Your browser is not supported. Please update it.

16 December 2021

EU adds clarity on route to 55% emissions reduction by 2030

The European Union has published its second package of policies in line with how it will achieve a 55% reduction in emissions by 2030 and reach net zero by 2050. Rather than the first load, which addressed global carbon markets and an ICE car phase out, the second places a more specific focus on gas, methane emissions, and building efficiencies – but falls short, on several fronts, of putting an expiry date on fossil fuels.

On the first– tackling natural gas consumption – the bloc has continued its change of tack on the use of gas as a transition fuel between coal and renewables. “Europe needs to turn the page on fossil fuels and move to cleaner energy sources. This includes replacing fossil gas with renewable and low carbon gases,” said EU climate policy chief Frans Timmermans, when unveiling the package.

Natural gas, used mostly within heating and power networks, currently provides around one quarter of energy consumed across the EU. However, with limited resources from within the bloc itself, the vast majority – around 90% – of this comes through imports from Russia (41%), Norway (16%), Algeria (8%), and Qatar (5%).

With such a high dependence on imports, EU countries have felt a particularly harsh sting as gas prices have soared over recent months. Wholesale electricity prices of €90 per MWh in Germany have surpassed records set in 2008, while natural gas is trading at a four-times greater cost than it was this time last year.

Fierce debates remain ongoing within the bloc regarding the use of natural gas as a transition fuel, with many fossil-fuel dependent nations such as the Czech Republic and Poland pushing for natural gas to be included within green finance eligibility.

The European Commission, however, has said that for the bloc to reach its climate goals, gas consumption must fall by 25% by 2030, from 2015 levels, and that locally produced renewables are the only long-term defense to volatile fossil fuel prices.

This week’s proposals aim to reform the EU gas markets for a low-carbon future, with measures to integrate low-carbon gases, such as hydrogen, into existing networks. It is pushing for a blend of 5% hydrogen from 2025 at all cross-country connectors and for network operators to play a key role in the development of an EU-wide hydrogen market.

While proposals will require countries’ long-term gas contracts to end by 2050, it has fallen short of setting the phase-out date for gas that many investors and activists have been calling for.

Instead, the measures seem to be more focused on tackling the volatility in fossil fuel prices. Other steps have been put in place to allow joint procurements of strategic reserves of natural gas to bolster storage capacity across Europe.

The second chunk of the proposals focuses on the emissions of methane, which is more than 100-times stronger as an atmospheric warming agent than CO2 when it is first emitted and accounts for over 40% of global warming. The EU, along with 100 countries, was also a recent signatory of the US-led Global Methane Pledge to reduce emissions by 30% between 2020 and 2030.

The proposed legislation would be the first to specifically tackle methane emissions across Europe. It would aim to punish the oil and gas industry for upstream methane leaks, and force them to fix any faults just five days after they occur.

The measures would enforce operators of oil and gas infrastructure on European soil to report methane emissions down to the original source from two years after the regulation goes into effect. Infrastructure would have to be checked for leaks every three months, starting six months after the outset. Routine flaring – where methane is intentionally burned off – or venting – when it is simply released – would also be banned, except for during project repairs.

However, the vast majority of the infrastructure that provides Europe’s gas operates beyond European walls. With the vast majority of methane emissions from gas (90% imported) and oil (97% imported) coming from close-to-source, it’s unlikely that the legislation would see a significant reduction in the emissions associated with European consumption.

The third set of proposals within the package cover building renovations, acknowledging that by 2050, 85% of Europe’s current buildings will still be in place.

Specifically, it sets out that the worst 15% performing buildings for energy efficiency – those rated G and below – should be renovated by 2030, with those Grade F and below renovated by 2033.

Non-residential buildings must be renovated faster, with G-grade ones renovated by 2027 and F-grade by 2030.

While this section is harder to criticize, many have pointed to the lost opportunity by the EU failing to incentivize a certain standard of renovation as part of the legislation, ideally to A, B, or C-grade energy efficiency standards. It has, however, stated that member states should not offer support to fossil fuel boilers from 2027.

The policies are all pieces of the European decarbonization puzzle, hoping to cut net greenhouse gas emissions by 55% by 2030, from 1990 levels, having already achieved 24% of this – largely through a reduction in bloc-wide coal consumption. The bloc does, however, remain as the world’s third largest emitter, if all of its 27 countries are aggregated.