Summary and implications

The EU underlined its commitment to tackling the environmental challenges posed by climate change through the recent publication of its “Roadmap for moving to a competitive low carbon economy in 2050” (Roadmap). Billed by the European Commissioner for Climate Action, Connie Hedegaard, as a “clear and predictable framework for business and governments to prepare their low-carbon strategies”, the Roadmap sets out proposals to meet the following objectives:  

  • A substantial reduction of European greenhouse gas emissions by mid-century, contributing to the global effort to stem the negative impact of climate change upon the environment;
  • A greater financial and social investment in a green economy, which it is believed will help protect against climate change; stimulate the European jobs market; and improve public health and lifestyle conditions; and
  • A more efficient sourcing and usage of energy supplies, emphasising in particular an increased use of locally-produced, renewable resources to reduce the EU’s dependence on costly, price-volatile fuel imports and thereby increase energy security.

The low carbon economy Roadmap

To read the full text published by the European Commission on 8 March 2011, click here

Background to the Roadmap

In March 2010, the EU initiated Europe 2020, a new economic development strategy designed to generate “smart, sustainable and inclusive growth for Europe” in the aftermath of the recent financial crisis. Identifying energy production and consumption as one of several key areas in which significant changes are needed to boost economic growth, it subsequently launched a “flagship initiative” in January 2011 focusing on the creation of a low-carbon, resource-efficient and environmentally-conscious economy. Amongst the various long-term policies now being developed under this initiative, the Roadmap is regarded as one of a trio of “key deliverables” whose implementation will ensure the success of the drive to create a resource-efficient economy.

The “key deliverables” for a resource-efficient economy

  • CLIMATE CHANGE: Roadmap for moving to a low carbon economy by 2050 (published 8 March 2011)
  • ENERGY: Energy Efficiency Plan (published 8 March 2011); Energy Roadmap 2050 (publication TBA)
  • TRANSPORT: Roadmap to a Single European Transport Area White Paper (published 28 March 2011)

The Roadmap’s key goal

The main objective of the Roadmap is to build upon the energy efficiency targets set by the EU in its Europe 2020 strategy, namely:

  • A reduction in greenhouse gas emissions to 20 per cent (or possibly 30 per cent if conditions allow) of 1990 levels;
  • A 20 per cent increase in energy supplied by renewable sources; and
  •  A 20 per cent increase in overall energy efficiency.

The EU believes that, if its current energy policies are correctly implemented, it will comfortably meet the first two of these targets by 2020. However, it cautions that “much greater efforts will be needed” to meet the 20 per cent energy efficiency goal. The Roadmap, therefore, acts as a spearhead to further the efforts being made in this regard but also extends the scope of the targets to look towards the longer-term. Crucially, it sets the EU an ultimate goal of reducing emissions by 80–95 per cent by the middle of the century.

The reasoning behind this goal is both scientific and economic. On a scientific level, the EU points to the worldwide need to limit global warming to less than 2°C above pre-industrial temperatures. To stop a rise above this by 2050, developed nations such as those within the EU need to commit to a drastic reduction in their emissions (a goal since also endorsed by the European Council and Parliament). Further, the EU believes that converting to a low carbon economy will have knock-on economic benefits, in terms of creating jobs and new industries, cutting its energy costs and increasing European energy security and reducing the damage caused to (and the associated costs of treating) environmental and human health.

Implementing the Roadmap: the main recommendations

Having established its principal aim, the remainder of the Roadmap sets out a range of proposals regarding how it can be reached in a cost-effective manner:  

1. The importance of domestic action

The Roadmap makes it clear that “real internal reductions of EU emissions” will be needed to meet the 2050 target, rather than relying on the acquisition of international credits to offset European emissions. An extensive use of such credits will not, in its view, be possible by the middle of the century as worldwide measures to reduce global warming in the coming years will reduce their supply and increase their costs.  

2. Re-drawing targets and the scope of cuts

Using financial modelling techniques, the Roadmap sets out emissions reduction targets for every 10 years from 2020 to 2050. In the case of the first target to be reached by 2020, it posits that the EU’s current pledge to cut emissions by 20 per cent could be revised up to a 25 per cent reduction commitment. Greater short-term domestic cuts in emissions represent a more cost-beneficial step towards meeting the eventual 2050 target, although the Roadmap points out that the success of meeting this revised 2020 goal depends on the EU’s ability to improve energy efficiency by 20 per cent in line with the Europe 2020 plan and the practical implementation of all existing climate and energy measures.

The road to 2050

To achieve emissions cuts of 80 per cent below 1990 levels by 2050, the EU must hit the following interim reductions targets:

  • 2020 = 25 per cent
  • 2030 = 40 per cent
  • 2040 = 60 per cent

On a related note, in order to meet the required 20 per cent increase in energy efficiency by 2020, the Roadmap also discusses the future use of EU Emissions Trading System allowances. During Phase Three (2013−2020), it recommends that an as yet unspecified quantity of additional allowances should be set aside as this will assist the reaching of the energy efficiency target by projecting a strong indication of the price of carbon and the stability of that price.

3. Investment in a low carbon economy

Financial investment in the green economy and a low carbon, resource-efficient standard of living is considered to be a key aspect of the EU’s ability to meet its emissions targets. According to the Roadmap’s projections, some €270bn of additional private sector/consumer funding (1.5 per cent of the EU’s GDP and on top of the current investment of 19 per cent) will be needed to assist the transition to a low carbon economy.

This extra funding, which the Roadmap believes will be recouped through savings made on lower bills for imported energy, should be put towards developing key existing technologies such as wind, solar, biofuels, smart grids and carbon capture and storage (as opposed to developing any new technologies, e.g. nuclear fusion). While it should be spread over a range of industry sectors, such as agriculture, power, construction and transport, the greatest investment should be concentrated on the key areas of vehicle and building construction technologies.

The Roadmap going forward

The Roadmap has been published as a Communication from the European Commission and is addressed to the national parliaments of EU Member States and a host of EU bodies, including the European Parliament, Council, European Economic and Social Committee and the Committee of the Regions. Invited to take the Roadmap into account in the future development of climate and energy policies, these bodies are expected to comment on the document’s proposals during the course of 2011. Following its publication, the Commission believes that the next step towards implementing European emissions and energy efficiency targets will be to prepare specific roadmaps relevant to each industry sector.