the European Industrial Strategy 29 and
the EU Circular Economy Action Plan point towards increased resource
efficiency and the circular economy as indispensable pathways for a
modernisation of EU industry contributing to greenhouse gas emissions
reductions.

Secure supply of batteries in line with the strategic action plan for batteries
under the European Battery Alliance will be indispensable for decarbonising
the EU’s energy system by enabling integration of increasing amounts of
renewable energy, and our transport sector by catalysing the shift to electric
vehciles.

The forthcoming Zero Pollution Action Plan for air, water and soil will look at
how to further address pollution from large industrial installations fully
consistent with climate, energy, as well as circular economy policies. The
EU’s Digital Strategy supports digital technologies that can help achieve
climate-neutrality across all sectors of the EU economy, and aims at greening
the ICT sector itself.

The CAP strategic plans to be developed by Member States are a key

opportunity to direct more resources to reduce emissions in the agriculture
sector in a durable manner, while enhancing the economic and environmental
sustainability and resilience of the sector.

Preparing a more ambitious EU strategy on adaptation to climate change will

be essential for all sectors, as climate change will continue to create increasing
stress on the Europe economic and social fabric, in spite of the mitigation
efforts.

Both mitigation and adaptation will in turn benefit from the EU Space
programmes such as Copernicus with ever improving monitoring capabilities.

Overall, higher ambition by 2030 and the transition to climate neutrality and
recovery from the COVID-19 crisis will be both a challenging task and an
opportunity to build a better future for all. A Technical Support Instrument
ensures that the Member States can benefit from tailor-made expertise for
developing sustainable and growth enhancing reforms.

Alongside government policies and regulation, citizens, communities and

organisations have their part to play. Regions, cities and towns are key centres
of transformative and sustainable solutions that lead the way forward through
movements such as the Covenant of Mayors. To this end, the Commission
will launch the European Climate Pact to give everyone a voice and space to
design climate action, share information, launch grassroots activities and
showcase solutions that others can follow.

International dimension

As an advanced economy, with a proven track record in successful

implementation of ambitious climate policy, the EU has the possibility – as
well as the moral obligation – to influence global greenhouse gas emissions

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trends and increase resource efficiency, within and beyond the international
climate negotiations. Raising the EU ambition from the current level to 55%
within the next ten years will double the ambition of the EU’s nationally
determined contribution and set the stage for the upcoming UN climate
change negotiations in 2021, thereby reinforcing the EU’s global leadership
position.

The Commission invites the European Parliament and the Council to consider
this as the EU‘s new contribution to the Paris Agreement. This should be
submitted to the UNFCCCC as the updated EU’s Nationally Determined
Contribution before the end of the year. This would give an early boost to the
UN’s preparations of the next meeting of the Parties of the Paris Agreement in
late 2021, as well as the UN’s Decade for Action (2030 Agenda).

By setting a higher target for 2030, and thereby increasing its ambition under
the Paris Agreement, the EU would set a positive example for the rest of the
world of how climate change can be effectively tackled, while pursuing a
modern and competitive economy and a prosperous, inclusive and resilient
society. It would also provide momentum for next year’s multilateral
discussions in the context of the G7 and the G20, which will be presided by
the UK and Italy, respectively. Through its external assistance the EU will be
able to support third countries in their effort to raise their climate ambitions.

The EU should continue leading by example, but it must also use its leverage
to promote a global change in economic incentives in support of the low-
carbon transition taking into account changing geopolitical and geoeconomic
realities. The EU will continue to foster multilateral rule-based cooperation,
using its green, climate and energy diplomacy – and the full spectrum of its
external policy instruments to enhance the ambition level of its partners, and
in particular the largest and upcoming emitters, and accelerate the global
transition to climate neutrality. This means using the EU’s strategic
partnerships, external financing, trade and other cooperation platforms
including through the deployment of international environmental standards
and promotion of clean technologies through trade. The private sector should
play an important role and EU leadership on sustainable finance, in particular
through the EU taxonomy as a tool to help investors in the transition to a low-
carbon, resilient and resource-efficient economy as well as through the
International Platform on Sustainable Finance with our international partners
will be instrumental. The EU will seek mutually beneficial alliances and
ensure an international level playing field around new sustainable
technologies, such as renewable hydrogen, advanced solar and wind, batteries,
and carbon capture, as well as around critical raw materials for these
technologies, such as rare earths. The EU’s position as the world’s largest
trading block provides significant opportunities in this respect.

At the same time, to effectively contain global climate change and achieve the
UN Sustainable Development Goals, all countries and notably G20 members
will need to come forward with much more ambitious actions to prevent
catastrophic consequences.

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In the absence of comparable increases in ambition by our partners, as the EU

increases its climate ambition, the Commission will propose a carbon border
adjustment mechanism , for selected sectors, to reduce the risk of carbon
leakage as a an alternative to measures currently in place to address that same
risk .. Hence, the Commission is looking into the options for setting up an
effective carbon border adjustment mechanism, compliant with World Trade
Organization rules.

5. Conclusions and next steps

Raising the EU’s ambition of greenhouse gas emissions reductions to 55% by

2030 is feasible and beneficial for the health, prosperity, and wellbeing of our
citizens. Without underestimating the challenge of mobilising significant
additional investments in the coming decade and promoting a just transition, it
offers the opportunity for sustainable growth, and, in the context of the
COVID-19 recovery, an opportunity for durable investments that can kick-
start the EU economy.

