COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A Roadmap for moving to a competitive low carbon economy in 2050
Date: 2011-03-08
Institutions: European Commission
Subjects: climate change, environmental protection, innovation, investment promotion, reduction of gas emissions, renewable energy

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EUROPEAN COMMISSION 

Brussels, 8.3.2011 
COM(2011) 112 final 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE 
REGIONS 

A Roadmap for moving to a competitive low carbon economy in 2050 

{SEC(2011) 287 final} 
{SEC(2011) 288 final} 
{SEC(2011) 289 final} 

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1. 

2. 

3. 

4. 

5. 

6. 

Europe's key challenges ............................................................................................... 3 

Milestones to 2050 ....................................................................................................... 4 

Low carbon innovation: a sectoral perspective............................................................ 6 

Investing in a low carbon future................................................................................. 10 

The international dimension....................................................................................... 13 

Conclusions ................................................................................................................ 14 

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1. 

EUROPE'S KEY CHALLENGES 

The EU provides its Member States with a long-term framework for dealing with the issue of 
sustainability  and  the  cross-border  effects  of  phenomena  that  cannot  be  dealt  with  at  the 
national level alone. Climate change has long been recognised as one such long-term shaping 
factor where coherent EU action is needed, both inside the EU and internationally.  

The Commission recently proposed the Europe 2020 flagship initiative for a resource-efficient 
Europe1  and  within  this  framework  it  is  now  putting  forward  a  series  of  long-term  policy 
plans in areas such as transport, energy and climate change. This Communication sets out key 
elements that should shape the EU's climate action helping the EU become a competitive low 
carbon  economy  by  2050.  The  approach  is  based  on  the  view  that  innovative  solutions  are 
required  to  mobilise  investments  in  energy,  transport,  industry  and  information  and 
communication technologies, and that more focus is needed on energy efficiency policies.  

The Europe 2020 Strategy for smart, sustainable and inclusive growth includes five headline 
targets  that  set  out  where  the  EU  should  be  in  2020.  One  of  them  relates  to  climate  and 
energy:  Member  States  have  committed  themselves  to  reducing  greenhouse  gas  emissions 
(GHG)  by  20%,  increasing  the  share  of  renewables  in  the  EU's  energy  mix  to  20%,  and 
achieving the 20% energy efficiency target by 2020. The EU is currently on track to meet two 
of those targets, but will not meet its energy efficiency target unless further efforts are made2. 
Hence, the priority remains to achieve all the targets already set for 2020.  

In  order  to  keep  climate  change  below  2ºC,  the  European  Council  reconfirmed  in  February 
2011 the EU objective of reducing greenhouse gas emissions by 80-95% by 2050 compared to 
1990,  in  the  context  of  necessary  reductions  according  to  the  Intergovernmental  Panel  on 
Climate Change by developed countries as a group3. This is in line with the position endorsed 
by world leaders in the Copenhagen and the Cancun Agreements. These agreements include 
the  commitment  to  deliver  long-term  low  carbon  development  strategies.  Some  Member 
States have already made steps in this direction, or are in the process of doing so, including 
setting emission reduction objectives for 2050.  

Together  with  the  White  Paper  on  Transport  and  the  Energy  Efficiency  Plan,  this 
Communication  is  a  key  deliverable  under  the  Resource  Efficiency  Flagship.  It  presents  a 
Roadmap for possible action up to 2050 which could enable the EU to deliver greenhouse gas 
reductions in line with the 80 to 95% target agreed. It outlines milestones which would show 
whether the EU is on course for reaching its target, policy challenges, investment needs and 
opportunities in  different sectors, bearing in mind that the 80 to 95% reduction objective in 
the EU will largely need to be met internally.  

1 
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3 

COM(2011) 21, see: http://ec.europa.eu/resource-efficient-europe 
Energy Efficiency Plan - COM(2011) 109.  
Taking into account necessary efforts from developing countries, this will allow a global reduction of 
50% in emissions by 2050. 

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2. 

MILESTONES TO 2050 

The transition towards a competitive low carbon economy means that the EU should prepare 
for  reductions  in  its  domestic  emissions  by  80%  by  2050  compared  to  19904.  The 
Commission has carried out an extensive modelling analysis with several possible scenarios 
showing how this could be done, as explained in the box below. 

This analysis of different scenarios shows that domestic emission reductions of the order of 
40%  and  60%  below  1990  levels  would  be  the  cost-effective  pathway  by  2030  and  2040, 
respectively.  In  this  context,  it  also  shows  reductions  of  25%  in  2020.  This  is  illustrated  in 
Figure 1. Such a pathway would result in annual reductions compared to 1990 of roughly 1% 
in the first decade until 2020, 1.5% in the second decade from 2020 until 2030, and 2 % in the 
last two decades until 2050. The effort would become greater over time as a wider set of cost-
effective technologies becomes available. 

