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Analysing the Impact Assessment on Raising the EU 2030 Climate Target: How does the EU Commission's Approach Compare with other Existing Studies?

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On 17 September 2020, the European Commission proposed to raise the EU climate target for 2030, so as to reduce greenhouse gas emissions by 55% compared to 1990. In this policy brief, CLIMACT and Ecologic Institute unpack the Commission's impact assessment for the new target. The brief analyses key policy options and analytical results and compares them to recent studies, in particular CLIMACT's 2030 modelling results. Within the framework of the tightened target, the EU Commission proposes to extend the EU Emissions Trading Scheme to buildings and road transport – a major change to the EU's current climate policy architecture. The team discusses potential implications and provides context to the sectoral developments and policies. The briefing highlights key points where the Commission diverges from other studies, identifying climate mitigation potentials that merit more attention in future analysis.
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ANALYSING THE IMPACT ASSESSMENT ON
RAISING THE EU 2030 CLIMATE TARGET
HOW DOES THE EU COMMISSION’S APPROACH COMPARE WITH OTHER EXISTING
STUDIES?
BRIEFING
28 SEPTEMBER 2020
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This briefing has been commissioned by the European Climate Foundati on (ECF) with a view
to providing a basis for discussion and engagement between stakeholders and policy -
makers. The ECF is not to be held responsible for any use which may be made of the
information contained therein.
The analytical team
CLIMACT: Jerome Meessen, Julien Pestiaux, Quentin Schobbens, Quentin Jossen, Benoit Martin,
Charles Vander Linden, Pieter-Willem Lemmens
ECOLOGIC INSTITUTE: Katharina Umpfenbach, Eike Karola Velten, Ana Frelih-Larsen, Benjamin
Görlach
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CONTENTS
Executive summary .................................................................................................................... 4
Context and objective of this report ........................................................................................... 7
A whole system view on policy levers and cross sectoral links .................................................... 9
Options for transforming the EU climate policy architecture .......................................................... 9
Recognising the interdependence across sectors ........................................................................... 13
Analysing sectoral ambition in the Impact Assessment ............................................................. 16
Overview of emissions reduction by sector .................................................................................... 16
Power .............................................................................................................................................. 16
Transport ......................................................................................................................................... 18
Buildings .......................................................................................................................................... 21
Industry ........................................................................................................................................... 24
Agriculture, land use and bioenergy ............................................................................................... 25
References ............................................................................................................................... 30
ANNEX: Detailed sectoral implications of the IA scenarios compared to the CTI scenarios ......... 32
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EXECUTIVE SUMMARY
The Impact Assessment (IA) just released by the EU Commission on raising the EU’s 2030 climate
target is a critical piece of work to guide the transition to a net zero emissions economy. This briefing
strives to unpack some of the key policy options and analytical results by comparing them to other
recent studies, in particular the CTI 2030 scenarios (CLIMACT 2020). We have looked at the IA both
from a high-level policy and cross-sectoral point of view, as well as in terms of sectoral
developments and policy actions required at that level. Given the short time frame available for this
analysis, the briefing is necessarily limited in scope and depth. Its main aim is to highlight key points
where the Commission diverges from other studies, proposing avenues for strengthening future
analysis. We also limited this analysis to reaching at least -55% for a fair comparison. The CLIMACT
prior analysis however shows that reaching -65% (excluding LULUCF) is technically feasible.
The IA assesses options to introduce EU-wide carbon pricing for buildings and road transport which
are currently covered by the Effort Sharing Regulation (ESR). In opting for exploring the extension of
the EU Emissions Trading Scheme (ETS) to these new sectors and leaving open what this would mean
for the ESR, the Commission proposes to substantially alter the EU’s existing climate policy
architecture. At the same time, the Commission acknowledges that carbon pricing alone will not be
sufficient to reach the 2030 target, arguing for a mixed approach which combines carbon pricing with
strengthened regulation. This is in line with scientific evidence on the strengths of policy mixes
compared to a pure pricing approach. It is also warranted from a risk management perspective:
setting up a functioning carbon pricing mechanism will be a challenging, time-consuming and
politically sensitive process. It will require detailed analysis on effective mechanisms to address
distributional effects within and between Member States. The IA has not looked into the
distributional effects since that can only be done based on a set of design options with details on
revenue recycling. Such analysis will have to be a crucial element of the instrument-specific IA. As
long as a carbon pricing scheme for road transport and buildings emissions is not in place and has not
yet proven to effectively cap emission volumes in a socially just fashion, it would be extremely risky
to toss out the functioning system of compliance control that is the ESR. Even in the longer run, there
is an argument for keeping the ESR. It would serve to ensure that national governments implement
climate policies that address the transformation as a systemic challenge, supporting private actors in
their mitigation efforts, e.g. by rolling out the supporting infrastructure and the regulatory
framework such as stringent CO2 standards for new cars.
As for the concrete policy levers included in the scenarios, our findings show that some key
additional avenues exist and could be explored to further support emissions reduction. The scenarios
included in the IA tend to be technology-focused without addressing much the impact of potential
societal changes, as well as missing a true vision for a circular economy by 2030. These are not just
possible additional options, they are necessary to make the climate transition realistic, turning it into
a true sustainable vision for Europe. A typical example is to ensure all products are built to last much
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longer with higher added-value over their lifetimes, which in many cases will require the proper
incentives to change business models, turning products into services.
A purely technical approach will lead to new sustainability issues with larger investments
requirements across all sectors, increases in demand for electricity and key raw materials. This will
result either in significant infrastructure build-outs or increased dependence on imports from
countries where Europe will have limited say on the climate ambition. All of these risks can be better
managed if the Commission’s approach is supplemented with policies incentivising improvements in
our societal organization and a more circular economy. Some of these additional policies however
require the initiative of Member States which further confirms the relevance of the ESR.
On the other hand, the technical ambition at the sectoral level in the IA must be praised, the IA
scenarios explore a real change in the scale of ambition. Focusing on the three IA scenarios reaching
-55% (including LULUCF but excluding international bunkers), the following insights emerge:
In the power sector, the low-carbon vision is clearly spelled out, with significant increases in
renewable-based electricity production. The coal phase-out is the cornerstone for a sustainable
power sector, but the question remains as to how quickly gas must also be phased-out. The IA
scenarios reach ~-70% greenhouse gas (GHG) emissions in 2030 compared to -90% in the EU CTI
scenarios (compared to 2015). This lower ambition in phasing out fossil-fuel use in electricity
generation leads to the need for higher ambition in the other sectors.
In the transport sector, the shift to clean vehicles is starting in earnest, with 20-25% of the car
stock required to be low- or zero-emission in 2030. For the fuel switch, the policy mix will have to
focus on regulatory measures besides a carbon price to target the vehicle purchase decision and
to address that the willingness to pay is much higher in transport than in other sectors. The
technology shift is compatible with demand-side measures which are not much addressed in the
IA, e.g. to curb the growth of the transport demand and incentivize modal shift to non-motorised
mobility. Overall transport volumes are expected to further increase in the IA scenarios, which
means that the focus on fuel switch may result in a raw material demand which is too high,
especially related to batteries .
With respect to buildings, the fuel shift is of a new order of magnitude, with fossil fuels
consumptions reduced by 58% in 2030 compared to 2015. In absolute terms, this a decrease of
815 TWh, mainly driven by a phase-out of coal and oil use, supported by energy efficiency
investments and a shift to electricity and renewables. According to the IA, a mix of regulatory
measures addressing the multiple challenges in building renovation and the introduction of a
carbon price including consideration of risks such as energy poverty are expected to make this
change happen.
In industry the ambition on the technological shift is real, although major levers such as fuel
switches (e.g. to electricity and clean gases) and new technologies (e.g. CCUS technologies and
hydrogen-based steel) would only be leveraged after 2030. Also, a complete vision for a higher
value-added circular economy is missing: this needs to start at the products level, creating the
right conditions for truly sustainable lifecycles, e.g. with more durable products. The narrow focus
on energy efficiency improvements combined with limited fuel switches between now and 2030
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leads to modest reductions in GHG emissions compared with other sectors and other scenarios
(-23% to -26% compared to 2015).
With respect to the agriculture, the IA focuses primarily on technical measures although it
acknowledges the co-benefits of improving diets. The importance of reducing meat consumption
and livestock numbers cannot be overstated given its impact on the whole value chain: it reduces
pressure on production intensification and releases land for new forests or grasslands. This is not
simply a lifestyle issue but requires instead fundamental innovation in the food production
system with new alternatives to meat. Moreover, the IA suggests almost doubling the
consumption of liquid biofuels by 2030 by mainly relying on dedicated energy crops which may
raise sustainability risks without clear safeguards. Consequently, regarding LULUCF, the IA clearly
does not significantly expand natural sinks before 2030 compared to the CTI scenarios.