Higher ambition for 2030 will contribute to a more gradual emissions

reduction path and a more balanced economic and social transition towards
climate neutrality in the next 30 years. Therefore, it will be more credible,
more prudent and fairer with respect to future generations.

Pressure on natural resources, general uncertainty around global

developments, and the growing climate concerns of the global population will
increase pressure on all governments to act swiftly. Acting ambitiously will
provide the EU and its businesses and industries a first-mover advantage in
the international economic arena, increasing its competitiveness in the
growing global markets for sustainable and green technologies.

Equally important, enhancing ambition will deliver very important benefits

alongside the fight against climate change, like a reduced fossil fuel import
bill, higher energy security, reduced air pollution, better health, improved
biodiversity, lower dependence on imported raw materials, and less hazards
from waste. Paired with intensified renewables and energy efficiency policies,
it will cut energy costs for households and companies, and provided that
social impacts are addressed help alleviate energy poverty and contribute to
growth and jobs.

EU citizens, businesses and social partners require increased certainty and

predictability on the pathway towards climate neutrality. Therefore, the
Commission is amending its proposal for the first European Climate Law 30
today, adding a 2030 target of at least 55% net greenhouse gas emissions
reductions compared to 1990. This will be the starting point for a smooth
pathway for the EU to become climate-neutral by 2050. The Commission
invites the European Parliament and the Council to swiftly reach agreement
on and adopt the European Climate Law Regulation.

Over the course of the coming nine months, the Commission will review its
key climate and energy legislation. This Communication already identifies

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key options to amend it. The Commission is convinced that all policy
instruments relevant for the decarbonisation of our economy must work in
coherence in order to achieve our objectives. A reinforced and expanded use
of emissions trading at EU level, energy efficiency and renewable energy
policies, instruments supporting sustainable mobility and transport, circular
economy, environmental, agricultural, financial, research and innovation, and
industrial policies will all have important roles in achieving the objectives of
the European Green Deal in general and an increased climate target for 2030
and climate neutrality by 2050 in particular.

Drawing on a broad public debate and a process of consultation with the

European Parliament, the Council, the Economic and Social Committee and
the Committee of the Regions, as well as national Parliaments, and all citizens
and stakeholders - namely through the European Climate Pact, but also the
upcoming Conference on the Future of Europe - the Commission will prepare
the key necessary legislative proposals by June 2021. This process should
pave the way for their subsequent rapid adoption, and leave sufficient lead-
time for all actors to achieve the increased 2030 climate and energy ambition.

(1)
COM(2019) 640 final

(2)
A strong decrease of consumption of animal products for nutrition could potentially reduce
emissions by more than 30 million tonnes by 2030.

(3)
COM(2020) 381 final

(4)
https://www.weforum.org/agenda/2019/01/why-digitalization-is-the-key-to-exponential-
climate-action/

(5)
New buildings today consume only half as much as typical buildings from the 1980s. About
35% of the EU's buildings are over 50 years old.

(6)
Calculated according to the methodology as set out in Directive 2018/2001/EC.

(7)
Report on Ecodesign Impact Accounting, forthcoming

(8)
See also the Circular Economy Action Plan (COM (2020) 98 final).

(9)
COM(2020) 380 final

(10)

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Directive (EU) 2018/410 amending Directive 2003/87/EC

(11)
Regulation (EU) 2018/842

(12)
Regulation (EU) 2018/841

(13)
Directive (EU) 2018/2001

(14)
Directive (EU) 2018/844

(15)
Regulation (EU) 2018/1999

(16)
Directive (2009/125/EC)

(17)
Directive 2010/31/EU and amendement 2018/844/EU

(18)
Including intra EU aviation and navigation

(19)
Regulation (EU) 2018/1999

(20)
[add reference]

(21)
Including intra EU and extra EU aviation, not including maritime navigation

(22)
This is related to the system’s coverage of district heating and due to electric heating.

(23)
The European Council Conclusions, 17-21 July 2020, recognised the need to work towards
reforming the own resources system and introduce new own resources for the Union. In this
context, the European Council invited the Commission to put forward a proposal on a
revised emissions trading system, possibly extending it to maritime and reducing the
allowances allocated for free to airlines.

(24)
On average, including all extra EU navigation and aviation emissions, i.e. the assumed
scope as reported in the greenhouse gas inventory of the United Nations Framework
Convention on Climate Change as memo item, in the EU greenhouse gas emissions
reduction target would require additional reductions of up to 3 percentage points by 2030
compared to 1990 in other sectors to achieve the overall EU reduction target.

(25)
2012 Energy Efficiency Directive together with the Energy Performance for Buildings
Directive, the Ecodesign Directive and the Energy and Tyre Labelling Regulations

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(26)
The Impact Assessment identifies a range of 35.5 % - 36.7 depending on the overall design
of policy measures underpinning the new 2030 target. This would correspond to a range of
39.2%- 40.6% in terms of primary energy consumption.

(27)
COM (2020) 98 final

(28)
COM/2020/67 final

(29)
COM(2020) 102 final

(30)
COM(2020) 80 final

Sus

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