EN    EN EN 
EN    EN  EUROPEAN COMMISSION 
Brussels, 8.3.2011 
SEC(2011) 289 final 
COMMISSION STAFF WORKING DOCUMENT 
 
SUMMARY OF THE IMPACT ASSESSMENT  
 
 
Accompanying document to the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT , THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMI TTEE AND THE COMMITTEE OF THE 
REGIONS  
 
A Roadmap for moving to a compet itive low carbon economy in 2050 
 
 
{COM(2011) 112 final} 
{SEC(2011) 288 final} 
EN 2   EN 1. PROBLEM DEFINITION  
(1) To avoid dangerous impacts, the EU has a stated objective of limiting global climate 
change to a temperature increase of 2ºC.  The Copenhagen Accord included reference 
to this objective. It was further confirme d within the UNFCCC in the decision of the 
16th Session of the Conference of the Parties to the UNFCCC.  
(2) The Intergovernmental Panel on Climate Chan ge (IPCC) reported in 2007 that existing 
science indicated that developed countri es would need to take a greenhouse gas 
emissions (GHG) reduction target within  the range of 80 to 95% below 1990 
emissions by 2050 to limit global climate chan ge to a temperature increase of 2ºC 
compared to pre-industrial levels. The Eur opean Council and Parliament endorsed this 
as an EU objective, in th e context of necessary reductions according to the IPCC by 
developed countries as a group.  
(3) The EU as a whole has seen its GHG emissions (without Land Use, Land Use Change 
an Forestry, LULUCF) decrease over the last 2 decades. For 2009 the EEA estimated 
emissions levels reduced further to 17% below 1990 levels. Including aviation this 
reduction would be around 16% below 1990 levels. In part this is due to the impact of 
the economic crisis in 2009. 
(4) Today, some 55% of Europe's primary ener gy is imported. With reduced oil and gas 
output in the North Sea, even with full implementation of the Climate and Energy Package this is expected to increase  to 57% by 2030. While energy dependence in 
itself does not constitute an economic pr oblem per se, there are several energy 
developments that require a ttention. Firstly, trends point  towards continuing increased 
demand for oil and gas from emerging econom ies. Secondly, supply side investments 
are not in line with  increasing demand. The Interna tional Energy Agency estimates 
that by 2035 some 75% of conventional crud e oil production will have to come from 
fields yet to be developed or  found. Thirdly, global reserves  are often localised in geo-
politically unstable regions and owned by state-run companies that not always can 
react adequately to market forces. The Eu ropean economy therefor e will continue to 
be exposed to serious risks related to energy prices, in particular the transport sector 
which is more than 90% dependent on oil. The Roadmap therefore considers energy developments and synergies to enhance energy security. 
(5) Low carbon technology development is crucial for sustainable growth and jobs. But its 
development is not only hampered by market failures related to th e non inclusion of 
GHG externalities. There is al so the problem of uncertain ty and knowledge spill-over 
in general, which may lead to lower inve stment in R&D than optimal. In addition, 
there is a commercialisation problem fo r capital intensive technologies where 
investments are marked by long lead times. It will hence be criti cal to foster low 
carbon technology development and accelerate th e learning curve as cost-effectively 
as possible. This presents both a major challenge and an opportunity for European businesses. How the EU develops its R& D, demonstration and innovation policies, 
creates framework conditions inducing technological change , public acceptability and 
fosters the competitiveness of a wide range of key manufacturing industries of the EU is an essential consideration in the de velopment of a low carbon economy roadmap. 
EN 3   EN (6) The transition towards a low carbon economy has important implications for the 
sustainable use of resources beyond ener gy resources, and hen ce the Europe 2020 
Resource Efficiency Flagship. Reducing energy GHG emissions coincides with 
significant reductions in othe r air pollutants with associ ated health benefits. The 
roadmap also needs to consider industrial pr ocesses, land use, agri cultural and forestry 
practices and the rela tionship with the pr oduction and consumpti on of food, feed and 
fibre (timber, pulp & paper) and the maintena nce of essential ecosy stem services (soil 
quality, water availability, biodiversity). 
2. OBJECTIVES  
(7) The specific objective of the Low-carbon econo my roadmap 2050 is to give insight on 
how the EU policy framework should develop in the next 10 years and beyond to (1) 
enable deep reductions of greenhouse gas emi ssions consistent with science while at 
the same time (2) reducing vulnerability to oil shocks and other energy security concerns, and (3) reaping opportunities for sust ainable growth and jobs (related to new 
low carbon technologies), while taking into acco unt wider sustainability and resource 
efficiency considerations. 