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CONTEXT AND OBJECTIVE OF THIS REPORT
THE EU IMPACT ASSESSMENT ANALYSES POLICY PACKAGES TO RAISE THE EU 2030
CLIMATE TARGET TO -50% TO -55%
The EU Commission has just published its communication “Stepping up Europe’s 2030 climate
ambition” and related Impact Assessment (IA) on raising the 2030 target (European Commission
2020a,b,c). Taking its responsibility in achieving the Paris Agreement, the IA discusses options to
increase the EU-27 2030 GHG emissions reduction target and the necessary adaptation of the policy
framework to reach higher targets. In its Communication the Commission proposes to increase the
target to 55% and highlights the need for a combination of policy levers including the extension of
the ETS which is in line with MIX-scenario.
More specifically, the IA lists available policy packages in each sector which would lead to increased
emissions reduction. Five scenarios of increased 2030 targets are then proposed by combining these
policy packages and compared to a baseline projection of the emissions under the current policies.
Three of these scenarios reach -55% emissions in 2030 compared to 1990, when including Land-Use,
Land-use changes and Forestry (LULUCF) and excluding international bunkers:
The REG scenario builds on intensified policies and regulations;
The CPRICE scenario drives the implementation of mitigation actions by increasing the carbon
price and extending the carbon pricing mechanism to buildings and road transport.
The MIX scenario also reaches -55% emissions reduction by 2030 by combining some
intensification of the policies (but softer than in the “REG” scenario) and extending the carbon
pricing to buildings and road transport.
Another proposed scenario is limited to -50% in 2030 (the MIX-50scenario) for the same scope
while a "ALLBNK” scenario reaches -57.9% in 2030 when including all international bunkers (aviation
and maritime transport).
In its IA, the Commission also explores a major shift in policy architecture: the extension of EU-wide
carbon pricing to buildings and road transport. Concretely, it examines the following options:
Current scope of EU ETS and ESR (ETS_1)
Extension of current EU ETS (ETS_2) with the following variants:
o Newly covered sectors do not remain in the ESR (ETS_2.1)
o Newly covered sectors remain in the ESR (ETS_2.2)
Separate EU-wide emissions trading system for new sectors (ETS_3)
Obligatory carbon price incentives through national systems (ETS_4).
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These scenarios were designed and assessed using the EU Commission modelling suite, which covers
the entire economy and quantifies impact on the energy system, transport, agriculture, forestry and
land use, atmospheric dispersion, health and ecosystems, macro-economy with multiple sectors,
employment and social welfare.
THIS REPORT COMPARES THE IA WITH RESULTS FROM THE CTI MODEL AND LITERATURE
TO INFORM DECISION-MAKERS ABOUT THE FULL RANGE OF MITIGATION OPTIONS
The objective of this report is to support the EU decision makers and Member States in better
understanding the implications of the IA scenarios and discussing potential alternative options for
reducing emissions. Given the short time frame available for this analysis, the briefing is necessarily
limited in scope and depth. Its main aim is to highlight key points where the Commission diverges
from other studies, proposing avenues for strengthening future analysis.
First, the briefing compares the three IA scenarios reaching -55% by 2030 (including LULUCF) to the
two EU CTI scenarios reaching -55% (excluding LULUCF) published by CLIMACT in June 2020 (CLIMACT
2020). These alternative scenarios were designed using the CTI 2050 Roadmap Tool, a transparent
simulation model of total EU GHG emissions.
The two CTI scenarios differ from each other in terms of preferred principles to reduce emissions:
The 55% Technology-focused scenario deploys technologies much faster than the current
pace. This includes upscaling mature technical solutions and accelerating the development of
those currently at lower Technology Readiness Level. This technology-focused scenario
demonstrates what can be achieved without fundamentally changing today’s lifestyles, while
raising deployment, infrastructure, innovation and R&D challenges.
The 55% Shared Effort scenario reduces the effort on some technological developments but
includes more action on lifestyle and socio-cultural changes (modes of travel, including fleets
of shared vehicles, healthy diets, consumption and production patterns, etc.). These societal
changes require certain infrastructure deployments but reduce the need for other capital
investment and infrastructure, as well as the total cost of the energy system (and energy bills
for EU citizens). This scenario leads to higher co-benefits, for example regarding health,
biodiversity, landscapes and ecosystems but leads to stronger shifts in industrial activity from
traditional to new industries.
In order to align its emissions accounting with the UNFCCC scope, the IA target covers all the
emissions and sinks by the LULUCF sector. LULUCF represents a net CO2 sink of 294.6 MtCO2e in 2015
(i.e. ~7% of the emissions from the other sectors). The CTI scenarios however were designed
excluding the LULUCF sector in accordance with the current EU target scope. The IA and CTI scenarios
thus should be compared with care as their 2030 ambition significantly differ (the CTI scenarios reach
around -60% in 2030 compared to 1990 when including LULUCF). This report focuses on the sectoral
ambition and the interactions between the sectors.
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A WHOLE SYSTEM VIEW ON POLICY LEVERS AND CROSS SECTORAL LINKS
Options for transforming the EU climate policy architecture
The IA discusses several options for strengthening the EU climate policy architecture in 2021. The
main aim is to explore how EU-wide carbon pricing could be extended to two new sectors which are
currently not subject to the EU ETS: road transport and buildings.
This briefing discusses the IA’s major findings and arguments and compares them to the findings of
the relevant literature, to identify blind spots that require closer attention and additional analysis in
the future. It is not the aim of the briefing, however, to discuss the strengths and weaknesses of
different carbon pricing options per se (for a detailed recent overview see Matthes 2020 and Stenning
2020). In general, it has become clear that a high enough carbon price can be a forceful tool to deliver
rapid emission reductions and to support structural changes in the key emitting sectors as
evidenced by the decline of coal-fired power generation in 2019 and 2020, for which the rising CO2
price from the EU ETS was a major factor. However, it is also clear that due to the regressive effect
of carbon pricing, any new system targeting the buildings and road transport sector needs to be very
carefully designed to compensate negative distributional impacts and avoid undue hardships.
After discussing implications based on the modelling results and reflecting on potential benefits and
risks, the European Commission expresses a recommendation for exploring the extension of the
current EU ETS to the buildings and road transport sectors (ETS_2), while leaving open what should
happen to the ESR. A separate trading scheme for new sectors (ETS_3) is presented as a potential
temporary solution to test trading for buildings and road transport without impacting the sectors
already covered under the existing EU ETS.
The Commission’s main argument for extending the ETS is the security of reaching emission
reductions in line with the climate targets while generating government revenues for climate action
or for addressing distributional concerns. The cap of an extended ETS would cover the vast majority
of EU emissions and would thus create a harmonised incentive for all covered entities to reduce their
emissions in line with the target. The IA further mentions that, unlike other instruments, carbon
pricing would be able to address rebound effects from energy efficiency improvements through
internalising carbon costs in end user prices. Moreover, the IA modelling shows that intelligent
recycling of these revenues can generate macroeconomic benefits (by addressing distortions
resulting from labour taxes). Alternatively, revenues can be used to compensate for the instrument’s
regressive effect (e.g. through lump sum payments to households).
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WHILE PROPOSING TO EXPLORE THE EXTENSION OF THE EU ETS, THE COMMISSION
RECOGNISES THE NEED FOR STRENGTHENING REGULATION AT THE SAME TIME
At the same time, the Commission acknowledges that carbon pricing alone will not be sufficient to
reach the 2030 target. Several market failures and barriers, including non-financial barriers,
bottlenecks in capacity and infrastructure and other factors impede decarbonisation, in particular in
the building sector, but not only there. An additional problem is that price sensitivities vary
enormously between the different sectors: in particular in road transport and heating, the
combination of other barriers and market failures and the demand structure result in low price
elasticities, meaning that high carbon prices would be needed to affect demand. As a result, a carbon
price that is high enough to drive changes in transport could cause undue hardships particularly for
low-income households and some businesses if distributional effects or level-playing field are not
properly addressed (see Stenning 2020).
Recognising these challenges, the Commission argues that a mixed approach which combines carbon
pricing in the non-ETS sectors with strengthened regulatory instruments such as standards can avoid
peaks of the carbon price, and the resulting burden on households and some businesses. This finding
is in line with extensive scientific evidence on the strengths of policy mixes compared to a pure
pricing approach (Matthes 2020, Görlach, 2014): while the carbon price can be a powerful driver in
the transformation towards climate neutrality, there is also a clear need for companion policies that
address the plenitudes of non-market barriers and market failures that impede the transformation
and which are even more prevalent in housing and transport than they already are in energy and
industry . It is therefore to be welcomed that the Commission clearly prioritises the MIX scenario over
the CPRICE scenario where the extended ETS is the main instrument.
A POLICY MIX IS WARRANTED FROM A RISK MANAGEMENT PERSPECTIVE
Given the administrative challenges arising from this systemic shift, a multi-instrument approach
seems warranted from a risk management perspective. The IA discusses the administrative
challenges arising from the need to secure and monitor data for an upstream trading scheme and
potentially from combining the new system with the existing downstream trading in the EU ETS.
While manageable according to the IA, the implementation will still require a careful and probably
time-consuming process. For this reason alone, it appears prudent to maintain and strengthen
regulatory measures, as planned while the new approach is being put in place.
The political challenges are not the focus of the IA. Yet, in the negotiations a number of concerns are
likely to emerge.
