COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Accelerating Europe's transition to a low-carbon economy Communication accompanying measures under the Energy Union Framework Strategy: legislative proposal on binding annual greenhouse gas emissions reductions by Member States from 2021 to 2030, legislative proposal on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework and communication on a European Strategy for low-emission mobility
Date: 2016-07-20
Institutions: European Commission, Secretariat-General
Subjects: climate change, emission trading, energy policy, greenhouse gas, investment promotion, reduction of gas emissions, renewable energy, transition economy

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 20.7.2016  COM(2016) 500 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Accelerating Europe's transition to a low-carbon economy Communication accompanying measures under the Energy Union Framework Strategy: legislative proposal on binding annual greenhouse gas emissions reductions by Member States from 2021 to 2030, legislative proposal on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework and communication on a European Strategy for low-emission mobility  
 
 
1.  Introduction 

The global transition to a low-carbon and circular economy has begun, given fresh impetus by 
the Paris Agreement on climate change1 and the 2030 Agenda on Sustainable Development. 
This transition is necessary in order to provide jobs, growth and investment opportunities for 
present  and  future  generations  of  Europeans,  while  mitigating  dangerous  climate  change.  If 
the  EU  does  not  maintain  and  exploit  its  first  mover  advantage  when  fostering  renewable 
energy, energy efficiency and competing on the development of other low carbon technology 
markets globally, other regions will. Europe's economic model is expected to change. It is our 
shared responsibility to ensure that the transition is fair and based on solidarity, so that none 
are left behind. The Energy Union framework strategy2 contributes to this goal.  

The package of measures presented by the Commission today helps Europe to prepare for the 
future and to stay competitive. It is primarily addressed to Member States, since they will be 
in  the  forefront  of  deciding  how  to  implement  measures  to  meet  the  agreed  greenhouse  gas 
emission target for 20303.  

But  Member  States  cannot  do  it  alone.  The  mobilisation  in  the  run  up  to  the  Paris  climate 
conference  showed  how  important  non-state  actors  are  for  delivering  change.  The  EU  also 
expects  action  from  its  businesses,  farmers,  researchers,  investors,  educators  and  social 
partners, amongst others. At the same time, the EU also has the responsibility to boost their 
action  by  providing  EU-wide  measures  and  enabling  environment.  It  supports  action  by  its 
cities, in which 80% of us live. They are among the most dynamic and innovative actors in 
implementing  a  low-carbon,  circular  economy,  often  exceeding  national  levels  of  ambition. 
Rural communities are equally important, as they play a crucial role in providing sustainable 
natural resources and protecting the environment for future generations.  

The EU is doing its utmost to maintain the positive momentum for climate action at the global 
level. No land is an island when faced with the threat of catastrophic climate change. That is 
why, at the highest political level, G7 leaders have committed to accelerate the transition to an 
energy system that enables decarbonisation of the global economy, as well as to set a deadline 
for ending most fossil fuel subsidies, pledging to end government support for coal, gas and oil 
by the end of 2025. The EU's cities will play a pivotal role in a new coalition of cities around 
the  world,  which  could  be  a  further  opportunity  to  engage  internationally  in  continuing  the 
fight against climate change at local level. The growing sense of urgency to address the link 
between  climate  change,  and  fragility  and  security  was  reaffirmed  in  this  year's  EU  climate 
diplomacy action plan4.  

The EU has all the potential to turn the climate change challenge into an opportunity. In this 
global  context,  Europe  is  a  leader  in  developing  innovative  low-carbon  technologies  and 

1 COM (2016) 110 The Road from Paris: assessing the implications of the Paris Agreement. 
2 COM (2015) 80 A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change 
Policy. 
3 In October 2014, the EU Heads of State and Government agreed the 2030 policy framework for climate and 
energy. The framework sets out the EU commitment to a binding target of at least a 40% domestic reduction in 
economy-wide greenhouse gas emissions by 2030 compared to 1990. 
4 European climate diplomacy after COP21 – Council conclusions of 15 February 2016.   