(8) This impact assessment aims to give info rmation on the overall and sectoral pathways, 
the underlying technological and structural ch anges required, the investment and cost 
patterns, and other impacts, synergies an d trade-offs related to the broader 
sustainability and resource efficiency age nda. It aims to give information for 
developing EU, national and regional climate change policies and specific sectoral 
roadmaps that are being develope d, including outlining milestones. 
3. M
ETHODOLOGY AND SCENARIO DESCRIPTION  
(9) When considering such a long time frame, it is  essential to take into account various 
assumptions, uncertainties and different deve lopments over time. Therefore the impact 
assessment considers what it would require for the EU to achieve large emissions 
reductions in line with the 2ºC objective under different alternative scenarios 
("decarbonisation scenarios" instead of polic y options) which vary for key parameters, 
e.g. the type of global conditions, the global energy price developments and the rate of 
technological innovation. The scenarios in clude carbon prices as a cost-effective 
policy driver. By comparing results from di fferent scenarios it is possible to extract 
more robust conclusions, how key parameters  influence results a nd how various parts 
interact. 
(10) The range for the reduction target of 80 to 95% for developed countries, as presented 
in the IPCC's 4th Assessment Report covers both internal reductions and the use of 
international credits. To assess the order of  magnitude of the requ ired EU's internal 
reductions by 2050, a review of recent science is presented together  with projections 
of the POLES model in line with the 2ºC objec tive, i.e. halving of global emissions by 
2050 compared to 1990. 
(11) Fossil fuel prices are important when  assessing the impacts of reducing GHG 
emissions but they are largely determined by global markets. In addition, global action 
on climate change can impact the prices of fossil fuels. Using the global POLES 
EN 4   EN model the interaction of climate action and fossil fuel prices was analysed through 3 
scenarios: 
• Global baseline : globally no additional climate action is undertaken up to 2050.  
• Global Action : global action halving global em issions by 2050 compared to 1990. 
• Fragmented Action : EU pursues a decarbonisation st rategy but other countries do 
not follow. They only comply with th e lower end of the Copenhagen Accord 
pledges until 2020 and undertake no additional efforts after 2020. 
This model projection was extended to include global agriculture and land use 
change projections using the GLOBIOM an G4M models. 
(12) For the EU modelling, PRIMES, an energy sy stem model was used in combination 
with the GAINS model for projections of EU Non CO 2 emissions. Also at the EU 
scale, the relationship between energy and LULUCF has been analysed with the G4M 
and GLOBIOM models. Decarbonisation is driv en mainly by carbon prices relating to 
CO 2 and Non CO 2 emissions.  
(13) The scenarios projected at EU level are:  
• A reference scenario that reflects imp lementation and continuation of existing 
policies (i.e. the Climate and Energy Package up to 2020). 
• A number of decarbonisation scenarios that  reflect an internal EU reduction of 
80% in 2050 compared to 1990, except for one fragmented action scenario where 
additional measures are taken to protec t the international competitiveness of 
energy intensive industries.  
• Decarbonisation scenarios are differentiated according to fossil fuel energy prices 
in line with the results of global analysis with the POLES model:  
– scenarios with low energy prices staying re latively stable (oil prices in real terms 
in 2050 at around 70$ 2008/barrel), likely to occu r with Global Action.  
– scenarios with oil prices gra dually doubling (increasing to 127$ 2008/barrel in 
2050), as in the reference scenario, lik ely to occur with Fragmented Action. 
– scenarios with a temporary oil shock or continued high energy prices from 2030 
onwards (doubling to 212$ 2008/barrel in 2030), for which a real risk remains with 
Fragmented Action. 
• Decarbonisation scenarios are differen tiated according to assumptions on 
technological developments: 
– effective technology scenarios to represen t successful enabling of efficient and 
low carbon technologies  
– 'delayed CCS' and 'delayed electrification scenarios' to assess sensitivities 
regarding the availability of  certain technology pathways. 
EN 5   EN – a sensitivity analysis on delayed clim ate action that assumes no new and 
additional climate policies before 2030. 
(14) Future modelling improvements could take in to account the impact of climate change 
itself, for instance, on agricultural and energy production and consumption. Further 
improving the modelling of energy storage and smart grid solutions could better project the deployment of  distributed generation. 