First, Member State governments may fear carbon price spikes: as ambition increases, the
carbon price would need to ensure that emissions remain within the cap. A rising carbon price
could drive up prices of heating fuels and electricity in particular, but it could also affect the
competitiveness of industries already covered under the existing ETS unless effective
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protection can be achieved e.g. through the envisaged border carbon adjustments (see
Stenning 2020 for a quantitative analysis). Properly addressing distributional aspects is of
central importance for acceptance of any carbon pricing system (Agora Energiewende 2019).
Unmitigated regressive effects would create a risk for the acceptance of EU climate action,
particularly when exploited by EU-sceptic groups. The IA does not provide any detailed
analysis of this crucial issue, since it does not discuss design variations in any detail. This will
be a key task for the instrument-specific IA.
This also applies to the distributional effects between Member States. In an extended ETS,
it would be purely down to market forces to determine how much reduction takes place in
which sector and in which Member State. In the logic of minimising overall abatement costs,
the determination where emissions are reduced would be the result of the marginal
abatement costs of different emitters, and their willingness and capacity to pay. This is
already the case in the current EU ETS, where a Finnish cement plant receives the same
treatment as a Portuguese one. Yet it marks a significant departure from the current ESR,
where the effort distribution is politically negotiated on the basis the capacity to mitigate
emissions (with GDP per capita used as a proxy). In an EU ETS with broad sectoral coverage
and a discontinued ESR, such politically negotiated outcomes would no longer be feasible for
the distribution of mitigation efforts. They would, however, be possible regarding the
distribution of revenues which is poised to be controversial and at the same time crucial for
the acceptance of the overall approach. Some form of solidarity mechanism will likely be
necessary to reflect discrepancies in Member States’ wealth as it is already the case in the EU
ETS with the Modernisation Fund. Öko-Institute and Agora Energiewende (2020) have already
proposed solidarity allocation mechanisms for a revised ESR that might be redesigned to fit
into an extended EU ETS. This element is not assessed in the IA which does not provide any
analysis on disaggregated impacts per Member State, because according to the Commission
discussion with Member States about the new EU Reference Scenario are still ongoing as is
the in-depth analysis of final National Energy and Climate Plans (NECPs).
Finally, Member States need to reconcile any new EU-wide approach with existing national
measures to price carbon or fossil fuel-based energy use in the non-ETS sectors while ensuring
that additional incentives for GHG mitigation arise another element that is not discussed in
any detail in the IA.
All of the concerns mentioned above may lead to design choices for the new or extended scheme
that would reduce its overall effectiveness, e.g. the introduction of exemptions or price ceilings.
As the example of the EU ETS showed, it took several rounds of simplification to abolish the
numerous exemptions, detailed and generous rules for free allocation of allowances or scope
limitations that Member States had introduced in recognition of the specific circumstances of
their domestic emitters. This again underlines the need for a risk-based approach based on a
combination of instruments.
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SHARED RESPONSIBILITY BETWEEN ETS AND ESR REDUCES RISKS AND CAN HAVE
SIGNIFICANT BENEFITS FOR STEERING ECONOMY-WIDE TRANSFORMATION
An open question concerns the future of the ESR in the new climate policy architecture. In principle,
it would seem logical that as the EU ETS grows, the domain of the ESR shrinks, relegating it for waste
and small industrial emitters, if emissions from agriculture are integrated in a new sector together
with LULUCF emissions. The IA rightly points out that once a trading system is in place in the new
sectors, it would be inefficient to force two different parties (i.e. national governments as well as the
actual emitters) to reduce the same emissions. Indeed, it appears difficult to imagine even from a
legal standpoint how the sanctions for exceeding national ESR budgets could be maintained if
private actors are free to trade their non-ETS allowances with private actors in other Member States.
However, such overlaps are not fully without precedent. In the complex interactions between
national and EU level climate governance, several countries have defined emission reduction targets
or even budgets for sectors that are covered by the EU ETS. This has been the case for example in the
UK where a carbon budget covers the entire economy and therefore included UK ETS emissions and
in Germany where a national sector target exists for the power sector. In these cases, no financial
sanctions apply, and it is not the case that two EU-level regulations conflict with each other.
Nonetheless, it shows that different actors can be assigned responsibility for reaching reductions
targets in the same sectors of the economy. A similar sharing of responsibility could also be
envisioned for the ESR and an extended EU ETS in particular since the final carbon pricing
instrument may not be a textbook trading system, e.g. if it includes a ceiling price for heating and
transport. In any case, national governments would still have an important role in designing and
implementing most other elements of the policy mix, i.e. the companion policies that reduce barriers
and imperfections, and drive change where the carbon price cannot.
In such an overlapping system, the ESR and ETS would take on different functions: the role of the ESR
would be to provide long-term guidance and orientation, including for investors. It would ensure
that national governments adopt and implement climate policies that address the transformation to
climate neutrality as a systemic challenge, and that support private actors in their mitigation efforts,
e.g. by rolling out the supporting infrastructure and the regulatory framework, and supporting
technology development. The role of the ETS, by contrast, would be to discover and mobilise the
least-cost abatement potential that is already available and market-ready across the economy, and
incentivise citizens to take into consideration carbon emissions when making consumption or
investment decisions.
While such an overlapping system might not be economically optimal, it seems warranted from a risk
management point of view. At least as long as a carbon pricing scheme for road transport and
buildings emissions is not in place and has not proven effective yet, it would be extremely risky to
toss out the functioning system of compliance control that is the ESR. In the existing EU ETS, except
for a brief spell in 2008/2009, it took 15 years and several rounds of reform until the system has now
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finally become capable of delivering a carbon price that has a noticeable effect on emissions. At this
point in time, the EU no longer has the luxury of taking so long to experiment, fail and eventually
improve.
Recognising the interdependence across sectors
It is important to ensure that policies address the interdependence between the various sectors of
the economy.
ELECTRIFICATION BASED ON DECARBONISED POWER IS NEEDED FOR REDUCING
BUILDINGS AND ROAD TRANSPORT EMISSIONS
Power is one of the cornerstones of the decarbonisation of the demand-side sectors, particularly in
transport and buildings, and it has the potential to be decarbonised quickly. The CTI model identified
an emissions reduction potential of over 90% by 2030, while the -55% scenarios in the IA reach in the
order of -70% reductions by 2030, with gas-based electricity production keeping an important share
of the mix. Policy-makers must not only incentivise a fast coal phase-out but also ensure gas
reduces quickly. At the same time, the electrification of the transport and buildings sectors must be
thought through to support grid stability with demand-side management and storage solutions.
EMBRACING ALL ASPECTS OF THE CIRCULAR ECONOMY IS A KEY LEVER FOR LOW-CARBON
TRANSFORMATION
The circular and sharing economy has the potential to transform all sectors and has been shown to
be another cornerstone of a sustainable low-carbon transition, while also contributing on other
dimensions such as material use, waste management, etc. Efforts on the demand side and the
quality of the products trickle down all the way to the industry value chain and to the supply side.
To maximise the potential, policy-makers need to design a comprehensive set of policies to be
applied well before 2030. A series of options exist to use products and materials much more
efficiently, extending their lifetimes and ensuring their extended use, sharing, reuse and
refurbishments. The associated challenges in product design, production and maintenance, as well
as changes in the business model will be significant for many types of assets, from cars, houses,
appliances, waste streams to energy. These transformations can help not only to reduce GHG
emissions but also to make our economies much more resilient to shocks as our assets will be built
to last longer and new local jobs will be created. However, these transformations will also have
profound impacts on the way we live and consume as well as on employment, implication that need
to be fully addressed in the policy mix.
The IA acknowledges that the transition to a circular economy enables further GHG emission
reductions. However, the Commission considers that additional research is needed to quantify the
measures’ climate impacts before they can be integrated in the Commission’s modelling framework.
The scenarios modelled in the CTI highlight the importance of tackling a circular economy right
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away, leading to significant reductions in material use already by 2030 (some basic materials
consumption can be reduced up to -8% to -25%) and with the wide range of measures having further
impact in the following decades.
BIOENERGY IS ONLY SUSTAINABLE WHEN TAKING A WHOLE-SYSTEM PERSPECTIVE
Sustainable bioenergy can play a limited role in reducing emissions when other decarbonisation
technologies are not yet available. This however is only credible if combustion emissions are fully
offset by carbon capture during the biomass growing phase. The CTI handles bioenergy very carefully
by limiting the bioenergy needs and ensuring the related feedstock are mainly coming from residues
and by-products from agriculture and the wood industry. The IA suggests a strong increase of the
liquid biofuels supported by dedicated energy crops which prevents extending natural sinks such as
forests or grasslands before 2030. These two approaches demonstrate why other zero-carbon
solutions must be rapidly deployed: policies that ensure R&D in transport, industry and buildings will
allow bioenergy requirements to remain at a sustainable level.
TECHNOLOGY-FOCUSED SCENARIOS RAISE OTHER RISKS WHICH DESERVE CAREFUL
ATTENTION
As described in the sectoral deep-dives below, the IA scenarios as well as the CTI technology-focused
scenario reach their 2030 target by assuming limited societal and lifestyle changes such as shifts in
diets, reductions in travel demand or the consumption of products, as well as the establishment of
strong circular economy principles. They leverage instead a fast deployment of technical solutions
which may in turn limit the decrease in production of basic materials (although no information is
available in the IA scenarios on the evolution of the levels of industrial production or material
demand).
