EUROPE: The European Commission answers questions about the 2040 climate target

As published on: fintech.global, Tuesday 13 February, 2024. 

The European Union is embarking on an ambitious journey to become the first climate-neutral continent by 2050, with a significant milestone set for 2040.

The EU Climate Law mandates a reduction of net greenhouse gas (GHG) emissions by at least 55% by 2030 and necessitates the establishment of an intermediate target for 2040. The European Commission has proposed a 90% reduction in net GHG emissions by 2040. This initiative not only aims to align with the Paris Agreement commitments but also to stimulate a comprehensive political debate and stakeholder dialogue on achieving climate neutrality.

The Commission’s recommendation is underpinned by a detailed impact assessment exploring pathways to attain this climate neutrality. The assessment emphasises the importance of timely setting targets to facilitate the necessary policy and investment decisions that would transition the EU towards a resilient economy, characterized by competitive industries, future-proof jobs, and sustainable energy solutions. The EU’s role on the international stage is crucial, as the 2040 climate target will form the basis of a new Nationally Determined Contribution under the Paris Agreement, urging other global partners to adopt similar ambitious measures.

Achieving a 90% emissions reduction by 2040 requires a multi-faceted approach, including the full implementation of the agreed 2030 framework and a focus on a just transition that leaves no one behind. The energy sector, particularly through renewables, nuclear, and bio-energy, alongside energy efficiency and carbon capture technologies, is pivotal in driving this decarbonisation. The Commission highlights the ongoing progress in renewable energy deployment and the importance of reducing fossil fuel consumption by 2040.

The economic implications of setting a 2040 target are profound, offering predictability and confidence for businesses, public authorities, and citizens to make informed investment and policy decisions. This proactive approach aims to prevent wasteful resource allocation and promote investments in clean technologies, thereby enhancing the EU’s competitiveness in the clean tech sector and reducing reliance on imported fossil fuels.

For European citizens, the transition to climate neutrality signifies a shift towards a more sustainable, healthy, and prosperous society. The reduction in GHG emissions and fossil fuel use will have direct benefits on air quality, health, and the environment, fostering a fair transition that benefits all. Investment in clean energy, efficient buildings, and sustainable transport will create new business opportunities and jobs, contributing to a robust economy.

The investments required to achieve the 2040 target are substantial, necessitating a blend of private and public sector funding. The Commission estimates an annual increase in investment in the energy system and transport sector, highlighting the need for a supportive policy framework to attract these investments. This comprehensive investment strategy will enable the EU to lead in the global transition to a sustainable future, ensuring economic resilience and environmental sustainability.


EU European Commission Climate target Climate finance Green finance

Carey Olsen advises Strategic…