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services, not only in the energy sector but also in industry, buildings and transport. It should 
maintain this leadership. We have to continue to equip Europeans with the right skills for the 
low-carbon economy, invest  in our children's future and help industry to adjust  to changing 
needs. Europe has promised ambitious action, and it will deliver what it has promised. 

2.  Guiding  principles  of  a  regulatory  framework  for  a  low-carbon  transition  in  all 

sectors of the economy 

The  EU  agreed  in  October  2014  a  clear  commitment:  a  binding,  economy-wide  emissions 
reduction target of at least 40% by 2030, compared to 1990 levels. This commitment is in line 
with a cost-effective pathway to reach the EU's long-term climate objective and became the 
basis  for  EU's  international  commitment  under  the  Paris  Agreement  on  climate  change  and 
will be delivered by all Member States collectively.  

To start implementing that commitment, in July 2015, the Commission presented a proposal 
to reform the EU Emissions Trading System to make it fit for purpose and drive investments 
after 2020 in the industrial and power sectors5. The European Parliament and Member State 
governments in the Council should do their utmost to adopt this proposal quickly. The present 
package of measures addresses the other main elements of the economy that will contribute to 
climate action: the sectors of buildings, transport, waste, agriculture6, as well as land-use and 
forestry.  

Building on the guiding principles for EU climate action so far, the new regulatory framework 
is based on the key principles of fairness, solidarity, flexibility and environmental integrity.  

To ensure fairness and solidarity, embedded in the climate and energy framework for 2030 as 
agreed  by  the  European  Council,  the  Commission  proposes  differentiated  national  emission 
reduction  targets  for  2030  that  take  account  of  the  gross  domestic  product  of  each  Member 
State to reflect relative wealth. The levels of the targets for individual richer Member States 
are further adapted among themselves to take into account cost-effectiveness.  

Furthermore,  the  proposal  creates  a  flexible  system  in  which  Member  States  can  reduce 
emissions  jointly,  across  a  number  of  sectors  and  over  time,  reflecting  also  the  different 
structure  of  Member  States'  economies.  It  will  allow  trade  in  emission  allocations  between 
Member States or the development of projects to reduce  emissions in  other Member States. 
This will facilitate investments flows across the EU towards where they are most needed to 
modernise the economy and where they will deliver the highest benefits at the lowest costs7. 

This  is  the  first  time  that  the  land-use  and  forestry  sector  is  included  in  the  EU  energy  and 
climate framework. The Commission proposes a careful balance between more incentives to 
capture  carbon  and  reduce  emissions  from  soil  and  forests  and  the  need  to  maintain  the 
environmental integrity of the EU climate framework, so as to incentivise emission reductions 

5 The EU 2030 target requires reductions of -43% compared to 2005 in these sectors. 
6 The EU 2030 target requires reductions of –30% compared to 2005 in these sectors. 
7 To further facilitate compliance, Member States that face proportionately higher costs to meet their target can 
opt to transfer some allowances under the Emission Trading System to offset emissions in the other economic 
sectors. 

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in the buildings, transport and agriculture sectors. Therefore flexibility towards other sectors 
will be limited. 

The  proposed  Regulation  for  these  sectors  provides  more  robust  accounting  rules  for  land, 
land-use  and  forestry.  As  forest  management  is  the  main  source  of  biomass  for  energy  and 
wood  production,  more  robust  accounting  rules  for  forest  management  will  provide  a  solid 
basis for Europe's renewables policy and the further development the bio-economy after 2020. 

3.  Fostering the enabling environment for low-carbon transition in the EU 

Building on this regulatory framework, it is up to the Member States to design measures that 
are  most  appropriate  to  reap  the  benefits  of  the  shift  to  a  low-carbon  economy  and  achieve 
their  targets.  The  EU  will  support  the  Member  States  with  a  number  of  tools  and  enabling 
measures.  