The IA and the CTI scenarios focus on analysing scenarios in terms of GHG emissions, energy
consumption, land use and other emissions drivers. However, other sustainability issues deserve
careful attention since large-scale technological development may potentially raise risks such as:
Excessive consumption of raw material resources, demanding large resource extraction;
Biodiversity degradation from the extraction of these minerals as well as the increased use of
agricultural entrants;
Inertia in infrastructure and consumption patterns which would not be sustainable in the
longer term (lock-in);
Limited social acceptance of large-scale infrastructures and renewable energy plant, and
potentially adverse impacts on land use and biodiversity.
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COST IMPLICATIONS VARY DEPENDING ON THE MODELLING APPROACH
This study did not compare the IA costs implications to the CTI scenarios ones since the underlying
models differ from each other in terms of costs assumptions. The CTI scenarios however demonstrate
how a pathway including lifestyles improvement and circular economy leads to a reduction of the
total energy system costs. Cost differences are stronger after 2030 once the demand-side measures
implemented before 2030 deliver their full benefits. The reduction in cost comes from lower annual
fuel costs, but also from requiring less investment based on better asset utilisation. This is typically
the case in transport where the trend to use vehicles as a fleet rather than owning them privately
can be reinforced. A more technology-oriented scenario, such as the CTI 55% Technology-focused
Scenario, requires more investment until 2030 (+51% investment in 2030 compared to 2016, up to
€1,076 bn in this model) which then permits avoiding fuel cost increases (see Figure 1).
Figure 1: Total energy system costs in 2016 and in 2030 in the CTI scenarios [bn€]
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ANALYSING SECTORAL AMBITION IN THE IMPACT ASSESSMENT
Overview of emissions reduction by sector
Before deep diving in the detailed sectoral implications, the following table provides an indicative
comparison of the emissions reduction per sector in the compared scenarios even though the
emissions scope may slightly differ between the models.
The IA scenarios clearly bet on a profound shift of the buildings sector with emissions reduction levels
significantly higher than in the CTI scenarios. The emissions reductions are relatively comparable for
the industry and agriculture in the two sets of scenarios even though the selected measures differ
(see sector details below). The transport sector clearly bears less effort in certain aspects of the
transition in the IA scenarios compared to the CTI ones, which also push the power decarbonization
further addressing the gas phase-out on top of the coal phase-out.
Selected IA scenarios
Selected CTI Scenarios
Sectors
REG
MIX
CPRICE
55%
Technology
55% Shared Effort
Buildings
-63.6%a
-62.0% a
-61.0% a
-22.4% b
-25% b
Industryc
-23%g
-23% g
-24% g
-25.5%h
-27% h
Power production
-69.6%
-70.8%
-70.4%
-85.5%
-92%
Transportd
-17.6%
-16.3%
-15.6%
-46.4%
-37%
Agriculture & Waste
-31.0%e
-31.0% e
-31.0% e
-29.3% f
-33% f
Table 1: Overview of the emissions reduction by sector in 2030 compared to 2015.
Notes: (a) Residential sector only; (b) Residential and non-residential buildings; (c) Including process CO2 emissions from industry,
excluding refineries; (d) Excl. International bunkers; (e) Non-CO2 emissions, excl. Energy consumption from agriculture; (f) all emissions
from agriculture and waste, incl. Energy consumption; (g) Including refineries; (h) Including oil & gas.
Power
Decarbonising energy supply is essential in reaching higher EU climate targets. This is particularly true
for the power sector as electrification will drive decarbonisation only with clean electricity. GHG
emissions from the power sector accounted for 28% of total EU emissions in 2017. They fell 12% in
2019 compared to the previous year, they remain one of the largest emitting sectors in Europe.
P a g e | 17
Power sector emissions went down by -32% in 2019 compared to 2012 due to a decrease in coal and
increase in renewable energy production. This increase in renewable energy sources has recently
slowed, going up by 16% per year on average between 2010 and 2017, but increasing only by 6.5%
in 2018 and +5.5% in 2019 (Agora Energiewende 2020b).
Key components across all scenarios are the deployment of renewable energy and a coal phase-out
by 2030. We find that the scenarios in the IA go in the same direction as the ones modelled by
CLIMACT. The IA results are roughly aligned with the CTI Technology-focused scenario with a ~11 to
13% increase in electricity demand, and with wind and solar generation doubling or tripling in size
over the next 10 years to enable the coal phase-out without leading to a massive increase in gas-
based electricity production.
Figure 2: Power generation (TWh) in the two CTI scenarios and the IA scenarios (estimates)
However, the Commission’s scenarios still see 17 to 18% of electricity produced based on fossil fuels
(the exact mix between coal, gas and oil is only inferred based on total final demand for coal of
115 TWh, so potentially ~50 TWh net electricity production). This means gas remains one of the main
components of the electricity mix, and therefore other sectors such as the LULUCF sector will have
to contribute more towards the 55% target.
The increase of renewables in electricity generation should be incentivised through “more ambitious
renewables policies and/or a further increase in the ETS carbon price” (European Commission 2020b,
p. 54). The results for the policy scenarios show that the effects are quite similar for an increased
carbon price or more ambitious renewable policies as both have almost the same renewable share.
This might be a result of keeping the existing renewable policies and the ETS in both policy scenarios
REG and CPRICE. The difference is that electricity consumption is slightly higher in the CPRICE
scenario when compared to REG because more power is used in buildings whereas REG priorities
efficiency.
P a g e | 18
However, specific challenges in the built-up of renewables certainly need an improvement of
regulatory frameworks e.g. in regard to simplification and alignment of administrative, planning and
permitting procedures and facilitated market and network access while a higher carbon price pushes
renewables competitiveness and reduces the required public payments for their deployment (see
e.g. Löschel et al., 2020; Agora 2019). At the same time, a better framework for renewables reduces
the need for fossil fuels.
The IA shows that all policy scenarios REG, MIX and CPRICE are fairly similar with a drastic reduction
of fossil fuel electricity generation from coal in particular. The Commission is aware of the need to
urgently address the substantial challenges that will result for coal-dependent regions and
discusses policy actions building on existing initiatives like the Just Transition Fund, the Coal Regions
in Transition Platform and skill training. At the same time, it is not entirely clear if the EU ETS alone
can ensure the coal phase-out as non-economical barriers exist. An potential policy option to
consider would be a EU funding for managing the transition in coal regions is conditional on national
phase-out plans (CAN Europe and Sandbag 2019).
Transport
The ambition significantly differs between IA and CTI scenarios. Total IA GHG emissions of inland
transport (excluding aviation and marine) are forecasted to be around 600 Mt CO2 for all three
scenarios, while the CTI scenarios are more ambitious and reach 540 Mt CO2 and 460 Mt CO2 for the
Shared Effort and Technology scenarios, respectively. This difference in ambition is reflected in all
activity level changes as detailed in the Annex.
THE TRANSPORT DEMAND GROWTH IS MAINTAINED IN THE IA SCENARIOS
As it can be seen on Figure 3, one key difference between IA and CTI scenarios lies in the evolution
of both passenger and freight transport demand. The CTI scenarios investigate complementary
pathways where the current growth rate of freight and passenger transport demand are curbed from
2015 to 2030.
1
This is a strong shift compared to the current observed growth in this sector which is
the only one that experienced an increase in emissions since 1990. IA scenarios therefore propose
1
Passenger transport demand in the CTI scenarios is either stabilised (Shared Effort) or slightly increasing (Technology,
+7% by 2030 compared to 2015), while IA scenarios foresee an 18-20% increase in transport demand. Freight transport
growth between 2015 and 2030 is limited to 7% and 20% in the CTI Shared Effort and Technology scenarios respectively,
while IA scenarios foresee an increase from 30 to 33% over the same period.
P a g e | 19
trajectories maintaining the historical growth. This preserves activity for the current automotive
industry, but also leads to technology shifts which are difficult to reach.
Figure 3: Growth of passenger and freight transport demand in CTI and IA scenarios (estimates), 2015-2030
The second main gap between CTI and IA scenarios concerns the modal split. Both types of scenarios
foresee a shift from road to rail (passenger) and from road to rail and navigation (freight). In the CTI
scenarios, this shift, coupled with a curbed transport demand, allows to increase the share of these
softer transportation modes and to decrease the share of road transport. In the IA scenarios
however, the increase of rail and internal navigation activity rather absorbs the increase of the overall
transport demand than decrease the road transport activity.
Changing transport demand patterns with a higher modal shift to public transport and wider
penetration of sharing options could complement technology shifts. These patterns will be affected
by a wide variety of societal factors, some of which can be more easily influenced by policy-makers
than others.
