EU Set to Seek Ambitious Goal of 90% Emissions Cut by 2040

(Bloomberg) -- The European Union’s executive arm is set to recommend a 90% net reduction of greenhouse gases by 2040, a target backed by climate scientists and criticized by the industry in the face of high energy prices and growing international rivalry in clean technologies. 

The European Commission plans to endorse the goal in line with advice from its board of scientists for climate that it’s the best pathway to meet the Green Deal’s overarching aim of zeroing-out pollution by the middle of the century, according to people with knowledge of the issue. The blueprint for the next decade is set to be adopted on Feb. 6, marking the first stage of a debate with member states on how to design future policies and objectives. 

The planned target for the 27-nation bloc, which is legally bound to reduce greenhouse gases by 55% this decade, will affect every corner of the economy and would entail significant political risk by requiring greener consumer lifestyles and more restrictions on businesses and agriculture. 

A key new component of the 2040 goal will be carbon removals, including technologies such as direct air capture or carbon sequestration by farmers and foresters. The EU has signaled that this element could account for around 10% of the target and is yet to decide how large the share of removals will be under the blueprint.

Europe wants to be a global leader in the green shift, an increasingly challenging objective when coming up against US President Joe Biden’s landmark climate package and competition from China in low-carbon technologies and critical materials. The bloc is still grappling with the effects of an energy crisis triggered by a cut in natural gas supplies from Russia following the war in Ukraine. 

While benchmark power prices in Germany, the region’s biggest economy, have eased from the highs seen in 2022, they are still more than twice the levels seen before the war.

The options analyzed by the commission for its climate roadmap to 2040 were an 80% cut, a reduction of 85-90% and a decrease of 90-95%, said the people, who asked not to be identified as the document hasn’t been yet adopted.  By the EU executive arm’s own assessment, current measures by its member states are lagging behind the group’s 2030 targets.

The building blocks for the planned 90% target include further growth of renewables, energy savings and accelerated use of technologies such as carbon capture and storage. It also needs phasing out of fossil fuels, rapid electrification of road transport and heating sectors, a strengthened industrial policy with funding mechanisms and a plan to attract private capital.

The green shift will require significant investment from both public and private capital, with the European Investment Bank having a key role to play. The 90% reduction goal would mean €2.8 trillion ($3 trillion) savings in net imports of fossil fuels in 2031-2050. 

Agriculture is set to play an increasing role in the green transition. With the right policies and support, the EU should be able to reduce non-CO2 emissions of greenhouse gases in the sector by at least 30% in 2040 compared to 2015, the people familiar said. When combined with forestry, it should become climate neutral as early as 2035, according to the people. 

The 2040 roadmap, to be presented four months before June’s European Parliament elections, will set in motion a lengthy process to adopting the goal. A legislative proposal setting the exact details and steps to reach it, will be put forward only when a new commission takes office after the elections. 

To become a law, the proposal would then need to be approved by the parliament and the 27 national governments, with both having the right to propose amendments.

(Updates with key elements of the blueprint from the seventh paragraph.)

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