A new report released by research firm Wood Mackenzie states that with the current energy transition policy and investment scenarios, Europe will not be able to meet its 2030 climate target.
The bloc has set a target to reduce its greenhouse gas emissions by 55% by 2030 compared to 1990 levels.
Wood Mackenzie says Europe will however deliver a 46% reduction in greenhouse gas emissions over 1990 levels.
The research firm says dramatic changes in investments and policies are required immediately for the bloc to up its climate action progress.
The report, Fast and Furious: Europe’s race to slash emissions by 2030, provides five key ways Europe can reduce its emissions by 53% (not 55%) by 2030.
However, the five ways would help the bloc to meet its initial climate target 2 years later, 2032.
The five ways include;
- Europe expanding its electric vehicles (EVs) and plug-in hybrids adoption to 97% of the EU’s passenger vehicle sales by 2030.
- Wind and solar power generation capacity must grow by 162GW and 253GW, respectively, over 2020 levels – underpinned by rapid scaling of grid infrastructure.
- Coal-plant retirements must be accelerated, alongside a carbon cost that maximises coal-to-gas switching.
- European Union’s Emissions Trading System (ETS) should be revised, providing more certainty over the cost of carbon that investors need to make structural changes and large capital investments.
- The bloc should ensure European industries are exposed to a carbon cost which incentivises decarbonisation without increasing the risk of carbon leakage.
Murray Douglas, Wood Mackenzie Research Director, said: “To hit the 2030 target, Europe will have to do everything we have assumed, but quicker. Moreover, as the potential to do more on renewables and EV penetration is limited, it will have to push harder in three key areas: energy efficiency and the electrification of buildings, reducing the amount of travel, and reform of the carbon market.
“The ETS covers around half of the bloc’s CO2 emissions. A large-scale expansion of the scheme to other sectors is unlikely, but maritime emissions are likely to be included. Still, the fact that ETS sectors will only deliver a third of the targeted reductions by 2030 underscores the need for reform.
“Certainty over the cost of carbon by 2030 would accelerate coal phase-out plans, as it did in the UK. Renewable generation would be more competitive, and the array of projects would expand. The rapidly growing pipeline of low-carbon hydrogen projects would be bolstered, and the market would become more engaged in the development of carbon capture and storage (CCS).”
Other key study findings include:
- Gas will remain resilient to 2030 amid a 55% emissions reduction.
- LNG will account for 27% of the EU’s gas supply mix by 2030. Pressure to cut carbon and methane emissions will push LNG suppliers to reduce emissions from well to customer.
- Investment by private capital chasing low-carbon opportunities will be key. Governments will have to ‘crowd in’ private sector investment with incentives to continue delivering renewables growth.
- Europe must rapidly shift from a power market where centrally dispatched supply follows demand to one where demand can respond to an increasingly variable, weather-driven supply from renewable sources.
- The biggest opportunities will be in the build-out of wind, solar and storage capacity, which will require $585 billion of investment by 2030.
Learn more about the report.