Modelling approach for the 2050 roadmap 

The  results  and  findings  presented  in  this  Communication  are  based  on  a  comprehensive  global  and  EU 
modelling and scenario analysis on how the EU could shift towards a low-carbon economy by 2050 against the 
backdrop of continued global population growth, rising global GDP and varying global trends in terms of climate 
action, energy and technological developments. 

A set of global projections were used to look at global impacts of climate action, how it relates to the energy 
sector,  agriculture  and  deforestation.  Furthermore,  impacts  on  the  EU's  competitive  sectors  were  projected  to 
assess the possible risks of ambitious actions in the context of fragmented global action on climate.  

Detailed EU projections were made within a wide set of potential future scenarios, focussing on the sensitivity 
regarding assumptions on global fossil fuel price developments and rate of technological innovation to analyse 
the  sectoral  contribution,  including  from  agriculture  and  other  land  uses.  While  there  are  always  uncertainties 
relating to long term projections, results have been made more robust by developing a wide set of scenarios with 
different assumptions.  

Future modelling improvements could consider better representation of the impacts of climate change itself, as 
well as energy storage and smart grid solutions for distributed generation. 

Figure  1  illustrates  the  pathway  towards  an  80%  reduction  by  2050,  shown  in  5  year  steps. 
The  upper  "reference"  projection  shows  how  domestic  greenhouse  gas  emissions  would 
develop  under  current  policies.  A  scenario  consistent  with  an  80%  domestic  reduction  then 
shows how overall and sectoral emissions could evolve, if additional policies are put in place, 
taking into account technological options available over time.  

4 

Domestic  meaning  real  internal  reductions  of  EU  emissions  and  not  offsetting  through  the  carbon 
market. 

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Figure 1: EU GHG emissions towards an 80% domestic reduction (100% =1990) 

100%

80%

60%

40%

20%

0%

Power Sector

Residential & Tertiary

Industry

Transport

Non CO2 Agriculture
Non CO2 Other Sectors

Current policy

100%

80%

60%

40%

20%

0%

1990

2000

2010

2020

2030

2040

2050

Emissions,  including  international  aviation,  were  estimated  to  be  16%  below  1990  levels  in 
2009.  With  full  implementation  of  current  policies,  the  EU  is  on  track  to  achieve  a  20% 
domestic  reduction  in  2020  below  1990  levels,  and  30%  in  2030.  However,  with  current 
policies, only half of the 20% energy efficiency target would be met by 2020.  

If the EU delivers on its current policies, including its commitment to reach 20% renewables, 
and  achieve  20%  energy  efficiency  by  2020,  this  would  enable  the  EU  to  outperform  the 
current  20%  emission  reduction  target  and  achieve  a  25%  reduction  by  2020.  This  would 
require  the  full  implementation  of  the  Energy  Efficiency  Plan5  presented  together  with  this 
Communication,  which  identifies  measures  which  would  be  necessary  to  deliver  the  energy 
efficiency target. The amount of currently allowed offsets would not be affected.6 

The  analysis  also  shows  that  a  less  ambitious  pathway  could  lock  in  carbon  intensive 
investments,  resulting  in  higher  carbon  prices  later  on  and significantly  higher  overall  costs 
over  the  entire  period.  In  addition,  R&D,  demonstration  and  early  deployment  of 
technologies, such as various forms of low carbon energy sources, carbon capture and storage, 
smart grids and hybrid and electric vehicle technology, are of paramount importance to ensure 
their cost-effective and large-scale penetration later on. Full implementation of the Strategic 
Energy  Technology  plan,  requiring  an  additional  investment  in  R&D  and  demonstration  of 
€ 50 billion over the next 10 years, is indispen sable. Auctioning revenue and cohesion policy 
are  financing  options  that  Member  States  should  exploit.  In  addition,  increasing  resource 
efficiency  through,  for  instance,  waste  recycling,  better  waste  management  and  behavioural 

5 
6 

Energy Efficiency Plan - COM(2011) 109. 
As agreed by the emissions trading Directive 2003/87/EC (as amended by Directive 2009/29/EC) and 
the effort-sharing Decision (Decision 406/2009/EC). 

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change, as well as enhancing the resilience of ecosystems, can play an important role. Also, 
continued effort to strengthen research on climate mitigation and adaptation technologies will 
be required. 

3. 

LOW CARBON INNOVATION: A SECTORAL PERSPECTIVE 

The Commission's analysis has also explored pathways for key sectors. This analysis looked 
at  a  range  of  scenarios  assuming  different  rates  of  technological  innovation  and  different 
fossil fuel prices. They produced largely convergent results with respect to the magnitude of 
reductions  needed  in  each  sector  in  2030  and  2050  as  indicated  by  the  ranges  presented  in 
Table  1.  The  development  of  sectoral  policy  options  will  have  to  go  into  greater  depth  on 
costs, trade-offs, and uncertainties.  