4. R
ESULTS FROM THE GLOBAL ANALYSIS  
Global reduction efforts, and the EU contribution  
(15) The review of the latest scientific litera ture and the model projections by the POLES 
model show that the EU woul d need to reduce its greenhouse  gas emissions internally 
by at least 75%, 80% or more by 2050 compared to 1990.  
(16) A global effort consistent with 2°C would imply that other deve loped countries take 
action with the same stringency as the EU modelled through an equal carbon price 
signal. Emerging countries would do so gradually, simulated through a gradual 
developing carbon market with carbon pric es equal in developed and emerging 
countries by 2030. This results in a reduc tion of developing c ountries GHG emissions 
by 80% in 2050 compared to baseline, back to or even below 1990 emissions. This implies that in case of globa l action, international credits are not cheaply available and 
large-scale offsetting is not an alternativ e to domestic action. The 80 to 95% reduction 
objective in the EU will larg ely need to be met internally, also from a cost-
effectiveness perspective. Emissions per capita would converge over time with 
absolute differences by 2050 significantly sm aller, even though per capita emissions 
remain higher in developed countries. 
The link between climate action and global fossil fuel prices 
(17) The analysis with POLES demonstrates th e interaction between global action on 
climate change and future fossil fuel prices. While baseline projections for oil prices 
almost double, oil prices in a world of global climate action in 2050 would remain 
stable compared to today. These relative re ductions would result from reduced energy 
demand and a shift towards low carbon fuels.  Essentially, a world of Global Action is 
characterised by lower fossil fuel  prices and high carbon prices. 
(18) The analysis shows that in a world of 'F ragmented Action', oil prices reduce only 15% 
compared to baseline levels. These results  are broadly consistent with the World 
Energy Outlook 2010 of the Intern ational Energy Agency. The IEA data indicate clear 
energy security risks related to the combina tion of rising demand, difficulties in terms 
of supply and geopolitical risks in oil and gas exporting regions. 
(19) Changes in prices for energy sources will re sults in changes in income of countries 
that export these goods. But these impacts ar e manageable. Annual revenues for OPEC 
are projected to be much higher in the ne xt 20 years compared to the previous 20 
years, even in the case of Global Action.  
The global contribution from agriculture an d forestry and the lin k with bio-energy 
EN 6   EN (20) As part of a global effort c onsistent with 2°C, also the contribution of agriculture and 
LULUCF and the correlation with the ener gy sector on a global scale was analysed, 
taking into account: 
(a) the need to ensure food security to  feed the increa sing global population 
(b) the EU objective to reduce global deforestation, in pa rticular in developing 
countries, and stop global forest cover loss by 2030 
(c) efforts to reduce agricultural emissions 
(d) increased biomass use for energy in case of climate change action 
(e) Dietary habits remain the same with changes towards more carbon intensive 
food due to welfare increases.  
From the analysis, it is concluded that ag riculture and forestry can achieve the above 
requirements by 2050 if appropriate incentives are set, but productivity improvements on a 
global scale will be crucial. If these improve ments cannot be achieved, the above listed goals 
are simply not met or can only throu gh significant food price increases.  
Reversing existing trends, toward s more carbon intensive food, coul d also contribute, but this 
has not been analysed. Lifestyl e and behavioural changes, c ould increase the likelihood of 
meeting deep reduction objectives as well as  the overall cost-eff ectiveness of action by 
helping to avoid more expensive mitigation options  in other sectors. Biodiversity will benefit 
majorly from limiting global climate change to 2ºC by preserving tropical forests which 
exhibit very high biodiversity values, but care should be taken that in creased productivity in 
agriculture/forestry is not leading to reduced  biodiversity, increased  depletion of water 
resources or cause other environmental problems.  
5. RESULTS FROM THE EU ANALYSIS  
Overall EU reduction pathways, and sectoral contributions  
(21) The analysis of the projections of the diffe rent EU decarbonisation scenarios show that 
by 2050, an 80% EU internal redu ction compared to 1990 is technically f easible with 
proven technologies if a suffici ently strong carbon price ince ntive is applied across all 
sectors (range of around € 100 to €370 per ton of CO 2-eq. by 2050). This will require 
substantial continued innovati on in existing technologies bu t is possible without the 
deployment of break-through technologies, su ch as nuclear fusion, hydrogen and fuel 
cells, or an electricity grid with wide scal e application of distri buted energy storage, 
and without major lifestyle ch anges (e.g. dietary changes, strong changes in mobility 
patterns). Such developments could further facilitate a low carbon economy, but were 
not included in the analysis  considering the uncertainties of their technical and 
economic feasibility and because of the difficulties of including them in the modelling tools.  