THE TECHNOLOGY SHIFT IN THE IA IS COMPLEMENTARY TO THE CTI MODAL SHIFT
Alternative fuels and powertrains play an important role in all analysed scenarios. The technology
shift towards alternative powertrains (e.g. BEV) is similar in relative terms in IA and CTI Shared effort
scenarios, with Zero and Low Emission Vehicles (ZLEV) reaching 21% to 25% of in the car fleet by
2030. The CTI Technology scenario on the other hand explores a much larger uptake of these
alternative powertrains (41% of ZLEV in the car fleet by 2030). Yet, these figures should also be
compared in their absolute values. The CTI scenarios foresee a stabilisation and a 40% decrease of
the EU car fleet for Technology and Shared Effort scenarios respectively between 2015 and 2030. By
contrast, IA scenarios foresee an increase of the passenger road transport demand, which is likely to
P a g e | 20
increase the car fleet as well. Hence, the absolute amount of EVs in the fleet might be significantly
larger in the IA than in CTI scenarios.
The IA scenarios are also betting on a more important contribution of biofuels to decarbonisation
as the biofuel quantity they foresee is approximately twice as high as it is in CTI scenarios (between
230 and 290 TWh for IA scenarios vs 128 TWh in CTI scenarios). The IA does not mention how this
biofuel demand is split between the different modes and solely mentions that aviation and navigation
are driving the increase of biofuels. Hence, it cannot be excluded that biofuels are also foreseen to
play a significant role for inland modes as well.
Finally, IA scenarios mention digitalisation and smart traffic management as enablers of sustainable
urban mobility. This can be connected to the mobility-as-a-service concept that affects the utilisation
and occupancy of private cars. However, these measures are not quantified in IA scenarios, thereby
preventing the comparison with CTI scenarios.
IT IS POSSIBLE TO ACCELERATE THE TRANSITION IN TRANSPORT WHILE IMPROVING
QUALITY OF LIFE
IA transport scenarios are a positive step towards reaching net zero emissions in 2050. However, the
analysis above shows that considered measures mainly belong to technological solutions. This may
result in an increased demand for raw materials for new vehicles and a biofuel demand hard to satisfy
in a sustainable way. Furthermore, focusing solely on technological solutions is a missed opportunity
to fully reap the fruits of a balanced mobility transition, where a controlled transport demand and an
ambitious shift to softer modes can bring many co-benefits in terms of air quality, health and quality
of life for EU citizens.
From a policy perspective, the Commission highlights the need for a shift to clean and efficient
mobility options including walking and biking. The highlighted mix of policy instruments including the
extension of the ETS to road transport, existing taxation and CO2 standards for vehicles “are
complementary instruments, acting as incentives on the fuels use and on the introduction of
technologies respectively.” (European Commission 2020b, p.146f.). This is somewhat in line with e.g.
Agora Energiewende (2020a) arguing that even if road transport emissions are included into the
ETS, there is still need for regulatory measures since the willingness and ability to pay is much
higher in road transport when compared to the power sector or industry. In addition, private and
commercial consumers are not always fully aware of the financial consequences which means that
measures targeting the purchasing of vehicles can be more effective (see e.g. Velten et al. 2019). In
this context, the Commission could be clearer in communicating that a phase-out of fossil-fuel based
vehicles is urgently needed between 2025 and 2040 the latest depending on the assumptions (e.g.
Agora Energiewende 2020a; DLR 2019).
Following above described developments of passenger and freight transport volumes, it is also
important to strengthen the role of clean, non-motorised mobility and the need for stabilising the
P a g e | 21
overall need for mobility. In this context, the Commission does not provide a real approach but rather
refers to a new initiative on Sustainable and Smart Mobility’” (European Commission 2020a, p.13).
Yet, the 2016 Mobility Strategy already highlighted the need for zero-carbon mobility but current and
outlined developments in the IA do not show a substantial shift. Thus, more and comprehensive
action is needed to address the challenges in transport (see e.g. CLIMACT and NewClimate 2020).
Buildings
The scenarios suggested in the COM IA are more ambitious in terms of GHG emission reductions by
2030 than most of the studies carried out so far. Targeted emission reductions are mainly enabled
by a quasi-full phase-out of liquid and solid fossil fuels. This suggests a strategic shift by the
European Commission as it contrasts with the “energy efficiency first” principle with the Commission
concluding that "fuel switch in heating in buildings is the key avenue for buildings to contribute to an
increased 2030 climate target”.
The exact assumptions underlying the modelled policies are difficult to grasp. However, based on the
reported content, it seems that energy efficiency improvements of buildings envelopes are mainly
driven by cost-efficient investments and supported by actions to mitigate market failures while
the deployment of RES heat is driven by financial incentives beyond the impact of a carbon price on
the business case of these investments. At the rise of the start of the Renovation Wave, this sounds
like an early defeat on a real boost of the renovation activity in the required rate towards high-
efficiency and carbon neutral buildings by 2050.
While the ambitions in terms of annual rates of deep renovations remain on the rise compared to
the historical average, they do not reach the 3%/year required to transform the entire building by
2050. The number of one-stage deep renovations also remain very low.
The signal for the 2030 GHG target is positive, however further efforts to improve the annual
renovation rate beyond 2030 will be required. Not only to improve the quality of life and the
resilience of European citizens, but also to reduce the magnitude of the changes of the energy system
needed to decarbonize the heating and cooling of buildings. More details can be found in the next
paragraphs.
SIGNIFICANT UPWARD REVISION OF BUILDINGS TARGETS COMPARED TO THE EU LONG-
TERM STRATEGY
The IA significantly increases previous ambitions for the building sector; making them much more
forceful by 2030 than suggested in CTI scenarios. This is the sector for which the reductions are the
largest in IA: the newly proposed scenarios supporting the EU -55% vision suggest a need to reduce
emissions in the buildings sector by 60% by 2030 compared to 2015. This is three times more than
modelled in the EU Long-term strategy aiming at -18% reduction in that sector in 2030 before
reaching global neutrality in 2050 (European Commission 2018).
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EFFICIENCY IMPROVEMENTS IN THE IA RESULT FROM A CONSERVATIVE INCREASE OF THE
RENOVATION RATE AND AN AMBITIOUS RENOVATION DEPTH IN LINE WITH CTI FINDINGS
The growth in renovation rates as well as the depth of renovations as modelled in the new IA
scenarios is important, increasing the energy efficiency of buildings and hence reducing energy
demand. It is encouraging to see that the most ambitious renovation ambitions (for residential) are
similar in the CTI and IA scenarios (see Annex). For example, the REG IA scenario aims for an average
renovation rate of 2.4% per year between 2026 and 2030 with energy savings ranging from 50% to
66% (on average, over the same period). Ambitions are however much stronger in CTI for non-
residential buildings, particularly in terms of renovation rate where CTI scenarios target 1.9%/year of
renovations rate as of 2025 and 2.5%/year by 2030 whereas IA ambitions maximum 1.5%/year on
average for the 2026-2030 period. Those rates are not sufficient to renovate all buildings (at least
3%/year of renovation rate needed to renovate 90% of the housing stock by 2050), which explains
the increased ambition in fuel switch detailed below.
Figure 4: GHG emissions for residential and non-residential buildings (m t CO2e)
MOST OF THE EMISSION REDUCTIONS ARE REACHED THANKS TO A QUASI-FULL PHASE-
OUT OF LIQUIDS AND SOLIDS FOSSIL FUELS IN TEN YEARS
The contrast between the CTI modelling and the IA scenarios is mainly due to very distinct ambitions
in terms of fuel switch. IA targets a quasi-full phase out of liquid and solid fossil fuels by 2030. It is
this lever that, by reducing the carbon intensity of the heat, allows for the additional reduction of
emissions compared to the CTI scenarios since the renovation ambitions are similar. In the three
-55% scenarios of the Commission, the consumption of coal and liquid fossil fuels becomes marginal
(coming from roughly 16% in 2015). Even if still significant by 2030 (23%), gas consumption is reduced
by 43% compared to 2015, i.e. a total of 523 TWh in 2030, compared to 594 TWh for the CTI-Shared
P a g e | 23
Effort scenario and 930 TWh in 2015. Additional energy savings beyond 2030 seem key when looking
at the availability of low-carbon gas to further decarbonise heat. The European Commission flags low-
carbon gas as an important part of the strategy beyond 2030 while the gas sector reports 230 TWh
available for buildings by 2050 (Gas For Climate 2020).
In the new ambitions, fossil fuel consumption represents only ~26% of the total mix, compared to
49% in 2015, an absolute reduction of ~815 TWh (-58% compared to 2015). This is 26% better than
the CTI-Shared Effort scenario (whose energy mix remains similar to 2015 in relative terms and which
reduces fossil fuel consumption by 442 TWh).
These decreases are allowed thanks to a much higher intake of electricity consumption (mainly
corresponding to heat pumps) and renewable energies than in the CTI scenarios (which roughly
stagnate in relative terms compared to 2015 while electricity consumption rises from 640 to 872 TWh
in the IA scenarios). “Yearly consumptions” indicators can hide part of the difficulties: technical
challenges associated with, for example, winter peaks will have to be anticipated and tackled
(through smart control and demand-side management solutions) to make this transition feasible.
