Return to Newsletters
Return to Blog
Return to Basics

The EU 2040 Climate Ambitions: A Critical Recap

Climate Finance

EU communication on the union-wide climate targets for 2040 has been released. Leading the announcements is the pledge to reduce net greenhouse gas emissions by 90% by 2040. There are updates on the focal points of the EU Industrial Carbon Management Strategy. Read more about how ambitious (or not) those EU 2040 goals are in our latest article.

The EU 2040 Climate Ambitions: A Critical Recap

The long wait is finally over - the EU communication on union-wide climate targets for 2040 has arrived. The first announcement : net greenhouse gas emissions are to decrease by 90% by 2040. Additionally, we also received updates on the priorities of the EU Industrial Carbon Management Strategy. The European Commission describes the new targets as ambitious, advancing that “staying in line with the recommended 2040 target would reduce premature deaths due to climate change from 466,000 in 2015 to 196,000 each year by 2040.” 

Not everyone found these announcements satisfactory however. Some of the main concerns were around: 

  1. The fact that the targets are relative and not absolute ; 
  2. The ambition on agriculture emissions has been watered down compared to preliminary discussions. 

Therefore,  targets are deemed too easy to reach - regulators are being cautious ahead of this year's EU Commission and Parliament elections. 

  • Understanding EU's 2040 Climate Targets
  • The EU's 2040 Climate Targets: announced
  • The Path Forward: Strategies for Achieving EU's 2040 Climate Objectives
  • Critiques and Debate around EU's 2040 Climate Ambitions

Understanding EU's 2040 Climate Targets

Why are the EU climate targets important? 

The European Union aims at fighting climate change - regulators set climate objectives to limit the detrimental effects of global warming on citizens and the economy. These targets are important as they influence many other rules and public programs. For example, the EU climate targets frame the commission’s  decision on the cap within the European Union Emissions Trading Scheme (EU ETS)  - the maximum volume of carbon emissions that can be released over a period of time. 

What EU climate targets did we know until now? 

In our previous article, we saw that so far, regulators had set the EU climate targets with a 2030 and a 2050 horizon. By 2050, the EU aims to be carbon neutral - having significantly reduced carbon emissions and achieved a balance between the remaining amount of CO2 emitted and the amount removed from the atmosphere (resulting in a net zero carbon footprint). By 2030, the "Fit for 55" initiative aims to cut EU emissions by 55% compared to 1990 levels.  

However, until now, we were still waiting for the intermediary target, which would define the course between 2030 and 2050. As marginal emissions are harder to abate (it gets harder and harder to reduce each additional tonne of CO2), the trajectory towards the end target is important. 

What were the biggest unknowns for the EU 2040 climate targets?

The biggest question around the EU 2040 climate targets announcements was whether the goals would be set in absolute or in relevant terms. 

  • An absolute target aims at reducing emissions by a specified amount: “CO2 emissions should be reduced by X tonnes”. 
  • A net target involves achieving a balance between emissions produced and those removed or offset (through activities like carbon removal projects or carbon capture technologies). This “balance” heavily relies on our ability to quantify the amount of emissions removed or offset - something that has been immensely controversial to date.

The EU's 2040 Climate Targets: announced

The EU 2040 Emissions Reduction

The initial announcement outlined a net reduction goal: achieving a 90% decrease in net greenhouse gas emissions by 2040. This decision was based on scientific advice from the European Scientific Advisory Board on Climate Change and an impact assessment exploring pathways to achieve carbon neutrality by 2050.

A graph showing that it is realistic to reach the 2040 EU climate targets

The EU Industrial Carbon Management Strategy

The other announcement made yesterday was regarding the EU Industrial Carbon Management Strategy - it outlines methods for capturing, storing, and utilizing carbon sustainably to achieve climate neutrality by 2050. The Commission will evaluate the amount of CO2 that must be directly removed from the atmosphere to meet the EU's emissions reduction targets for both 2040 and 2050.

The Path Forward: Strategies for Achieving EU's 2040 Climate Objectives

What investments are needed to achieve the 2040 climate targets?

According to a Q&A published by the European Commission, the EU should spend an additional 1.5% of GDP (compared to spendings between 2011 and 2020) every year to reduce carbon emissions in line with the new objectives. The average annual investment in the energy system (excluding transport) needs to rise to approximately €660 billion per year between 2031 and 2050. This represents a required increase in energy systems investments from 1.7% of GDP (2011-2020) to 3.2% of GDP (2031-2050). Finally, the annual investment in the transport sector is expected to reach about €870 billion - around 4.2% of the EU GDP.

The EU approach to industrial carbon management to reach the 2040 climate targets

As seen above, the 2040 announcement of the EU climate targets was made in “net terms”, meaning that regulators are setting the stage for carbon capture and storage mechanisms. Here are the priorities announced:

  • Work to establish European CO2 transportation pipeline infrastructure.
  • Identify suitable CO2 storage locations - until now, the EU has lacked verified CO2 storage capacity.
  • Come up with common quality standards for CO2 transportation and storage.
  • Optimize the costs of implementing the necessary infrastructure through international agreements. 

This is highly criticized as the technologies have not been proven at scale, and pose immense industrial and scientific challenges. 

Critiques and Debate around EU's 2040 Climate Ambitions

Effectiveness of the Targets: is a net 2040 EU climate target enough? 

One major criticism of the 2040 EU climate targets announcements is that the target is too easily achievable - studies such as the report from Paris Agreement Compatible scenarios for energy infrastructure argue that the ambitions are feasible with the current economic activity without undertaking major changes. 

According to the Carbon Markets Watch policy director Sam Van den Plas, “If history teaches us anything, the European Commission has consistently low-balled the EU’s climate goals. Unfortunately, the proposed 2040 target is no exception. In addition to setting an inadequate 2040 goal, the Commission also failed to beef up the EU’s 2030 climate policies and, regrettably, a 2035 climate target is also nowhere to be seen.”

The EU 2040 climate targets and the EU 2024 elections

The announcements mark the beginning of the political climate debate ahead of the EU Commission and Parliamentary elections in June this year. Some surveys indicate that the election results could lead to a shift towards the right in the EU Parliament - this means a reduced ambition when it comes to climate policies. One of the primary concerns about the 2040 announcements was their political caution. Not only are the targets too easily achievable as discussed above, but they also overlook important topics. Despite the ongoing social disruptions and protests, the agricultural sector was absent from the announcements.

The director of food and agricultural policies at the french “Institut du Développement Durable et des Relations Internationales”, Pierre-Marie Aubert,  reacted to the announcement - he underlined that cattle farms had already been excluded from the scope of the directives on industrial emissions reductions, reducing the effectiveness of the policy tools currently in place. Moreover, he reminded that the European Parliament voted against the proposed regulation on the sustainable use of pesticides. Not only this, but the draft framework law on sustainable food systems and the legislative package on animal welfare have been abandoned. Finally, the regulation on nature restoration has not yet entered into force and has been considerably weakened. All those elements are also seen as jeopardizing the ambition of the 2040 EU climate targets by the UNCCC's Migration Work Programme co-chair, Lola Vallejo.


Sources

European Commission, 2024. Questions and Answers – Communication on Europe's 2040 climate target and path to climate neutrality by 2050

European Commission, 2024. 2040 climate targets

European Commission, 2024. Recommendations for 2040 targets to reach climate neutrality by 2050

ESABCC, 2024. Scientific advice for thedetermination of an EU-wide 2040climate target and a greenhousegas budget for 2030–2050

Start your journey
Become a carbon investor