Table 1: Sectoral reductions  

GHG reductions compared to 1990  
Total 
Sectors 
Power (CO2) 
Industry (CO2) 
Transport (incl. CO2 aviation, excl. maritime)  
Residential and services (CO2) 
Agriculture (non-CO2) 
Other non-CO2 emissions  

2005 
-7% 

-7% 
-20% 
+30% 
-12% 
-20% 
-30% 

2030 
-40 to -44% 

2050 
-79 to -82% 

-54 to -68% 
-34 to -40% 
+20 to -9% 
-37 to -53% 
-36 to -37% 
-72 to -73% 

-93 to -99% 
-83 to -87% 
-54 to -67% 
-88 to-91% 
-42 to -49% 
-70 to -78% 

A secure, competitive and fully decarbonised power sector  

Electricity will play a central role in the low carbon economy. The analysis shows that it can 
almost totally eliminate CO2 emissions by 2050, and offers the prospect of partially replacing 
fossil fuels in transport and heating. Although electricity will increasingly be used in these 2 
sectors,  electricity  consumption  overall  would  only  have  to  continue  to  increase  at  historic 
growth rates, thanks to continuous improvements in efficiency.  

The  share  of  low  carbon  technologies  in  the  electricity  mix  is  estimated  to  increase  from 
around 45% today to around 60% in 2020, including through meeting the renewable energy 
target, to 75 to 80% in 2030, and nearly 100% in 2050. As a result, and without prejudging 
Member  States'  preferences  for  an  energy  mix  which  reflects  their  specific  national 
circumstances, the EU electricity system could become more diverse and secure.  

A  wide  range  of  existing  technologies  will  need  to  be  widely  deployed,  including  more 
advanced technologies, such as photovoltaics, that will continue to become cheaper and thus 
more competitive over time.  

Energy  specific  scenarios  and  the  means  of  achieving  such  decarbonisation,  while  ensuring 
energy  security  and  competitiveness,  will  be  examined  in  the  Energy  2050  Roadmap.  This 
will build on the established EU energy policy and the EU 2020 Strategy. 

The  EU  ETS  will  be  critical  in  driving  a  wide  range  of  low  carbon  technologies  into  the 
market, so that the power sector itself can adapt its investment  and operational  strategies to 
changing  energy  prices  and  technology.  For  the  ETS  to  play  this  role  on  the  identified 

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pathway  to  2050,  both  a  sufficient  carbon  price  signal  and  long-term  predictability  are 
necessary. In this respect, appropriate measures need to be considered, including revisiting the 
agreed  linear  reduction  of  the  ETS  cap7.  Other  tools,  such  as  energy  taxation  and 
technological  support  may  also  be  appropriate  to  ensure  that  the  power  sector  plays  its  full 
part.  

Given that the central role of electricity in the low carbon economy requires significant use of 
renewables,  many  of  which  have  variable  output,  considerable  investments  in  networks  are 
required to ensure continuity of supply at all times8. Investment in smart grids is a key enabler 
for a low carbon electricity system, notably facilitating demand-side efficiency, larger shares 
of  renewables  and  distributed  generation  and  enabling  electrification  of  transport.  For  grid 
investments, benefits do not always accrue to the grid operator, but to society at large (with 
co-benefits  for  consumers,  producers,  and  society  at  large:  a  more  reliable  network,  energy 
security and reduced emissions). In this context, future work should consider how the policy 
framework  can  foster  these  investments  at  EU,  national  and  local  level  and  incentivise 
demand-side management.  

Sustainable mobility through fuel efficiency, electrification and getting prices right  

Technological innovation can help the transition to a more efficient and sustainable European 
transport  system  by  acting  on  3  main  factors:  vehicle  efficiency  through  new  engines, 
materials and design; cleaner energy use through new fuels and propulsion systems; better use 
of  networks  and  safer  and  more  secure  operation  through  information  and  communication 
systems.  The  White  Paper  on  Transport  will  provide  a  comprehensive  and  combined  set  of 
measures to increase the sustainability of the transport system. 

Up until 2025, the main driver for reversing the trend of increasing greenhouse gas emissions 
in  this  sector  is  likely  to  remain  improved  fuel  efficiency.  Emissions  from  road,  rail  and 
inland waterways could in fact be brought back to below 1990 levels in 2030, in combination 
with measures such as pricing schemes to tackle congestion  and  air pollution, infrastructure 
charging, intelligent city planning and improving public transport, whilst securing affordable 
mobility.  Improved  efficiency  and  better  demand-side  management,  fostered  through  CO2 
standards and smart taxation systems, should also advance the development of hybrid engine 
technologies  and  facilitate  the  gradual  transition  towards  large-scale  penetration  of  cleaner 
vehicles  in  all  transport  modes,  including  plug-in hybrids and electric vehicles (powered by 
batteries or fuel cells) at a later stage.  