While the majority (60%) of emissions are reduced by 2030 in the IA scenarios, there is still 40% to
be achieved. Renovation efforts will have to be maintained and even increased to reduce the
pressure on the power sector and ease the transition in sectors where energy efficiency gains are
more complex to achieve. This is reflected in the CTI scenarios, which project a 60% decrease in
residential energy consumption in 2050 (compared to 2015), while the most ambitious IA scenario
(REG) shows only 36% of reductions for the same period.
Figure 5: Residential final energy demand in CTI-Shared Effort and IA scenarios (in TWh), 2015 vs. 2030
P a g e | 24
The Commission proposes a mixed approach to address buildings GHG emissions. The IA (European
Commission 2020b, p. 71) finds that using only a carbon price (CPRICE scenario) incentivise less deep
renovation when compared to a scenario with regulatory measures (REG scenario) - thus,
investments and related local employment is higher for the REG-scenario. A mixed approach (MIX
scenario) which includes “a carbon price of EUR 44/tCO2, incentives for renewables in H&C, support
for heat pumps and renovation policies” results in investments between the two and incentivises
deep renovation and fuel switch. In this context, the Commission highlights in its communication that
an adequate policy mix also has to avoid negative impacts on vulnerable consumers, […and...] target
the renovation of their houses and keep the impact on their heating and electricity bills in check
(European Commission 2020a, p. 5). Reaching the renovation rates in the MIX scenario, however,
means that barriers to cost-effective renovations are addressed (European Commission 2020b, p.
66). This particularly refers to access to finance and the split incentive (or landlord-tenant dilemma)
and is most relevant for Member States in Central and South-Eastern Europe where there is lack of
an appropriate policy framework to trigger cost-effective renovations (see e.g. BPIE et al.
forthcoming; Agora Energiewende 2020a).
This means that the proposal of including buildings into the ETS does not make other policy
measures redundant or unnecessary. It rather reflects that a carbon price is urgently needed to
increase the economic viability of fuel switch (see e.g. IRENA et al. 2018), regulatory measures are
needed to trigger deep renovation and other measures have to address in particular those barriers
that cannot be solved with higher energy prices such as access to finance, split incentive, knowledge
gaps and limited availability of local craftsmen as well as the protection of vulnerable consumers.
This is in line with findings of other studies such as BPIE (2020) showing the multifold challenges in
building renovation as well as Sebi et al. (2018) highlighting the need of new or strengthened policy
measures besides carbon pricing.
Industry
The EU industry has managed to reduce its emissions with about 20% since 2005. However, emission
levels have stabilized in the last decade, as the lowest hanging fruit has been exhausted and
continued efficiency improvements are offset by production increases. Although further process
optimization remains important, achieving deep reductions in this sector will require more profound
changes, from a more circular production-consumption model to the roll-out of new, low-emission
production technologies (including the use of carbon capture technology). Although many of those
technologies already exist, most of them are currently still in R&D or demonstration phase. This in
combination with typically long investment cycles poses a particular challenge for the climate
transition in the industrial sector. It is therefore vital that necessary actions are taken in the coming
decade to set the EU industry on a pathway towards climate neutrality by 2050.
Our CTI scenarios have identified four main levers to reduce emissions in the industry: 1) reducing
the demand for emission-intensive industrial products via a transition to a circular and functional
P a g e | 25
economy, 2) the large scale roll-out of new, low-emission technologies, including carbon capture, to
some extent, 3) continued ambitious energy efficiency improvements and 4) switches towards
climate-neutral energy vectors, including via electrification.
THE IA CONCENTRATES ON EFFICIENCY IMPROVEMENT WHICH CAN BE COMPLEMENTED
BY LEVERAGING THE TRANSFORMATIVE POTENTIAL OF A FULLY CIRCULAR ECONOMY
Although the Commission’s scenarios apply similar levers to achieve deep reductions on the longer
term (2050), they clearly differ in terms of timing. Whereas the CTI scenarios leverage all four levers
already in the coming decade, the Commission’s scenarios consider the potential for reductions by
2030 mainly limited to energy efficiency improvements (in particular waste heat recovery in the
textile, food & beverages, chemical and refinery sector), complemented with some limited fuel
switches (a small degree of electrification and some replacement of natural gas by bio-methane). The
Commission considers that the large-scale roll-out of new technologies and large-scale fuel switches
will only be feasible as of 2035-2040, given the need for further technological developments and
infrastructure needs. Finally, the IA acknowledges that the transition to a circular economy can serve
as an enabler to achieve emission reductions across sectors, including in industry. However, it states
that at this moment further research is needed on their quantification before this can be integrated
in the modelling framework underpinning the scenarios. There is no data available on the assumed
industrial production levels in the Commission’s scenarios.
Whereas the ambitions in term of energy efficiency are comparable between the CTI scenarios and
the Commission’s scenarios, the lower use of the other levers leads to a lower overall GHG emission
reduction in the Commission’s scenarios (-23% to -26% between 2015-2030) compared to our CTI
scenarios (-30% to -32%). These emissions are mainly driven by a lower overall final energy
consumption (-14.7% to -16.8% by 2030 between 2015 and 2030) and to a lesser extent by fuel
switches and electrification).
Agriculture, land use and bioenergy
The IA clearly recognizes the need to reduce non-CO2 emissions from agriculture and the importance
of preserving and developing the natural carbon sinks in soil and biomass. The agricultural sector
represented indeed a significant share of EU emissions in 2015 with ~460 MtCO2e or 12% of total GHG
emissions (when including CO2 emissions from energy consumption in this sector). Natural sinks
formed through land use, land-use change and forestry (LULUCF) on the other hand contributed to a
reduction of 295 MtCO2e, a capture of ~7% of the emissions for the same year. If properly managed,
protected and restored, natural sinks can remove some remaining emissions in the future and will be
essential to reach net-zero emissions by mid-century at the latest.
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THE IA FOCUSES ON TECHNICAL MEASURES FOR LIVESTOCK AND CROP MANAGEMENT
ALTHOUGH ACKNOWLEDGING THE CO-BENEFITS OF IMPROVING DIETS
For the non-CO2 emissions from agriculture, the IA scenarios currently focus on technical measures
while the CTI scenarios include lifestyles changes through shifting to healthier diets. The IA scenarios
explicitly avoid any change in diets compared to the historical trend (i.e. about -5% meat
consumption in 2030 compared to 2015), although the Commission recognises that such a change
could lead to a reduction in GHG emissions as important as the potential reduction obtained with
technical measures in the agricultural sector (up to ~30 MtCO2e annually by 2030). This confirms that
combining technical and consumption-oriented measures would help significantly reducing
agriculture emissions.
The IA technical measures settle to reduce the livestock emissions are (1) innovative animal breeding
and growing practices, (2) farm-scale anaerobic digestion of manure with biogas recovery, and (3)
the use of feed additives combined with changed feed management practices. To reduce non-CO2
emissions linked to crop production, the IA suggest to (1) use nitrification inhibitors in large farms to
decrease fugitive N2O emissions, and (2) adopt a more efficient use of fertilizers which could
substantially reduce N2O emissions. All the technical measures combined allow to reduce agricultural
non-CO2 emissions by 30.6 MtCO2e (a decrease of about 7.7% compared to 2015 level).
In contrast, the CTI scenarios relied on a limited improvement of fertilizers use to increase the yields
but also proposed substituting part of the meat by vegetal protein alternatives (between 11% and
28% of meat substitution, see Figure 6). Even though the CTI scenarios imply deep changes in the
agriculture production, they are therefore better aligned with the WHO diet guidelines
recommending halving the EU meat consumption. Leveraging diet changes not only reduces GHG
emissions but also reduces the need (and costs) to deploy technical measures, improves health of
Europeans, and frees land that can be converted into more efficient carbon sinks such as forests or
permanent grasslands which in turn help restoring biodiversity.
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Figure 6: Food consumption, including 9% net export, in the 55% CTI scenarios compared to the historical meat
consumption trend which likely reflects the IA scenarios (in kCal/capita/day).
THE IA PRESERVES THE CURRENT LULUCF SINK UNTIL 2030 WHILE THE CTI SCENARIOS
INCREASE THE SINK THROUGH AFFORESTATION AND GRASSLANDS EXPANSION.
By 2050, about 500 Mt CO2e will have to be annually removed from the atmosphere by LULUCF to
offset residual emissions that are too difficult to abate in both the IA and CTI scenarios sets. However,
the CTI scenarios reach around 500 Mt CO2 already in 2030 thanks to a massive afforestation of the
land freed up after changing diets, agriculture and land management practices.
In the IA scenarios, the LULUCF sink is maintained mainly by reducing deforestation, a limited
afforestation (+2 m ha between 2020 and 2030) and improving soil and forest management. These
practices could generate from ~44 to 80 MtCO2e of additional LULUCF sink by 2030 (and ~62 to ~123
MtCO2e by 2050). The IA mentions, though without including it in the scenarios, that protecting
organic soils could reduce CO2 emissions by about 50 additional MtCO2e by 2030 at a reasonable cost
(Pérez Domínguez et al. 2020).