EN 7   EN (22) Despite the significant variati ons in technological and fo ssil fuel price assumptions 
across the different scenarios, the results  are robust in terms of the speed and 
magnitude of emission reductions with vari ations at sectoral level a bit larger. 
GHG reductions compared to 1990  2005 2030 2050 
Total -7% -40 to -44% -79 to -82% 
Sectors   
Power (CO2) -7% -54 to -68% -93 to -99% 
Industry (CO2) -20% -34 to -40% -83 to -87%1 
Transport (incl. aviation, excl. maritime) 
(CO2) +30% +20 to -9% -54 to -67% 
Transport excl. aviation, excl. maritime +25% +8 to -17% -61 to -74% 
Residential and services (CO2) - 12% -37 to -53% -88 to -91% 
Agriculture (Non CO2) -20% -36 to -37% -42 to -49% 
Other Non CO2 emissions  -30% -71.5 to -72.5% -70 to -78% 
 Source: PRIMES, GAINS 
(23) Total GHG emissions reduce in 2030 by around 40%, compared to 1990 except in the 
case of high oil prices by 2030, which woul d result in reductions of 44%. Further 
intermediate steps of a low cost pathwa y would be decreases of around 25 % by 2020 
and around 60% by 2040.  
(24) With equal economic reduction in centives across sectors, a larger contribution by the 
sectors covered by the EU Emissions Tradin g System (ETS) would continue to be 
cost-effective. Emission reductions of  already around 45% by 2030 and around 90% 
compared to 2005 in 2050 would be achieved in the ETS sectors, while non-ETS sectors would reduce their emissions by somewhat over 25% by 2030 and nearly 70% 
compared to 2005 in 2050.  
(25) The highest reductions would occur in th e power sector. Under similar economic 
incentives across sectors, it de carbonises fast through the pe netration of a wide range 
of low carbon technologies (various rene wable energy technologies, nuclear, CCS 
after 2020) and increased demand side effi ciency, reaching usually well above 60% 
emission reductions by 2030. By 2050, decar bonisation of the po wer sector is 
practically complete.  
(26) Above average contributions in the medium a nd long term can also be achieved by the 
residential and service sector . The key drivers for emissions  reductions are significant 
reductions in required heating due to impr oved insulation, more use of (low carbon) 
electricity and renewables for building heating as well more energy efficient 
appliances.  
(27) Industry decarbonises slightly less than th e overall economy in the medium term, but 
in particular industry CCS allows for signi ficant further reduction options, be it later 
(after 2030) than in the power sector.  
                                                
 
1 Not including the specific scenario  with measures that require less reductions from energy intensive 
industries. 
EN 8   EN (28) Transport and agriculture are the main s ectors where no full decarbonisation in the 
longer term is achieved.  
(29) In transport, the increasing trend of the la st 20 years is revers ed. In 2030 transport 
emissions (road, rail and inland navigation)  are reduced below 1990 levels for most 
scenarios, with the effec tive technology scenario at reference fossil fuel prices 
achieving -5% and at low fossil fuel prices achieving -2%. But the largest part of 
reductions would be achieved between  2030 and 2050, reaching levels around -60% 
for transport2. 
(30) For agriculture the pattern is the invers e. Its reductions between now and 2030 are 
significant, but then further technical GHG reduction options are more limited. As in 
other sectors, there remains scope for fu rther analysis concerning the impact of 
behavioural change on GHG mitigation options.  
(31) Other non CO 2 emissions, such as methane from landfills and industrial N 2O 
emissions are also rapidly reduced until 2030, after which only limited further reductions are taking place. For the non-CO
2 emissions in the ETS these reductions 
occur already in the reference scenario, for th e others sectors such as agriculture, waste 
and F-gases additional actions would be required beyond existing policies. 
System costs: carbon prices, investmen t expenditure, and fossil fuel costs  
(32) In all scenarios, carbon prices increa se from around 50 to 60 € per tonne of CO 2-eq: in 
2030 to a range of € 100 to € 370 per ton of CO 2-eq (150 € to 200 € for the effective 
technology scenarios) depending on the t echnological and fossil fuel parameters 
chosen.  