3.1. The Energy Union Strategy and other sector-specific initiatives 

Given  the  importance  of  transport  in  the  EU  emissions,  the  Commission  is  presenting  a 
strategy  on  low-emission  mobility  which  identifies  the  key  levers  in  the  field  of  transport, 
including  EU-wide  measures  on  low  and  zero-emission  vehicles  and  alternative  low-
emissions  fuels.  The  Strategy  also  underlines  the  need  to  make  the  most  of  the  synergies 
between the transport and energy systems. 

As  regards  buildings,  the  Commission  is  reviewing  the  existing  EU-framework  for  energy 
efficiency and will present proposals later this year, including on how to attract financing into 
buildings renovation. The Commission  will  also finalise this  year a voluntary  industry-wide 
recycling  protocol  for  construction  and  demolition  waste.  Given  the  more  limited  scope  for 
emissions  reductions  in  agriculture  and  land-use  sectors,  the  land-use  and  forestry  proposal 
will create additional incentives for carbon sequestration in these related activities. Moreover, 
the reformed Common Agricultural Policy provides different instruments and measures in its 
two pillars to promote climate action.  The review of EU-wide policy addressing the use of 
fertilisers  is  expected  to  contribute  to  a  reduction  of  emissions  from  mined  and  synthetic 
fertilisers.  After  agriculture,  the  waste  sector  is  currently  the  second  most  important  sector 
emitting non-carbon dioxide emissions. The Waste Management Framework Directive and in 
particular the Landfill Directive, for which the Commission proposed revisions last year, are 
expected to contribute to a significant reduction of emissions from waste. 

Member States can only reap the benefits of these EU-wide measures if they implement and 
enforce them properly.  

3.2. Cross-cutting tools and drivers  

The  Energy  Union  priority,  with  all  its  dimensions,  provides  a  broader  framework  within 
which  the  EU  can  provide  the  right  enabling  environment  for  the  energy  transition.  Apart 
from  that  there  are  a  number  of  other  enabling  factors  to  support  such  transition  across  all 
sectors of the economy.  

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3.2.1.  Circular economy 

The circular economy has  a role to play in  the sectors covered by the package and beyond. 
There is a direct physical link between the quantity of raw material used, the energy required 
and greenhouse gas emissions. The EU has managed to decouple its economic growth from 
the growth in carbon dioxide emissions, but so far have not yet managed to do the same for 
material use and resource efficiency.  

Last year, therefore, the Commission presented an ambitious Circular Economy Package8 to 
address this challenge. The proposed actions will contribute to "closing the loop" of product 
lifecycles through greater recycling and re-use, and extract the maximum value and use from 
all raw materials, products and waste. 

3.2.2.  Innovation for competitiveness 

To seize the opportunities created by innovation as a key enabler in the transition to a low-
carbon economy and maximize the impact of every Euro invested, the Commission intends to 
present  an  integrated  Energy  Union  strategy  for  research,  innovation  and  competitiveness 
later  this  year.  Concrete  actions  under  this  new  strategy  should  directly  support  the 
achievement  of  Europe's  climate  and  energy  goals,  and  contribute  to  the  modernisation  and 
competitiveness of the EU economy by supporting the EU's leadership in clean technologies. 

Europe  is  still  the  world's  largest  source  of  financing  for  energy-related  research  and 
development  (at  EUR  3.9  billion  in  2014,  amounting  to  36%  of  the  total)  and  leads  on  the 
number of patent applications for high-value climate-change mitigation technologies, with a 
40 per cent share of the total. At the same time, some high-value potential remains untapped, 
notably  in  clean-energy  technologies  and  zero-emission  vehicles.  In  other  areas,  including 
renewable  energy  technologies,  the  EU  has  begun  to  lose  ground  to  its  competitors.  More 
importantly,  and  cutting  across  specific  technologies  and  innovation  areas,  Europe  needs  to 
improve when it comes to bringing its innovations to market and making them commercially 
successful. 