The synergies with other sustainability objectives such as the reduction of oil dependence, the 
competitiveness  of  Europe's  automotive  industry  as  well  as  health  benefits,  especially 
improved  air  quality  in  cities,  make  a  compelling  case  for  the  EU  to  step  up  its  efforts  to 
accelerate  the  development  and  early  deployment  of  electrification,  and  in  general,  of 
alternative fuels and propulsion methods, for the whole transport system. In this respect, it is 
not surprising to see also automotive industries in the US, Japan, Korea and China increasing 
their investments in battery technology, electric vehicles and fuel cells. 

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8 

Directive  2003/87/EC  as  amended  by  Directive  2009/29/EC  foresees  a  linear  reduction  of  the  cap  of 
1.74 percentage points per year. This reduction is legally enshrined in the ETS and continues after 2020.  
See  also  Communication  "Energy  infrastructure  priorities  for  2020  and  beyond  –  A  blueprint  for  an 
integrated European energy network" - COM(2010) 677. 

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Sustainable biofuels could be used as an alternative fuel especially in aviation and heavy duty 
trucks,  with  strong  growth  in  these  sectors  after  2030.  In  case  electrification  would  not  be 
deployed  on  a  large-scale,  biofuels  and  other  alternative  fuels  would  need  to  play  a  greater 
role to achieve the same level of emissions reduction in the transport sector. For biofuels this 
could  lead,  directly  or  indirectly,  to  a  decrease  of  the  net  greenhouse  gas  benefits  and 
increased pressure on bio-diversity, water management and the environment in general. This 
reinforces  the  need  to  advance  in  2nd  and  3rd  generation  biofuels  and  to  proceed  with  the 
ongoing work on indirect land use change and sustainability. 

The built environment 

The  built  environment  provides  low-cost  and  short-term  opportunities  to  reduce  emissions, 
first  and  foremost  through  improvement  of  the  energy  performance  of  buildings.  The 
Commission's analysis shows that emissions in this area could be reduced by around 90% by 
2050, a larger than average contribution over the long-term. This underlines the importance of 
achieving the objective of the recast Directive on energy performance of buildings9 that new 
buildings built from 2021 onwards will have to be nearly zero-energy buildings. This process 
has  already  started,  with  many  Member  States  implementing  stricter  energy  performance 
standards for buildings. On 4 February 2011 the European Council, taking account of the EU 
headline  target,  decided  that  from  2012  onwards  all  Member  States  should  include  energy 
efficiency standards in public procurement for relevant public buildings and services. By the 
end  of  2011,  the  Commission  will  present  a  Communication  on  "Sustainable  Construction" 
setting out a strategy on how to boost the competitiveness of this sector while improving its 
environmental and climate performance.  

Efforts will need to be strengthened significantly over time. Today, new buildings should be 
designed as intelligent low- or zero-energy buildings. The extra cost of this can be recovered 
through  fuel  savings.  A  greater  challenge,  however,  is  the  refurbishment  of  the  existing 
building  stock,  and  in  particular  how  to  finance  the  necessary  investments.  Some  Member 
States are already pro-actively using structural funds. The analysis projects that over the next 
decade  investments  in  energy-saving  building  components  and  equipment  will  need  to  be 
increased  by  up  to  € 200  billion.  Several  Memb er  States  have  already  implemented  smart 
financing schemes, such as preferential interest rates for leveraging private sector investments 
in the most efficient building solutions. Other private financing models must be explored. 

As  in  the  transport  sector,  shifting  energy  consumption  towards  low  carbon  electricity 
(including heat pumps and storage heaters) and renewable energy (e.g. solar heating, biogas, 
biomass),  also  provided  through  district  heating  systems,  would  help  to  protect  consumers 
against rising fossil fuel prices and bring significant health benefits.  

Industrial sectors, including energy intensive industries 

The  Commission's  analysis  shows  that  GHG  emissions  in  the  industrial  sector  could  be 
reduced  by  83  to  87%  in  2050.  The  application  of  more  advanced  resource  and  energy 
efficient  industrial  processes  and  equipment,  increased  recycling,  as  well  as  abatement 
technologies  for  non-CO2  emissions  (e.g.  nitrous  oxide  and  methane),  could  make  a  major 
contribution by allowing the energy intensive sectors to reduce emissions by half or more. As 

9 

Directive 2010/31/EU. 

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solutions  are  sector-specific,  the  Commission  sees  a  need  to  develop  specific  Roadmaps  in 
cooperation with the sectors concerned. 

In  addition  to  the  application  of  more  advanced  industrial  processes  and  equipment,  carbon 
capture and storage would also  need to be deployed on  a  broad scale after 2035,  notably to 
capture industrial process emissions (e.g. in the cement and steel sector). This would entail an 
annual investment of more than € 10 billion. In a world of  global climate action, this would 
not raise competitiveness concerns. But if the EU's main competitors would not engage in a 
similar  manner,  the  EU  would  need  to  consider  how  to  further  address  the  risks  of  carbon 
leakage due to these additional costs. 