(33) Notably, there is a clear inverse correlati on between fossil fuel prices and carbon 
prices. Higher fossil fuel pri ces require lower carbon prices to decarbonise. This is a 
logical consequence of the fact  that pricing in general, be it through the carbon price or 
through energy prices themselves  is an important driver to  reduce emissions due to its 
impact on energy demand and energy efficienc y. The benefit of carbon pricing clearly 
is that it prices those inputs and processe s more which are most carbon intensive and 
that revenues are recycled in  the local economy, while with high energy prices this is 
not always the case, especially for the EU  which is heavily reliant on fossil fuel 
imports. 
(34) It is also concluded that delayed devel opment & deployment of certain technologies 
(CCS, electrification), as well as delayed climate action (n o extra action before 2030) 
leads eventually to signifi cant higher carbon prices an d overall high er costs and 
reduced fuel savings. This highlight s the critical importance of :  
• R&D and early deployment of low car bon technologies as a means to reduce 
overall costs and increase public acc eptance for certain technologies. 
• The need of continuing but gradual reductions  over time, so as to avoid that late 
catch-up leads to large, sudden increases in carbon prices.  
                                                 
2 NOx emissions from aviation and other indirect impacts of aviation on global warming potential are not 
included. 
EN 9   EN (35) The most important conclusion of all decar bonisation scenarios is the massive shift 
from fuel expenses (operating costs) to inve stment expenditure (cap ital expenditure). It 
is important to note from an economy-wide pe rspective that investments are to a large 
extent expenditures in the domestic economy, requiring increased added value and 
output from a wide range of manufacturing industries (aut omotive, power generation, 
industrial and grid equipment, energy–efficien t building materials, construction sector 
etc), while fuel expenses are to a large extent flowing to third countries considering the 
EU's strong reliance of fossil fuel imports. 
(36) In case of the effective technology s cenarios, by 2040- 2050, annual investments on 
average are around € 550 billion higher than in reference case. Averaged out over the 40 year period, this increase in invest ment expenditure amounts to around € 270 
billion annually, both in case of  global and fragmented action. 
(37) The flip side of the investment increases is an equally large reduction of fuel costs. In 
the reference scenario, fuel costs still increases from around € 900 billion on average 
per annum in the period 2010-2020 to around € 1400 billion for the period 2040-2050. 
With reference energy prices, decarbonisation reduces fuel costs almost € 350 billion 
per annum in the period 2040-2050. With gl obal action, the reduction in fuel costs 
compared to reference is of course even  larger, with a bit more than € 600 billion 
saved per annum in the period 2040-2050, beca use of the combined effect of fossil 
fuel savings and lower prices for fossil fu els. Taken over the whole 40 year period, 
average fuel costs decreases per annum co mpared to reference are between € 175 
billion (fragmented action – reference energy prices) and € 320 billion (global action – 
low fossil fuel prices) provided that electricity penetration in transport is not delayed. 
(38) An oil shock or high fossil fuel prices would increase the required investment 
expenditure in the reference scenario by about € 100 billion per year; there is however 
no such impact in the decarboni sation scenarios. Fuel expe nses are significantly lower 
in the decarbonisation scenarios combined wi th high fossil fuel prices than the 
reference case combined with high fossil fu el prices. In the high fossil fuel price 
scenario increases in investment expend iture for climate action are more than 
compensated for by the reduction in fuel costs. 
(39) The rise in low carbon capital expenditure is a consistent feature across all sectors 
(power, industry, transport, and the built envi ronment) but in absolute terms the largest 
investment increases are not  taking place in power genera tion, grid infrastructure or 
industry, but in demand side technologies in the transport se ctor (most notably 
vehicles), and the built environment (e nergy-efficient build ing materials and 
components, heat pumps, appliances, etc). It is especially the business sectors 
providing those technologies  and equipment that would benefit the most from 
decarbonisation. 
(40) The size and composition of low-carbon capit al expenditures in the coming decades 
raises important questions in policy terms how, even with strong carbon incentives, 
financing barriers, in partic ular for end-users of tran sport and build ings, can be 
overcome. Innovative finance and fiscal instruments will be required such as 
preferential loans, grants that pay back  part of a low-energy investment and tax 
rebates, with the aim to unlock private inve stment in low carbon technologies. Also a 
larger share of regional funding within the EU budget would need to go to policy 
instruments that leverage private sector resources. 
