The European Commission has finally tabled its legislative proposal with an EU-wide target to cut net greenhouse gas emissions by 90 per cent by 2040, compared to 1990. Vattenfall stands in full support of this target and see it as a critical step forward for the EU to achieve climate neutrality by 2050.
At the same time, we recognise that it must be underpinned by a supportive climate policy framework which ensures the EU’s industrial competitiveness and a just transition for the whole of society.
An ambitious EU 2040 target puts an important checkpoint in place to ensure the transition stays on track for 2050. An intermediary target between the 55 per cent reduction target for 2030 and the 2050 net zero ambition contributes to the clarity needed to drive decarbonisation. The next decade will be a critical period in the energy transition, and a 90 per cent reduction by 2040 ensures that the EU avoids the risk of a ‘too little, too late’ scenario in 2050, where too much work would be left to the final stretch to reach net zero.
As COP30 in Belém, Brazil, approaches this November, the Commission’s proposal sends a strong message. It ensures that the EU’s Nationally Determined Contribution (NDC) aligns with the Paris Agreement, while strengthening Europe’s leading role in the global energy transition. We trust that the EU co-legislators recognise the importance of reaching a timely agreement in support of the 90 per cent emissions reduction target, enabling the EU to meet the global deadline and speak with a united voice, which will be essential for credibly persuading other major economies to follow suit so that the 1.5°C target can be reached.
Yet, ambition alone is not enough without an enabling policy framework
The 2040 target is a critical component providing long-term investment certainty for the phase-out of fossil fuels from the energy system and industry. But it is just one piece of the decarbonisation puzzle. To ensure that climate targets are met, the EU needs to create a policy framework to unlock the right investment signals for its industry and with that create more demand for fossil-free energy.
To provide the long-term policy certainty needed for large-scale investments, it is critical that we do not backpedal on existing climate and energy policy and instead focus on national implementation of EU rules. Industrial policy must be firmly anchored in the Green Deal. This certainty is critical to allow demand and supply to grow at the same pace and thereby enable a competitive future for Europe.
Policymakers can now enable a stable and coherent framework which allows industry and the energy sector to take concrete steps so that the EU reaches its 90 per cent target by 2040. The EU’s carbon market (EU ETS) should be the key driver for creating a favourable investment climate, as it remains the most long-term, internationally harmonised, market-based and cost-effective climate policy available.
As a First Mover in the energy transition, we at Vattenfall are playing our part, not just through our ambition, but through action. Our commitment to reaching net zero by 2040 remains firm, and we are working to help others join us in our journey to fossil freedom.
Source: Vattenfall