As the EU develops its climate policy framework, there will be a need to continue to monitor 
and  analyse  the  impacts  of  these  measures  on  the  competitiveness  of  energy-intensive 
industries in relation to efforts by third countries, and to consider appropriate measures where 
necessary.  The  Commission's  analysis  confirms  earlier  findings  that  the  current  measures 
provide  adequate  safe-guards  in  the  current  context  and  notes  the  findings  on  options  for 
addressing  carbon  leakage  as  set  out  in  the  Communication  of  May  2010,  including  on  the 
inclusion of imports into the ETS10. The extent to which the existing, adequate safeguards are 
sufficient will continue to be kept under close review in relation to efforts by third countries. 
The Commission remains vigilant in order to maintain a strong industrial base in the EU. The 
Commission will continue to update the list of sectors at risk of carbon leakage as foreseen in 
the EU ETS Directive11. Clearly, the best protection against the risk of carbon leakage would 
be effective global action. 

Raising land use productivity sustainably 

The  Commission's  analysis  shows  that  by  2050  the  agriculture  sector  can  reduce  non-CO2 
emissions  by  between  42  and  49%  compared  to  1990.  The  sector  has  already  achieved  a 
significant  reduction.  More  reductions  are  feasible  in  the  next  two  decades.  Agricultural 
policies should focus on options such as further sustainable efficiency gains, efficient fertiliser 
use,  bio-gasification  of  organic  manure,  improved  manure  management,  better  fodder,  local 
diversification and  commercialisation of production and  improved livestock productivity, as 
well as maximising the benefits of extensive farming.  

Improved agricultural and forestry practices can increase the capacity of the sector to preserve 
and sequester carbon in soils and forests. This can be achieved, for instance, through targeted 
measures  to  maintain  grasslands,  restore  wetlands  and  peat  lands,  low-  or  zero-tillage,  to 
reduce  erosion  and  allow  for  the  development  of  forests.  Agricultural  and  forestry  are  also 
providing  the  resources  for  bio-energy  and  industrial  feedstocks,  and  this  contribution  is 
bound to increase further.  

The above elements will be further addressed in the Common Agriculture Policy legislative 
proposals for 2013, of which the positive impacts have not yet been taken into account in the 
analysis, as well as the forthcoming Bio-economy Communication12.  

10 
11 
12 

COM(2010) 265. 
Article 10a (13) of Directive 2003/87/EC as amended by Directive 2009/29/EC. 
Commission  Work  Programme  2011,  European  Strategy  and  Action  plan  towards  a  sustainable  bio-
based economy by 2020. 

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After 2030, the rate of emission reductions in the agricultural sector could slow down, in part 
because of increased agricultural production due to the growing global population. However, 
it is important to note that, by 2050, agriculture is projected to represent a third of total EU 
emissions, tripling its share compared to today. Its importance in terms of climate policy is, 
therefore,  set  to  increase:  if  it  does  not  achieve  the  projected  emissions  reductions,  other 
sectors  would  need  to  reduce  even  more,  which  would  come  at  a  high  cost.  The  farming 
sector is also potentially at some risk of carbon leakage, so changes in production and trade 
patterns should not in the longer-term undermine global reduction of emissions. 

The  analysis  also  considers  implications  for  the  agricultural  and  forestry  sector  in  a  global 
perspective. In 2050, the world will have to feed around 9 billion people. At the same time, 
tropical forests will have to be preserved as an essential component of tackling climate change 
and  preserving  world  biodiversity.  In  addition,  mitigation  efforts  are  expected  to  increase 
demand for bio-energy alongside existing and increasing demand for feed for animals, timber, 
paper production and bio-industries. The dual challenges of global food security and action on 
climate  change  need  to  be  pursued  together.  In  order  to  cope  with  these  increased  land  use 
requirements  in  the  EU  and  on  a  global  scale  sustainable  increases  in  the  productivity 
delivered by diverse agricultural and forestry systems (both intensive and extensive) will need 
to  continue  at  rapid  pace,  not  least  in  developing  countries.  Any  negative  impacts  on  other 
resources  (e.g.  water,  soil  and  biodiversity)  will  need  careful  management.  Accelerating 
climate  change  could  endanger  these  productivity  improvements  in  a  world  of  insufficient 
action on climate change.  

This also underscores the need to consider all land uses in a holistic manner and address Land 
Use,  Land  Use  Change  and  Forestry  (LULUCF)  in  EU  climate  policy.  The  Commission  is 
preparing  an  initiative  on  this  issue  later  this  year.  In  addition,  paper  and  wood  products 
should be reused and recycled more to reduce pressure on land use.  

The  analysis  took  account  of  global  trends  towards  a  greater  share  of  animal  products  in 
nutrition. Reversing existing trends of food waste and re-orienting consumption towards less 
carbon intensive food would be desirable. 

4. 