EN 10   EN Energy resources, energy efficiency and energy security  
(41) In the decarbonisation scenar ios, the EU's energy resource efficiency would improve 
substantially bringing also ener gy security benefits linked in particular to lower fossil 
fuel use and imports. Total primary ener gy consumption would be reduced to 1650 
Mtoe in 2030 and some 1300-1350 Mtoe in 2050;  compared to more than 1800 Mtoe 
in 2005. More domestic energy resources would be used, in particul ar renewables, and 
total energy imports would more than halve compared to 2005 by 2050. Starting from 2025, this would lead to a complete reversal  of the trend of fuel import dependency 
increases, reducing to less than 35% by 2050. The oil import bill would be halved or 
more compared to today by 2050, and reduced by around 80% compared to the reference case, the equivalent  of € 400 billion or more. 
(42) It is important to note that these levels  of reduced primary energy consumption are 
mainly the result of technological changes on the demand side, and not from reduced 
energy services: first by more efficient buildings, heating systems and vehicles, 
reinforced later on by electr ification in transport and heating, which combine very 
efficient demand side technologies (plug-in hybrids, electric ve hicles, heat pumps) 
with a largely decarbonised power sector.  
(43) Achieving the 20% energy savings target in 2020 enables the EU to reduce domestic 
emissions by 25% or more by 2020. 
(44) Decarbonisation will significantl y reduce fossil fuel security risks but large scale 
electrification combin ed with decentralised generation involves other challenges and 
opportunities. The 2050 Energy Roadmap will a ddress these issues in more detail. 
Power sector 
(45) While final energy demand of all sectors decreases significantly, electricity 
consumption keeps on increasing until 2050. This is the result of two opposing trends:  
• Increased efficiency improvements on the demand side  
• Especially after 2025, an increasing demand from the heating and transport sector, 
triggered by the wide scale application of  efficient demand side technologies (e.g. 
plug-in hybrids, electric vehicles, heat pumps). 
However, the pace of the increase remains similar to historic trends of the last 20 
years, despite the fact that over time a cons iderable part of the transport and heating 
sector is switching from o il and gas to electricity.  
(46) On the supply side, the share of low car bon technologies in the electricity mix 
(renewables, fossil fuels + CCS , nuclear) is rapidly increa sing from 45% today, around 
60% in 2020 (as a result of the full impl ementation of the Climate and Energy 
Package), to 75 to 80% in 2030 and nearly  100% in 2050. As low carbon electricity 
technologies are characterised by higher cap ital expenditures and lower fuel costs, 
generation investment expend itures are high, as well as fo r grid expansion. As for 
other sectors, the key policy question is how to best enable these investments. 
EN 11   EN Transport  
(47) Energy efficiency is one of the major contri butors to the decarbonisation of transport. 
The analysis shows that up until 2025 and despite continuously increasing transport services, improved efficiency of vehicles is  the main driver to reverse the trend of 
increasing GHG emissions and to bring b ack land based transport GHG emissions 
below 1990 levels in 2030. For passenger ca rs for instance, these efficiency 
improvements go beyond existing CO2&cars legislation after 2020, driven by a 
gradual hybridisation. 
(48) While hybridisation is important from the pe rspective of increased efficiency up until 
2025, it is from a technological perspective also  an essential step to enable the move 
towards electro-mobility (electric propulsion vehicles) after 2025. For passenger cars, this is a key technology that enables very st rong reductions in the transport sector post 
2030. For aviation, and to lesser extent heav y duty vehicles, biofuels would play a 
more important role, mostly after 2030.  
(49) For aviation biofuels become an importa nt GHG reduction technology in the period 
after 2030. For road transport the largest increase in biofuels used is in the period up to 
2020 to achieve the 20% overall  renewables target and th e specific 10% renewables 
target for transport. After 2020 up to 2050 th e absolute increase would continue but 
remain lower than in the period 2005 – 2020, if  electro mobility penetrates the market 
successfully. However, if this is not the cas e, biofuels would need to become more 
important to achieve the same level of reduc tions. Such increases in biofuels could 
lead to increased pressures on land us e, including emissions from land use, 
biodiversity, water management and the enviro nment in general, at least assuming that 
land-based biofuels would be used. 
(50) There is only a small impact in all scenar ios analysed on total transport demand. This 
is in part due to the modelling framew ork that focuses on GHG reductions, and does 
not include specific transport policies to enable a more efficient transport system, 
modal shift and to reduce diffe rent kinds of externalities,  such as congestion and air 
pollution, that can lead to additional co-ben efits in terms of emission reductions. These 
aspects will be dealt with in more detail in the impact assessment of the White Paper on Transport. 