The CTI scenarios significantly increase the CO2 absorption by LULUCF before 2030. In these
scenarios, beyond stopping deforestation and preserving current forest, most of the sink increase
comes from a massive afforestation of the land freed up thanks to the changes in agriculture
production. The technical efficiency options exploited in the commission’s scenarios are barely not
used in the CTI scenarios. The forest sequestration is also improved in the CTI scenarios by lowering
the harvest rates which may in turn reduce the availability of wood residues for bioenergy use. In
P a g e | 28
contrast, in the IA, the increasing demand for solid bioenergy suggests an intensification of the
harvesting practices.
THE DEMAND FOR LIQUID BIOFUELS ALMOST DOUBLES IN THE IA SCENARIOS COMPARED
TO 2015 WHILE IT DECREASES BY ~15% IN THE CTI ONES
The total demand for bioenergy increases in the IA while it the increase is much more limited in the
CTI scenarios. The IA suggests an increase of 8% to 10% by 2030 compared to 2015 (67% to 77% by
2050, see Figure 7). That increase comes from almost a doubling of the liquid biofuels demand by
2030 which is expected to play a key role in the transport sector, while the CTI managed to reduce it
by ~15%. The demand for solid and gaseous bioenergy in the IA scenarios however remains
comparable to 2015 (the increase staying below ~6% depending on the scenarios which falls between
the two CTI scenarios).
CONSISTENCY IS NEEDED WITH OTHER LAND-RELATED CHALLENGES
The IA is not very explicit on the synergies, as well as potential trade-offs, between mitigation,
biodiversity and adaptation needs. It acknowledges the need for adaptation activities as a means of
maintaining forest sinks. However, the importance of agro-ecological practices to facilitate
maintenance of sinks and yields on agricultural land, as well as to contribute to reversing biodiversity
losses on agricultural land is not clearly addressed. For example, several droughts (including 2018)
have already significantly affected yields. To achieve mitigation targets and avoid leakage, yield
stability is important. This requires that soil health is maintained, soil degradation reversed, and
agriculture can deal with increasing occurrence of pests and diseases, risks of droughts, soil erosion
and other extreme events. Many agro-ecological measures simultaneously contribute to mitigation,
biodiversity and adaptation needs; however it is not clear how these are considered in the IA
assessment. Such measures would include for example diversified crop rotations, improved coverage
of landscape features (including agroforestry), and organic farming practices. The focus in the
agricultural component of the assessment is primarily, or exclusively, on technological solutions such
as precision farming, nitrification inhibitors, feeding strategies, which have limited adaptation and
biodiversity benefits. Moreover, this technological focus also risks leading to lock-in situations that
can block the transition towards farming practices and production structures that fit with ecosystem
boundaries and local environmental conditions, as well as ultimately result in climate friendly and
more resilient farming systems.
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Figure 7: Bioenergy demand by type in CTI and IA scenarios compared to the historical trend projected until 2030
The Commission indicates contribution to Farm to Fork and Biodiversity Strategy via technological
measures that improve nitrogen and phosphorous efficiency (and thus contribute to zero pollution
ambition). It does not, however, explicitly consider the contribution to pesticide and biodiversity
targets, including the targets to have 10% of agricultural area as high diversity landscape features
and 25% of agricultural land organically farmed by 2030. It does refer to the role of the Common
Agriculture Policy in funding mitigation technologies and changes in farming practices (non-CO2), and
it assumes that much of the additional incentives to invest in LULUCF sinks would derive from
flexibilities linked to ESR and/or ETS. How these flexibilities are set up and managed will affect the
credibility of ambitions set out.
Since the IA does not consider improving lifestyle and diet changes to reduce non-CO2 emissions in
agriculture, it also does not exploit the knock-on effects and systematic solutions required to
transition to a climate-friendly agricultural sector. Therefore, the IA also not clearly considers the
need to develop an integrated food and agriculture policy to manage the complex interactions
between production and consumption in the food system, including supporting transitions by
farmers and foresters, which are required to achieve reductions along the whole food supply chain.
This is in contrast to what has been called for increasingly in recent years from research and
stakeholders (including e.g. IPES Food 2019 or Willet et al. 2019).
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REFERENCES
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55% target in EU policy architecture, Berlin: Agora Energiewende.
Agora Energiewende publication (2020b): The European Power Sector in 2019: Up-to-Date Analysis
on the Electricity Transition, Berlin: Agora Energiewende.
Agora Energiewende (2019): European Energy Transition 2030: The Big Picture. Ten Priorities for the
next European Commission to meet the EU’s 2030 targets and accelerate towards 2050.
BPIE, CLIMACT, Creara and Ecologic Institute (forthcoming): Lessons learned to inform integrated
approaches for the renovation and modernization of the built environment. Study
commissioned by DG ENER.
CAN Europe and Sandbag (2019): Just transition or just talk?, Brussels: Climate Action Network
Europe and Sandbag (now Ember).
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P a g e | 31
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ANNEX: Detailed sectoral implications of the IA scenarios compared to the CTI scenarios
Table 1: Power sector
Policy area
Range for CTI 55% scenarios Technology-focused and Shared Effort
Range for IA scenarios reaching -55% (REG, MIX, CPRICE)
Electricity
demand
Electricity demand increases by 15% vs 2020 in a more technology-
focused scenario, while it decreases by 10% in a shared efforts
scenario with a higher focus on demand-side measures.
Electricity demand increases in all scenarios from about ~2,900 TWh in 2015 to
~3,200 TWh in 2030, so by +11% (REG) to +13% (CPRICE) and grows further by
2050.
Coal and fossil
fuels phase-
out
Together all fossil fuels in decrease from 42% in 2015 to 6% in 2030.
Coal is almost fully phased out by 2030, going from 470 in 2019 to ~50
TWh in 2030 (~10% of 2019).
The share of fossil fuels decreases from 42% in 2015 to 17-18% in 2030. Figures
for coal-based electricity generation are missing, but final energy demand for coal
sinks to 9-11 Mtoe or ~115 TWh. Assuming most of it goes to power production
this leads to ~50 TWh which is similar to CTI results.
RES support
RES production covers 75% of power production by 2030, on a
stable or increasing power demand. This means RES has an 8.5% to
12% growth year-on-year, adding 90 to 130TWh of production per
year in the next 10 years compared to ~40 TWh from 2010 to 2018.
Biomass-based production stays roughly stable with 186 TWh in
2030. The RES share increases to 92% by 2050.
RES production covers 67% to 68% in the three scenarios of the power
production by 2030 (so about 2200 TWh of the 3273 TWh).
Nuclear
Nuclear slowly phases out, contributing 17 to 20% of the production
mix in 2030 (574 TWh).
Driven by MS policies, nuclear electricity generation falls by 2030 in both absolute
and relative terms compared to 2015 to 466 (REG) to 493 TWh (CPRICE) which is
below the CTI results.
CCS
No Carbon Capture and Storage (CCS) is assumed in power.
No significant deployment of CCS for power generation is projected in any of the
considered scenarios by 2030.
Zero-carbon
flexibility
options
Variable renewable energy source production reaches 55 to 59% by
2030 and 74 to 80% by 2050. This is capped by the available
network flexibility. Hydrogen-based production slowly starts in
2030, covering ~5-6% of production in 2050. In the shared-efforts
scenario, 100% of the demand-side management potential is
captured from 2030 onwards. Several zero-carbon flexibility options
cover the daily and weekly flexibility needs (storage, inter-
connections, biomass-firing). Seasonal flexibility is answered by
zero-carbon dispatchable generation.
Variable renewable energy source production reaches 48% by 2030. The
increasingly volatile nature of the electricity generation sources will require
deployment of storage solutions through pumped hydro and batteries. Some
hydrogen and power-to-gas are put in place, but they mostly rise after 2030
which is also assumed in the CTI scenarios.
Analysing the Impact Assessment on raising the EU 2030 climate target
P a g e | 33
Table 2: Transport
Lever
Range for CTI 55% scenarios Technology-focused and Shared Effort
Range for IA scenarios reaching -55% (REG, MIX, CPRICE)
Transport
demand
Average transport demand per person across Europe increases by 7%
by 2030 and is stabilized in the Shared effort scenario.
Passenger transport activity shows sustained growth relative to 2015 in all scenarios
(18-20% by 2030)
Modal shift
The use of cars in passenger transport decreases from 80% of
passenger kilometres (km) in 2015 to 73%-70% in 2030.
Car modal share in inland transport increases from around 80% in 2015 to 81-82%
depending on the scenario. There is a significant shift towards rail, particularly in
the REG scenario.
Utilisation
rate and
occupancy
The passenger distance per car and occupancy remain at their 2015
level in 2030, respectively 12,000 km/year, 1.62 passenger km/vehicle
km in the technology focused. IN the Shared effort scenario, the
passenger distance per car increases ~50% to 18,000 km/year in 2030.
The occupancy increases to 2.1 passenger.km/ vehicle.km in 2030.
Mentioned but not quantified.
Technology
share
In 2030, the car stock is composed by 12%-30% ZEV, and 9% to 11% of
remaining vehicles are low emission vehicles (PHEV mostly).
By 2030, between 12% (CPRICE) and 14% (REG) of the car stock is composed of
ZEV. LEV represent from 12% to 14% of remaining cars in the fleet.