INVESTING IN A LOW CARBON FUTURE 

A major increase in capital investments 

Various  forms  of  low  carbon  energy  sources,  their  supporting  systems  and  infrastructure, 
including  smart  grids,  passive  housing,  carbon  capture  and  storage,  advanced  industrial 
processes  and  electrification  of  transport  (including  energy  storage  technologies)  are  key 
components  which  are  starting  to  form  the  backbone  of  efficient,  low  carbon  energy  and 
transport  systems  after  2020.  This  will  require  major  and  sustained  investment:  on  average 
over  the  coming  40  years,  the  increase  in  public  and  private  investment  is  calculated  to 
amount to around € 270 billion annually. This represents an additional investment of around 
1.5%  of  EU  GDP  per  annum  on  top  of  the  overall  current  investment  representing  19%  of 
GDP  in  200913.  It  would  take  us  back  to  the  investment  levels  before  the  economic  crisis. 
Investments today will determine the future competitiveness of economies. In this context, it 
is interesting to note the much larger shares of GDP allocated to investments in China (48%), 

13 

Eurostat, National accounts. 

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India  (35%),  and  Korea  (26%)  in  200914,  showing  emerging  economies'  need  to  build  up 
infrastructure  but  also  the  potential  in  leapfrogging  towards  a  competitive,  low  carbon 
economy.  

Unlocking the investment potential of the private sector and individual consumers presents a 
major challenge. While most of this extra investment would be paid back over time through 
lower  energy  bills  and  increased  productivity,  markets  tend  to  discount  future  benefits,  and 
disregard long-term risks. A key question is, therefore, how policy can create the framework 
conditions for such investments to happen, including through new financing models.  

In  the  implementation  of  the  20%  energy  efficiency  target,  the  Commission  will  have  to 
monitor the impact of new measures on the ETS in order to maintain the incentives in the ETS 
rewarding low carbon investments and preparing the ETS sectors for the innovations needed 
in  the  future.  In  this  respect,  appropriate  measures  need  to  be  considered,  including 
recalibrating the ETS by setting aside a corresponding number of allowances from the part to 
be  auctioned  during  the  period  2013  to  2020  should  a  corresponding  political  decision  be 
taken. This would also ensure that the contribution to the energy efficiency target would be 
made in a cost efficient manner in both, the ETS and non-ETS sectors. 

Additional public private financing mechanisms are key in order to overcome initial financing 
risks and cash flow barriers. Public finance through innovative financing instruments, such as 
revolving  funds,  preferential  interest  rates,  guarantee  schemes,  risk-sharing  facilities  and 
blending mechanisms can mobilise and steer the required private finance, including for SMEs 
and consumers. In this way, limited public finance can leverage a multitude of private sector 
investments15.  The  European  Investment  Bank,  the  European  Bank  for  Reconstruction  and 
Development,  as  well  as  dedicated  funding  in  the  next  Multi-Annual  Financial  Framework 
should  play  a  role  in  providing  additional  financing  for  energy  efficient  and  low  carbon 
technologies. 

Increasing  domestic  investments  provide  a  major  opportunity  for  increased  productivity, 
added value and output from a wide range of EU manufacturing industries (e.g. automotive, 
power generation, industrial and grid equipment, energy–efficient building materials and the 
construction sector), which are key industries for the creation of future growth and jobs. 

Beyond the reductions in greenhouse gas emissions, which are the key benefits of the shift to 
the low carbon economy, this transition will bring a number of other essential benefits. 

Reducing Europe's energy bill and its dependency on fossil fuel imports 

Taken over the whole 40-year period, it is estimated that energy efficiency and the switch to 
domestically produced low carbon energy sources will reduce the EU's average fuel costs by 
billion per year. The actual cost saving depends on the extent 
between € 175 billion and € 320 
to which global action on climate change is undertaken. In a scenario of global climate action, 
less  fossils  fuel  would  need  to  be  imported  into  the  EU  and  the cost  of  what  would  still  be 
imported would decline.  

14 
15 

World Bank, Indicators. 
If it constitutes State aid, public funding should be in line with State aid compatibility rules. 

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If  the  rest  of  the  world  does  not  take  coordinated  action,  however,  a  major  benefit  of  EU 
action would be to protect the economy against high fossil fuel prices. The analysis, as well as 
the IEA World Energy Outlook 2010, clearly demonstrates that fossil fuel prices are indeed 
projected to be significantly higher in case of limited global action. This is not only a long-
term issue. Even following the recession in the Western world, oil prices are about twice as 
high as in 2005. The IEA estimated that the EU has seen its import bill rise by $ 70 billion 
from  2009  to  2010,  and  that  further  rises  in  the  foreseeable  future  are  probable.  As  we 
experienced in the '70s and early '80s, oil price shocks can lead to inflation, increasing trade 
deficits, reduced competitiveness and rising unemployment. 

In 2050, the EU's total primary energy consumption could be about 30% below 2005 levels. 
More domestic energy resources would be used, in particular renewables. Imports of oil and 
gas would decline by half compared to today, reducing the negative impacts of potential oil 
and  gas  price  shocks  significantly.  Without  action  the  oil  and  gas  import  bill  could  instead 
double  compared  to  today,  a  difference  of  €  400  billion  or  more  per  annum  by  2050,  the 
equivalent of 3% of today's GDP16. 