(51) A comparison between different scenarios s hows there is a clear correlation between 
GHG reductions in the transport sector and in the power sect or. If the transport sector 
reduces GHG emissions more through electr o-mobility, electricity use is increased, 
which would have an impact on electricity emi ssions. So, even if the transport sector is 
not included in the ETS, it w ould over time increasingly influence developments in the 
EU ETS.  
The built environment  
(52) Heating & cooling (two thir d) and water heating & cooki ng (more than 20%) are the 
most important energy consumer s in this sector, with the remaining largely lightning 
and electrical appliances.  
(53) The key trends observed are similar to thos e in the transport se ctor. First, overall 
energy demand is reduced: efficiency, in particular the energy performance of 
EN 12   EN buildings, is improved with passive house technology becoming mainstream, and 
much improved energy performance of ex isting buildings thr ough refurbishments. 
This entails quite substantial investments, which can be recuperated over time by reduced energy bills. A key policy question is  how initial financ ing barriers can be 
overcome.  
(54) As in the transport sector, there is an important shift in terms of the fuels used, from 
oil, gas and coal towards electricity and rene wable fuels. Efficient heat pumps play an 
important role by allowing to increase end-use efficiency as well as to decrease the 
carbon intensity of fuels by using geothermal energy and electricity. In addition, biogas, biomass and solar heating are replaci ng to a significant extent fossil fuels.  
Industry  
(55) The cost-effective contribution of energy intensive industries in the Effective 
Technology scenario would increase to around 35% emission reductions in 2030 and 
between 85 and 90% in 2050. These potentials are a combination of further energy 
intensity decreases, and the application of CCS for the remaining energy intensive industrial CO
2 emissions (e.g. process emissions in for instance steel and cement) from 
2035 onwards.  
(56) In the context of fragmented action with the EU reducing emissions significantly more 
than other countries, certain industries will benefit from additional investments in a 
wide range of low carbon technologies and improved competitiveness due to first 
mover advantages.  
(57) But also the impact of a more ambitious climate policy on energy intensive industries 
was assessed. The results of previous m acro-economic modelli ng was revisited and 
refined up to 2030. It confirmed that the im pact on the production levels of energy 
intensive industries were limited and that free allocation protects energy intensive industry in the ETS, even if the EU woul d implement more ambitious targets in a 
world where other regions have more limited ambition.  
(58) However, for energy intensive industries, the described reduction potentials after 2035 
requires large scale introduc tion of CCS, which is a tec hnology that has no other real 
benefits than reduced GHG emissions and wh ich brings both extra investment as well 
as higher operating costs.  
(59) An alternative scenario is therefore analys ed where energy intensive industries would 
be subject to lower emission reduction requ irements, where industry emissions stay 
closer to the reference scenario results , reaching not a reduction of -86% by 2050 but 
around -50%, in particular because CCS w ould not become a mainstream technology 
for process related emissions. In such a scenario, energy-intensive industries would 
not need to bear the extra costs related to CCS deployment, which would otherwise 
rise to more than € 10 billion annually in the last decade.  
Agriculture and other non CO2 emissions 
(60) From 1990 until 2005, non CO
2 emissions were reduced by a quarter, considerably 
faster than CO 2 emissions. Today, agricultural emissions (N 2O and methane) make up 
more than half of non CO 2 emissions.  
EN 13   EN (61) Non CO 2 emissions other than agriculture ar e projected to decr ease significantly, 
especially before 2030. The main reasons are the N 2O reductions in industrial sectors 
covered by the ETS, reduction of methane em issions due to the full implementation of 
the Landfill Directive, reduction of HFCs3, and the reduction of methane releases in 
mining, energy and industrial sectors.  
(62) With additional actions agricultural emissions  can continue to decrease up until 2030, 
this trends slows down afte r 2030. With emissions levels  at around 330 Mio ton in 
2050, a third below emission levels in 2005, ag riculture represents around a third of 
the remaining total EU emissions in 2050, tripling in share from 2005. This points to 
the important role of agriculture in achie ving decarbonisation. If emissions would not 
continue to decrease by a th ird by 2050 compared to 2005, other sectors would need to 
do even more.  