Freight
transport
demand
The increasing trend in freight transport is partly counter-balanced
with the ambition on the circular economy: both effects lead to
freight volumes increasing by 7% to 20% up to 2030.
The increase in inland freight transport is around 30-33% by 2030 compared to
2015.
Modal shift
The truck use decreases from 50% in 2015 to 45% in 2030.
The truck modal share decreases up to 48% by 2030 (REG), with modal shifty
mainly to rail.
Technology
share
34% to 91% of new trucks are ZEV by 2030.
0.5-1% of the truck stock are ZEV and 8-9% are LEV.
Fuel mix
The combined demand for bioenergy for transport (including
international bunkers) reaches 128 TWh in 2030 and 128 TWh to 180
TWh in 2050.
The combined demand for bioenergy for transport (including international
bunkers lies between 230 and 290 TWh in 2030 and increases to a range between
560 and 690 TWh by 2050.
Analysing the Impact Assessment on raising the EU 2030 climate target
P a g e | 34
Table 3: Residential Buildings
Policy area
Range for CTI 55% scenarios Technology-focused and Shared Effort
Range for IA scenarios reaching -55% (REG, MIX, CPRICE)
Demand for
heated areas
The yearly evolution is decreased down to +0.35% to -0.18%/year by
2030 leading to an average floor area per person of 40.8-
41.5m²/person
No reductions of current trends in demand are applied
Envelope and
heating
efficiency
Energy renovation boosted to 1.8% to 2.4%/year by 2025 with an
average of 35% of Energy Efficiency in both cases. By 2030,
renovation rate reaches 2.3% to 3.4%/year with 80% of energy
savings.
REG and MIX assumes more than doubling the rate of renovation. From 1% to
2.4% per year for 2026-2030. CPRICE results in 1.4%/year renovation rate. On
average (2026-2030), energy savings range between 53% (for CPRICE) and 66%
(for REG).
Heat
decarbonisation
The consumption of electricity slightly increases in Shared Efforts in
relative terms (from 22% to 25%) but decreases in absolute terms
(33 TWh less, reaching 607 TWh in 2030)
The share of fossil fuels used to heat existing buildings is reduced by
20% leading to a contribution of 47% by 2030 (mix of Oil (15-20%)
and Gas (80-85%). Heat is fully decarbonised by 2050.
The share of electricity increase from almost 25% today to ~38% in all policy
scenarios in 2030 and this share will be around 45% in all scenarios by 2050.
Natural Gas cover ~30% of needs in 2030, Coal is fully phased-out in 2030 and
almost no more Oil is consumed by then.
Appliances &
consumer
goods
Demand for electricity-dependant services reduces by 0.4%/year in
Shared Efforts and increases by 1.8% in Technology, reaching a
demand ranging from -5.6% to +16% in 2030 vs 2015. Energy
efficiency is improved by 36% by 2030.
Not mentioned in the IA.
Table 4: Non-residential buildings
Policy area
Range for CTI 55% scenarios Technology-focused and Shared Effort
Range for IA scenarios reaching -55% (REG, MIX, CPRICE)
Demand for
heated areas
The yearly evolution (m²/person) is decreased down to 0.4 to
0.5%/year by 2030.
No reductions of current trends in demand are applied
Envelope and
heating
efficiency
Energy renovation is boosted such that it reaches by 2025 1.9%/year
with an average 73% EE, and by 2030 2.5% renovation rate with an
average 82% energy saving.
Renovation rate increase ranges from 1.1% (in MIX) to 1.5% on average in 2026-
2030 period.
Analysing the Impact Assessment on raising the EU 2030 climate target
P a g e | 35
Table 5: Industry
Levers
Range for CTI 55% scenarios Technology-focused and Shared Effort
Range for IA scenarios reaching -55% (REG, MIX, CPRICE)
PRODUCT DESIGN:
Material
switch
A major material switch is undertaken: in road vehicles, 16% of steel is
replaced by carbon fibres, 16% by aluminium. In buildings, 17% of cement is
replaced by plastics, 16% of cement by timber and 41% of steel by timber.
No info available on production levels and/or impact of material
intensity/material switch/recycling rates
Material
intensity of
products
The improved design and the use of more efficient materials enables
reducing the material use per product by 10% in steel, 20% in high value
chemicals (HVC), 10% in cement, and 8% in other industries.
Share of
recycled
materials
The share of recycled materials in new products increases to 65% for steel,
14% for high value chemicals (HVC), 75% for cement, and 50% for the other
industries (excluding manufacturing waste recycling).
PROCESS:
Maximum ambition is required for all modelled action lever
The bulk of the reductions come from energy efficiency improvements:
New process
technologies
New technologies are deployed: 23 to 27% of primary steel is manufactured
through HIsarna, 17 to 18% of primary cement is manufactured through
polymers. Wet clinker is entirely substituted with dry clinker.
No large-scale use of new, innovative technologies before 2035-2040.
Energy
efficiency
Within existing technologies, energy efficiency is improved by 26 to 28% to
produce clinker, 17 to 18% for chemicals production (average for all
chemicals modelled) and 9% for steel BOF process.
15 to 17% lower final energy consumption compared to 2015, mainly due
to efficiency gains (waste heat recovery) in textile, food & beverages,
chemicals and refineries, based on waste heat recovery.
Electrification
Processes are further electrified, assuming a major use of resistive heating.
50-70% of fossil fuels are substituted by electrification in steel, chemicals and
other smaller industries.
No large-scale electrification, only a small shift from natural gas to
electricity as an energy carrier (which is largely offset by efficiency
improvements, leading to a very limited increase in electricity
consumption).
Fuel switch
Fuel switches are important. First, 27 - 28% of the remaining coal and oil are
replaced by gas in HVC and by hydrogen in traditional steel (Blast oxygene
furnace - BOF). 51 - 60% is replaced by hydrogen in ammonia production and
24 - 30% in other chemicals manufacturing. Third, remaining fossil fuels are
substituted at 15% by biomass in oxygen steel, 24 to 30% in chemicals (HVC,
ammonia), 84 to 100% in cement, and 65 to 80% in other materials.
No large-scale fuel switching, only a limited switch to biofuels (bio-
methane replacing natural gas)
CCS
7 to 24 Mt CO2 are capture in 2030 to support several sectors (steels, HVC,
ammonia, cement and others),
No ‘significant’ use of carbon capture before 2040.
Analysing the Impact Assessment on raising the EU 2030 climate target
P a g e | 36
Table 6: Agriculture and land use
Lever
Range for CTI 55% scenarios Technology-focused and Shared Effort
Range for IA scenarios reaching -55% (REG, MIX, CPRICE)
BEHAVIOUR:
Change in diets
Calories consumed decrease from -1% to -4% (2030 vs 2015). Meat
consumed per person is reduced by -11% to -28% while dairy
consumption and production is stabilised at 2015 level. Share of
ruminant meat down to ~19% of consumed meat (vs. 20% in 2015).
The diet level is following the current trend without further attempt to
reduce total calories or meat consumption.
AGRICULTURAL PRACTICES:
Reduce food
waste
Maximum potential of waste collection is achieved: ~20% on-farm food
crops waste and 50% of post-farm meat waste are collected (vs 10%
on-farm and 40% meat post-farm in 2015).
IA scenarios activate technical measures based on carbon prices without
giving data on deployment, e. g feed additives +changed feed management
to reduce methane; more efficient fertiliser use to cut N2O emissions.
Crop yields
Crop yields go up ~13% to 17% while minimising nitrous fertiliser use.
LAND USE:
Slow down
land
degradation
Maximum effort is made to stop land degradation.
IA scenarios leverage practices limiting deforestation, improving soil carbon
sequestration and sustainable forest management to adapt forests so that
they are a resilient natural carbon sink.
Land multi-use
17% less land is required to produce food thanks to multi-cropping and
other changes in agriculture practices (2030 versus 2015).
Surplus land
78% of all surplus land is afforested; 22% is dedicated to grasslands.
Not mentioned.
Forestry
intensity
Forest harvesting intensity is lowered by ~12% (2030 vs. 2015)
corresponding either to an average intensity reduction or the set-aside
of 12% of EU forests. 2030 demand for sustainable bioenergy is met.
The demand for bioenergy plays an important role in increasing biomass
production. As woody biomass increases, harvesting intensity is likely not
modified or even increased.
Dedicated
bioenergy
crops
Less than 3 m ha dedicated biofuel/energy crops are necessary; this is
about a third of 2015 dedicated crops. In 2030, dedicated bioenergy
crops represent about 40 TWh (between 2-3% of the total feedstock).
IA scenarios shift from conventional to much larger volumes of advanced
biofuels from dedicated bioenergy crops and agricultural residues. In 2030,
dedicated bioenergy crops supply 240 - 260 TWh (~12% of total feedstock).
BIOENERGY:
Total demand
Total bioenergy demand increases from +1%- +5% compared to 2015.
Increase from +8% - +10% in 2030 and from +67% to +77% (2050 vs. 2015).
Liquid biofuel
demand
Decrease from -16% to -17% compared to 2015
Important increase (~+78%) but it does not represent more than 20% of the
total use of biomass in any of the scenario (compared to 2015).
ResearchGate has not been able to resolve any citations for this publication.
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