New jobs  

Investing early in the low carbon economy would stimulate a gradual structural change in the 
economy  and  can  create  in  net  terms  new  jobs  both  in  the  short-  and  the  medium-term. 
Renewable  energy  has  a  strong  track  record  in  job  creation.  In  just  5  years,  the  renewable 
industry  increased  its  work  force  from  230 000  to  550 000.  Also  for  the  construction  sector 
low  carbon  investment  offers  large  short-term  job  opportunities.  With  some  15  million 
employees in the EU, it was particularly hard hit by the economic crisis. Its recovery could 
get  a  significant  boost  through  a  major  effort  to  accelerate  the  renovation  and  building  of 
energy efficient houses. The Energy Efficiency Plan confirms the large job creation potential 
from promoting investments in more efficient equipment.  

In  the  longer-term,  the  creation  and  preservation  of  jobs  will  depend  on  the  EU's  ability  to 
lead  in  terms  of  the  development  of  new  low  carbon  technologies  through  increased 
education,  training,  programmes  to  foster  acceptability  of  new  technologies,  R&D  and 
entrepreneurship,  as  well  as  favourable  economic  framework  conditions  for  investments.  In 
this context, the Commission has repeatedly emphasized the positive employment benefits if 
revenues from the auctioning of ETS allowances and CO2 taxation are used to reduce labour 
costs, with the potential to increase total employment by up to 1.5 million jobs by 2020. 

As  industry  takes  advantage  of  the  economic  opportunities  provided  by  the  low  carbon 
economy,  the  need  to  ensure  a  skilled  work  force,  especially  in  the  construction  sectors, 
technical  professions,  engineering  and  research,  becomes  more  pressing.  This  will  require 
targeted  vocational  training  of  the  existing  work  force  towards  "green-collar"  job 
opportunities,  addressing  emerging  skills  bottlenecks  and  fostering  these  skills  in  education 
systems.  The  Commission  is  currently  working  on  assessing  the  employment  effects  of 
greening the economy, for instance through the implementation of the Agenda for New Skills 
and Jobs. 

Improving air quality and health 

16 

The level of reductions in the bill for fossil fuel imports depend on future fossil fuel price developments 
and diversification of supply sources. 

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Action  to  reduce  GHG  emissions  would  importantly  complement  existing  and  planned  air 
quality  measures  resulting  in  significantly  reduced  air  pollution.  Electrification  of  transport, 
and the expansion of public transport, could strikingly improve air quality in Europe's cities. 
The  combined  effect  of  GHG  reductions  and  air  quality  measures  would  bring  about  more 
than  65%  lower  levels  of  air  pollution  in  2030  compared  to  2005.  In  2030,  annual  costs  of 
controlling traditional air pollutants could be more than € 10  billion lower, and in 2050 close 
to € 50 billion could be saved  every year. These developments would also reduce mortality, 
with  benefits  estimated  up  to  € 17  billion  per  year   in  2030,  and  up  to  € 38  billion  in  2050. 
Moreover, public health would be improved, with a reduction in health care costs and damage 
to ecosystems, crops, materials and buildings. These gains will be important also in the light 
of  the  comprehensive  review  of  the  EU  Air  Quality  Policy,  foreseen  for  2013  at  the  latest, 
where  the  aim  is  to  maximise  co-benefits  with  climate  policy  and  minimise  negative  trade-
offs. 

5. 

THE INTERNATIONAL DIMENSION 

The  EU  with  little  more  than  10%  of  global  emissions  will  not  be  able  to  tackle  climate 
change on its own. Progress internationally is the only way to  solve the  problem of  climate 
change, and the EU must continue to engage its partners. By formulating and implementing 
ambitious domestic climate change policies for more than a decade, the EU has brought many 
other  countries  on  board.  The  situation  today  is  fundamentally  different  than  at  the  end  of 
2008  when  the  EU  unilaterally  adopted  its  Climate  and  Energy  Package.  At  COP15  in 
Copenhagen, world leaders agreed that global average temperature should not rise more than 
2°C. Today, countries representing more than 80% of global emissions have pledged domestic 
targets  under  the  Copenhagen  Accord  and  the  Cancun  agreements.  For  some  countries, 
delivering on these pledges will require stronger action than currently envisaged.  

This  concrete  action,  sometimes  more  ambitious  than  what  countries  would  be  ready  to 
commit to internationally, is driven to a significant extent also by other domestic agendas: to 
accelerate innovation, increase energy security and competitiveness in key growth sectors and 
reduce  air  pollution.  A  number  of  Europe's  key  partners  from  around  the  world,  such  as 
China, Brazil and Korea, are addressing these issues, first through stimulus programmes, and 
now  more  and  more  through  concrete  action  plans  to  promote  the  "low  carbon  economy". 
Standstill would mean losing ground in major manufacturing sectors for Europe.  