(63) At the same time, as global food demand grows, and food patterns change towards 
more carbon intensive diets, the analysis cl early shows there are limits to the reduction 
of agricultural emissions. A potentially important element that is not included in the quantitative assessment is the possible imp acts of behavioural changes that would 
reverse current trends towards less carbon intensive food patterns . In the long term, a 
transition to a more healthy diet could re duce methane and nitrous oxides emissions 
substantially, and have positive impacts on land use requirements. 
Land use, land use change and forestry 
(64) Energy from biomass will be a significant co mponent of the increase in renewable 
energy projected over the coming decades. In  the reference case bio-energy production 
more or less doubles between 2010 and 2050. In the decarbonisation case the 
production of bio-energy more than triple s on the same period. Increased bio-energy 
supply mainly comes from increased biof uel production from agricultural crops, 
increased use of agricultural residues , woody biomass and waste materials.  
(65) The increases in bio-energy demand will have  effects on the manner that land is used 
in the EU, which are to a ce rtain extent competing with other uses, such as food and 
feed production, paper and timber production. Furthermore, the production itself could 
have an impact on the EU's GHG emissions  by changing (1) the required inputs in 
agriculture that could increas e emissions (e.g. increased fer tiliser use in agriculture), 
(2) land use leading to net increased gr eenhouse gas emissions (e.g. changes in 
deforestation or afforestati on rates or conversion of gra ssland into cropland) and (3) 
forest management practices and thus alte ring emissions and absorptions of managed 
forests (e.g. change in harvesting cycles).  
(66) In Europe, land use, land use change and forestry leads to a net sequestration of 
carbon, in particular in forest s. Over time, this net sink is projected to decrease 
significantly, because of maturing forests, and increased harvesting for bio-energy, 
paper production and timber. Reducing the increase in virgin wood demand over time, 
for instance through recycling of organi c waste, paper and wood products, would 
reduce this lowering of the net sink function over time. 
                                                
 
3 F-gas Regulation and Directive of mobile air conditioning systems in vehicles. 
EN 14   EN (67) Uncertainties are large, and interrelations be tween the energy, forestry and agricultural 
sector complex, also on a global scale. EU  demand for bio-energy will partly be met 
through imports, which would lead to lower impacts in the EU, but  potentially more in 
third countries. It is clear that this i ssue requires further attention and examination. 
Productivity increases in agricu lture would be very importa nt to ensure that these 
increases in bio-energy can be delivered without too negative impacts on other end 
uses of forestry or agriculture products . Finally also the impact on biodiversity of 
changes in management practices will require further attention.  
Employment impacts 
(68) In terms of employment, the underlying structural changes ar e expected to have no or 
a slightly positive impact on the overall employment level (at least in the long run), but significant shifts  in employment among or within sectors are expected, provided 
adequate labour market policies are implem ented. The development of policies will 
matter to ensure overall effects are positive and ensure shifts in employment to sectors and occupations that are innova tive and with high growth po tential. The analysis has 
shown that increased investment in ca pital-intensive goods (power generation 
equipment, renewable energy, transpor t equipment, buildings and building 
components) would require increased output of  a wide range of ma nufacturing sectors, 
as well as in the c onstruction sector.  
(69) Changing the energy system, the transport and the housing sector, which are main 
sources of GHG emissions, will raise demand for new skills and competences. This is particularly significant in the energy sector as a result of major investments and expansion in renewable and energy manage ment subsectors. The main need is to 
revise and upgrade the skills of existing workers. But reskilling is not only limited to sectors that see growth decrease or increase but also in sectors that are indirectly 
involved such as the banking sector. 
(70) Furthermore pricing policies can allow fo r smart recycling of revenues, with 
employment benefiting most from reductions in labour costs. The introduction of 
pricing policies such as auctioning for sect ors not exposed to international competition 
or taxation in the Non ETS, together with a reduction in labour costs through recycling 
can result in net job growth of  0.7% compared to reference, or an increase with a bit 
more than 1.5 million jobs by 2020. 
Co-benefits in terms of air quality 
(71) Overall, air quality benefits  are observed. Average air pollution levels would be more 
than 65% lower in 2030 compared to 2005. In 2030, annual cost s of controlling 
traditional air pollutants could be more than € 10 billion lower; and in 2050 even close to € 50 billion could be saved every year. These developments would also reduce mortality, with benefits estimated at around € 7 to 17 billion per year in 2030, and € 17 
and 38 billion in 2050. Moreover, public hea lth would be improved, with a reduction 
in health care costs as well as reduced damage to ecosystems, crops, materials and 
buildings.  
(72)