The European Union (EU) is emphasizing the need for substantial investment, approximately €1.5 trillion per year between 2031 and 2050, to achieve its ambitious goal of reducing greenhouse gas emissions to zero by mid-century.
This information is part of a preliminary document from the European Commission, as reported by the Financial Times, outlining Brussels’ strategy to cut emissions by 90% by 2040 and attain “economy-wide climate neutrality” by 2050.
The document highlights that the significant investment required would far outweigh the immense costs of inaction in the face of escalating global warming effects. Keeping temperature increases within 1.5 degrees Celsius above pre-industrial levels could potentially save the EU €2.4 trillion in economic losses from 2031 to 2050 and reduce the net costs of fossil fuel imports by €2.8 trillion during the same period.
The new 90% emission reduction target, situated at the lower end of recommendations by the EU’s scientific advisory board, aims to expedite climate action as the economic consequences of extreme weather events become more pronounced. Under the EU’s climate law, member states are committed to reducing emissions by 55% by 2030 compared to 1990 levels and achieving net-zero emissions by 2050.
However, some sectors, including industry and agriculture, argue that these requirements are excessively burdensome, particularly in the midst of high inflation and the aftermath of an energy crisis stemming from Russia’s invasion of Ukraine. Protests against environmental regulations, notably by farmers, have erupted in multiple EU countries.
To reach its climate goals, the EU envisions a near-complete decarbonization of the electricity sector by around 2040, a shift of the workforce into green industries, and an overall reduction in fossil fuel consumption by 85% compared to 1990 levels. Transportation, especially oil for ships and aircraft, would account for most of the remaining fossil fuel usage.
Excluding transportation and the cost of acquiring new vehicles, the annual investment required to attain the 90% reduction goal would be close to €660 billion between 2031 and 2050. This is a significant increase from the commission’s earlier estimate of €360 billion annually to achieve the EU’s 2030 targets.
A substantial portion of this investment will need to be allocated to rapidly scaling up carbon capture technology, which is still in its early stages, to capture residual emissions. Another draft strategy proposes that the EU should capture 450 million tonnes of carbon dioxide annually by 2050 to meet its net-zero objective, a substantial increase from current levels.
Furthermore, the document acknowledges that agricultural activities, including livestock breeding and fertilizer use, are projected to become the largest contributors to the EU’s greenhouse gas emissions. One potential approach to address this issue could be integrating the price of agricultural emissions into the food value chain, hinting at the possibility of including the sector in the EU’s emissions trading system, which levies charges on polluters.
It’s important to note that this document is a preliminary draft and may undergo revisions. It is scheduled for publication by the EU’s executive arm on February 6, serving as the basis for debates on the 2040 target. The formal legislative proposal will be developed once a new commission takes office after the EU elections in June. This document will also play a role in establishing the EU’s 2035 Nationally Determined Contribution, a critical emissions reduction target for all EU member states as they prepare for the UN’s COP30 climate summit next year.
The EU has positioned itself as a climate change leader, aiming to gain a competitive advantage as more countries adopt renewable energy, carbon pricing, and circular economies. Climate-related events have resulted in 220,000 deaths and €650 billion in costs for the EU since 1980, as per the European Environment Agency’s data.
