Climate advisors identify main gaps in EU’s post-2030 climate policy

The report comes as Europe finalises the adoption of its ‘Fit for 55’ package of legislation, designed to cut greenhouse gas emissions 55% below 1990 levels by 2030.

“Additional measures are imperative if the EU is to achieve its climate neutrality objective by 2050 at the latest,” the ESABCC said in a statement accompanying the report ‘Towards EU climate neutrality: progress, policy gaps and opportunities’, published on Thursday.

The European Commission is due to publish proposals for the EU’s 2040 climate policy on 6 February, charting the way forward for the Union to reach its ultimate goal of cutting emissions to net-zero.

A 90% emissions cut, as envisaged by the Commission for 2040, “would require a significant acceleration in the current pace of emissions reductions,” the board warned.

“The EU has made great progress in recent years to strengthen its climate policy framework. But reaching climate neutrality by 2050 is a race against the clock, and we cannot afford to lean back now,” said Ottmar Edenhofer, chair of the Advisory Board.

“To stay on track, we need to make sure actions today are in line with our long-term goals, and to start preparing for even deeper reductions after 2030,” he said in a statement.

13 recommendations

To align policies with the EU’s long-term energy and climate goals, the advisory board made 13 recommendations.

First among them is to implement the ‘Fit for 55’ package at the national level and “make EU policies fully consistent with the need to phase out fossil fuels” in order to meet the bloc’s 2030 climate goals.

“Now we rely on implementation” by EU member states, Edenhofer told journalists in a briefing on 16 November. “And here, a lot of homework remains to be done”.

This includes providing “a stable investment outlook for renewables” and concluding the revision of the EU’s Energy Taxation Directive, which is currently stuck in the Council of EU member states because it requires unanimity.

On renewables, wind energy would need doubling by 2030 to meet EU goals a quadrupling would be necessary for solar, the ESABCC report found.

However, EU countries are currently not on track. Based on National Energy and Climate Plans (NECPs) submitted so far by EU member states, the Union is on track to reach a 51% reduction in emissions by 2030, according to a preliminary assessment by the European Commission published in December.

Short-term action

A second group of recommendations relates to what needs to be done “now or well before 2030” to reach climate neutrality on time.

This includes politically-sensitive areas such as measures to address the socio-economic impacts of climate policies and aligning the EU’s common agricultural policy with climate goals.

“The lack of progress in climate action is most notable in the agriculture and LULUCF sector,” Edenhofer said, referring to so-called ‘land use, land use change and forestry’ policies.

“One the main gaps is the absence of incentives for farmers and land managers to reduce emissions and to increase removals,” he explained.

Addressing this should begin with the implementation of a “greenhouse gas emission-pricing regime,” the report recommends, saying this can be done by shifting EU support away from emission-intensive agricultural practices such as livestock production and promoting plant-based diets.

For industry, the report recommends targeting carbon capture and storage (CCS) technology to industries where non-fossil alternatives are not viable.

“In plain language, this means that CCS is not useful in the electricity sector,” Edenhofer said.
Carbon trading ‘fit for net-zero’

A key instrument to drive emissions reductions in these areas is to reform the EU’s carbon trading system, an area where the EU should start preparing “by 2031 at the latest,” the report says in its third series of recommendations.

“Here, we recommend to make the two Emissions Trading Schemes fit for net-zero,” Odenhofer said.

For instance, current legislation provides “no clarity” about how the ETS will function when the emissions cap eventually goes down to zero. And it does not say either what will happen to sectors like agriculture and parts of industry where residual emissions are considered unavoidable.

Moreover, there are no alternatives to the free allocation of CO2 allowances for industrial sectors like chemicals, which are currently not covered by the EU’s CO2 tariff, the Carbon Border Adjustment Mechanism (CBAM).

As for the ETS2, which will gradually start applying to road transport and buildings as of 2025, the ‘soft price cap’ that was introduced to shield consumers from rising fuel prices also comes with downsides – essentially increasing the risk that emissions targets will be missed.

“There might be in the future large price differences between ETS1 and ETS2, which undermines cost-effectiveness, creates distortions and perverse incentives,” Odenhofer said.

Social acceptability, and nuclear

Responding to questions from journalists, Odenhofer acknowledged that some recommendations in the ESABCC report could come with high political costs.

For instance, addressing emissions from agriculture “can lead to higher food prices,” he admitted, saying policies there need to include “compensation packages” for low-income households.

When it comes to nuclear power, the ESABCC report seems dubious, saying the long lead times it takes to build new plants – 10 to 15 years at least – does not make it a viable technology to meet the Union’s 2030 goals.

Beyond 2030, Odenhofer appeared sceptical too, underlining “social acceptability” issues with nuclear and “risk factors” such as “lack of cooling water” for thermal plants, including nuclear reactors.

“In our scenarios, we fully acknowledge that different member states have different options for nuclear power – there’s nothing wrong with that,” he said.

“Still, what we need to do in the short term is to expand renewables, which are cheap in all the scenarios, even for countries with a relatively high share of nuclear power.”

“Nuclear power and renewables are very close substitutes” to lower emissions down to zero, Odenhofer said. But in the end, reaching “carbon neutrality isn’t good enough,” he added, saying carbon removals will be needed to reach net-negative emissions.