BlogCO2 Management, Emissions Trading System (ETS)

90% climate target for the EU in 2040

Written by

Ulf Narloch

Published on

On its way to climate neutrality, the EU is working on a 2040 target. The European Commission has now proposed emission reductions by 90%. Such a target would require ambitious emission cuts and expansion of carbon removals. While not yet legally binding, this proposal serves as a guidepost for new climate policies.

Setting targets towards climate neutrality

As a frontrunner in global climate action, the EU aims to become the first climate-neutral continent by 2050 to meet the commitments of the Paris Agreement. Now, the European Commission has published its proposal for an interim target for 2040. Alongside these targets a strategy for carbon management was also published.

These ambitious goals result from the European Green Deal as a core initiative of the current EU policy cycle, which is ending this year. As part of this agenda, the goal to reach net-zero in 2050 and negative emissions thereafter has been made legally binding in the European Climate Law (ECL).

The ECL also includes a target to cut greenhouse gas (GHG) emissions by 55% compared to 1990 levels by 2030. To reach this target, the Fit-for 55 package initiated various policies and legislations.

Despite these policies, latest data by the EEA project that 2030 climate targets will be missed by a margin of over 300 Mt CO2e in 2030. Submitted National Energy and Climate Plans (NECPs) would only lead to a 51% reduction so that the EU is calling for greater national ambition. Final NECPs must be submitted by 30 June 2024.

The ECL also lays out a process to define targets for 2040. A proposal by the European Commission is a first step in developing a binding law for the 2040 target. This communication was now adopted by the Commission in time before the European elections. It is backed by an impact assessment.

As part of preparatory work, a public consultation took on board the views of citizens and other stakeholders. Also, several studies analysed implications for the target setting, such as the recommendations by the German Environment Agency.

An official body set up by the ECL European Scientific Advisory Board of Climate Change had called for an ambitious 2040 target of cutting emissions by 90-95%. Ahead of the publication of the 2040 targets, 11 European countries expressed their support for these emissions cuts.

Disentangling the 2040 targets

The proposal by the European Commission pledges a 90% reduction goal in net EU GHG emissions by 2040 compared to 1990 levels.  Annual net emissions would be around 450 Mt CO2e after counting for removals of 400 Mt CO2e and unabated emissions of 850 Mt CO2e.

These targets are informed by an impact assessment which analyses pathways to reach climate neutrality with different carbon budgets as cumulative emissions between 2030 and 2050. 3 target options are considered:

  1. S1 with a reduction of up to 80% and a carbon budget of 21 Gt CO2e
  2. S2 with a reduction between 85% and 90% and a budget of up to 18 Gt CO2e
  3. S3 with a reduction between 90% and 95% and a budget of up to 16 Gt CO2e

Abating CO2

The 90% emission reduction target would leave 748-943 Mt CO2e (S3-S2) to be emitted per year in 2040. This lower bound equals today’s emission level of Germany or all industrial emissions in the EU. The upper bound would add Belgium or emissions from the waste sector. All other emissions would need to be cut.

Total EU-27 emissions in 2021 amounted to 3,471 Mt CO2e. The 2040 target implies cutting annual emissions by 75% from today.

These cuts would come primarily from power and energy systems, which need to be mostly decarbonized by 2040 through the expansion of renewables and other energy technologies.

Also, emissions from buildings would need to fall under 100 Mt CO2e per year by then. Heat pumps and energetic restoration would be needed throughout the building stocks.

Similarly, road transport systems would need to get off fossil fuels with 120-143 Mt CO2e per year (S3-S2). Cars would mainly be electric or use biofuels or e-fuels. 

Emissions in industry would also experience massive cuts through new manufacturing technologies, more efficient processes, alternative materials, and the use of hydrogen. Hard to abate emissions would be captured for utilization or storage.

With these cuts agriculture would be by far the largest emitter in 2040. With comparatively modest reductions from today’s levels, it would still emit 271-302 Mt CO2e per year (S3-S2).

Removing CO2

The 90% reduction target would require 400 Mt CO2 of carbon removals per year in 2040. This level could be reached through a 75% increase of today’s capacity of European lands to absorb more carbon than they emit. Such a removal target would require large expansion of natural carbon sinks or scaling-up of industrial removals. 

While industrial removals currently play a negligible role, land use, land use change and forestry (LULUCF) today already takes 230 Mt CO2 out of the atmosphere each year. Complementing the ECL, the revisions to the LULUCF regulation (amendment 2023/839) aims to remove 310 Mt CO2 per year by 2030 from natural carbon sinks.

To reach the 90% target in 2040, the impact assessment shows that annual removals of between 365-391 Mt CO2 (S2-S3) would be needed. With removals from natural carbon sinks remaining at the 2030 target level, the remainder would need to come from industrial removals of 49-75 Mt CO2 (S2-S3).

This would require a massive upscaling of industrial removal technologies from a baseline of current policies, in which such removal capacities remain very limited.

 Capturing CO2

The industrial carbon management strategy, which complements the 2040 target communication, specifies that 280 Mt CO2 would need to be captured per year in 2040. This capacity amounts to almost 40% of today’s industrial emissions from all European countries.

The impact assessment shows that the 90% target would require between 222-344 Mt CO2 (S2-S3) being captured each year. A large part of this captured CO2 would come from industrial processes.

Bioenergy and Carbon Capture and Storage (BECCS) and Direct Air Capture with Carbon Storage (DACCS) would play an increasing role making between 24% (S2) and 44% (S3) of this CO2.

Up to 70% of the captured CO2 would need to be stored in geological sites using carbon capture and storage (CCS) technologies. The remainder would be used for the production of e-fuels. Carbon capture and utilization (CCU) for other materials is projected to only pick up after 2040.

As this would require a massive ramp up of projected capture capacities under current policies, additional policy measures will be needed. The industrial carbon management strategy sets a framework for such policies.

Making 2040 targets legally binding

Based on this communication by the European Commission, the next Commission will make a formal legislative proposal to include the 2040 targets in the ECL, making them legally binding. This process will also require the adoption by the European Council and the newly elected Parliament.

Meanwhile, the communication provides a guidepost for the next generation of climate policies to be defined in the 2024-29 EU policy cycle. With the preparation of the European election in full swing, discussion about possible policy directions have started.  Agora Think Tanks have just published 20 possible policy initiatives.

Any new climate policy measures must account for a changing policy context, with stretched resources and increasing public backlash. At the same time policy measures will need to become more ambitious to get to net-zero. Carefully navigating the political economy will become ever more important.

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Photo by Thomas Richter on Unsplash