In  the  coming  years,  implementing  these  pledges  will  be  a  key  step  in  globalising  climate 
change  policies.  The  EU  should  use  this  opportunity  to  strengthen  its  cooperation  with  its 
international  partners,  including  to  work  towards  a  gradual  development  of  global  carbon 
markets to support efforts of developed and developing countries to implement low-emission 
development  strategies,  and  ensure  that  all  climate  financing  contributes  to  "climate  proof" 
development opportunities.  

However,  swift  implementation  of  the  pledges  made  since  Copenhagen  would  only  achieve 
part  of  the  reductions  needed.  A  recent  report  by  UNEP  estimated  that  their  full 
implementation would reach 60% of the required emission reductions until 2020. If no firm 
global action is taken against climate change, temperatures might increase by more than 2°C 
already by 2050, and more than 4ºC by 2100. In order to avoid this scenario, science indicates 
that by 2050 global greenhouse gas emissions need to be reduced by at least 50% compared to 
1990.  With  the  preparation  of  this  Roadmap,  the  EU  is  taking  a  new  initiative  to  stimulate 

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international  negotiations  in  the  run-up  to  Durban.  In  this  way,  the  Roadmap  is  an  integral 
part  of  a  wider  strategy  to  deliver  on  the  objective  to  keep  the  global  average  temperature 
increase below 2ºC compared to pre-industrial levels. When cooperating with its partners, the 
EU should take a comprehensive approach intensifying bilateral and multilateral engagements 
on the broad range of aspects across sectors that touch upon climate policy. 

6. 

CONCLUSIONS 

The  Commission's  detailed  analysis  of  cost-effective  ways  of  reducing  greenhouse  gas 
emissions by 2050 has produced a number of important findings.  

In  order  to  be  in  line  with  the  80  to  95%  overall  GHG  reduction  objective  by  2050,  the 
Roadmap indicates that a cost effective and gradual transition would require a 40% domestic 
reduction of greenhouse gas emissions compared to 1990 as a milestone for 2030, and 80% 
for 2050. Building on what has already been achieved, the EU needs to start working now on 
appropriate strategies to move in this direction, and all Member States should soon develop 
national low carbon Roadmaps if not already done. The Commission is prepared to provide 
some of the necessary tools and policies. 

Second, the analysis also shows that with existing policies, the EU will achieve the goal of a 
20%  GHG  reduction  domestically  by  2020.  If  the  revised  Energy  Efficiency  Plan  would  be 
fully  and  effectively  implemented  meeting  the  20%  energy  efficiency  target,  this  would 
enable  the  EU  to  outperform  the  current  20%  emission  reduction  target  and  achieve  25% 
reductions. This Communication does not suggest to set new 2020 targets, nor does it affect 
the EU's offer in the international negotiations to take on a 30% reduction target for 2020, if 
the conditions are right. This discussion continues based on the Commission Communication 
from 26 May 201017. 

Third, as well as reducing the threat of dangerous climate change as part of ambitious global 
action, deep reductions in the EU’s emissions have the potential to deliver benefits in the form 
of savings on fossil fuel imports and improvements in air quality and public health. 

Fourth, the Roadmap gives ranges for emissions reductions for 2030 and 2050 for key sectors. 
To realise these milestones  as  cost-effectively as possible, and to maximise benefits for EU 
manufacturing industries, the implementation of the Strategic Energy Technology Plan is of 
crucial importance. Considering the important labour market implications, the New Skills and 
Jobs Agenda will need to support the transition process.  

The Commission intends to use the Roadmap as a basis for developing sector specific policy 
initiatives and Roadmaps, such as the 2050 Energy Roadmap and the upcoming White Paper 
on  Transport.  The  Commission  will  initiate  the  appropriate  sectoral  dialogues.  The 
Commission will continue to ensure that the EU ETS remains a key instrument to drive low 
carbon  investments  in  a  cost-efficient  manner.  It  will  also  remain  attentive  to  the  risk  of 
carbon leakage in order to ensure a level-playing field for industry. 

As  part  of  the  development  of  the  next  Multi-Annual  Financial  Framework,  it  will  also 
examine  how  EU  funding  can  support  instruments  and  investments  that  are  necessary  to 

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promote  the  transition  to  a  low  carbon  economy,  taking  into  account  the  specificities  of 
sectors, countries and regions.  

The Commission invites the other European institutions, Member States, candidate countries 
as  well  as  potential  candidates,  and  stakeholders  to  take  this  Roadmap  into  account  in  the 
further  development  of  EU,  national  and  regional  policies  for  achieving  the  low  carbon 
economy  by  2050.  Internationally,  the  Commission  will  present  the  2050  Roadmap  to  its 
global partners in order to stimulate international negotiations working towards global action, 
and will foster cooperation with countries in the EU's neighbourhood on measures to promote 
a resilient low carbon economy. 

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