3.2.3.  Shifting and scaling up investment 

Shifting  and  rapidly  scaling  up  private  investment  is  essential  to  support  the  transition  to  a 
low emission and climate resilient economy, and for avoiding the "lock-in" of high emissions 
infrastructure and assets.  

In the EU, efforts have already started to align private investments with climate and resource-
efficiency objectives both through policies and by strategic public investments.  

The EU Emissions Trading System puts a price on carbon. For sectors not covered by the EU 
Emissions Trading System, Member States' taxation policies are also relevant to set the right 
incentives. 

8 COM (2015) 614 Closing the loop - An EU action plan for the Circular Economy. 

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The Capital Markets Union initiative9 addresses the importance of long-term and sustainable 
investment  to  maintain  and  extend  EU  competitiveness  and  encourage  the  shift  to  a  low-
carbon and resource-efficient economy. The recent emergence  of green bonds can also  help 
direct capital flows towards low-carbon investments.    

There is more to do. The EU will continue to deepen the single market and work on removing 
barriers to investment.  

The Commission is actively working to ensure that the current EU budget spending is aligned 
with  the  climate  objectives.  The  political  commitment  to  ensure  that  at  least  20%  of  the 
Multiannual  Financial  Framework  is  explicitly  climate  related  is  delivering  results.  In  this 
spirit, the Commission has recently joined the Mission Innovation Initiative, whose members 
have  committed  to  double  their  public  funding  to  clean  energy  research  and  development 
within five years by 2020.  

The EU financial instruments are also making a significant contribution to EU climate action, 
as demonstrated by the European Fund for Strategic Investments. The Fund is firmly on track 
to deliver on mobilising at least EUR 315 billion in additional investment in the real economy 
by  mid-201810.  Over  50%  of  the  investments  approved  so  far  are  climate  relevant.  Co-
investment  in  projects  under  the  European  Fund  for  Strategic  Investments  can  take  place 
either at project level or at the level of an Investment Platform. Investment platforms can help 
finance  small  projects  and  bundle  funds  from  different  sources  to  enable  diversified 
investments  with  a  geographic  or  thematic  focus.  They  can  also  render  small  or  local 
investment  opportunities  attractive  to  new  investor  groups,  for  example  pension  funds  or 
overseas institutional investors. The Commission is exploring ways to blend and combine the 
resources  available  under  other  EU  programmes,  as  for  example  the  Connecting  Europe 
Facility  or  Horizon  2020  to  unlock  additional  investments,  in  particular  through  investment 
platforms, for example in the fields of energy efficiency, smart urban mobility, and innovative 
technologies.  

The  reformed  EU  Cohesion  policy  also  supports  low-carbon  transition  and  its  projects  will 
result in benefits for the post-2020 period. It supports measures in energy efficiency in public 
and residential buildings (EUR 13.3 billion) and in enterprises (EUR 3.4 billion, with a focus 
on  SMEs),  in  the  move  towards  an  energy-efficient,  low-emissions  transport  sector  (EUR 
39.7  billion  for  sustainable  urban  mobility  and  low-carbon  transport  modes  such  as  rail, 
seaports and inland waterways). In addition, EUR 8 billion are allocated for risk prevention 
and management, including 6.4 billion for climate-related risks. A total of EUR 115 billion of 
the  budget  for  the  reformed  Common  Agricultural  Policy  supports  climate  action  through 
improved land management and targeted investments11. 

9 See also Capital Markets Union: First Status Report, SWD (2016) 147 final.   
10 COM (2016) 359 Taking Stock of the Investment Plan for Europe and next steps (state of play on 1 June 2016) 
11 Under the Rural Development pillar of the policy, EUR 7.7 billion are earmarked for projects targeting carbon 
sequestration  and  storage  in  soils,  the  supply  and  use  of  sustainable  renewable  energy  and  climate  smart 
investments. Another EUR 43.7 billion are earmarked actions to improve ecosystems which also have an effect 
on the carbon footprint of agriculture and forestry. 

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In order to support investments in innovation, such as carbon capture, renewable energy and 
the  uptake  of  new  breakthrough  technologies  in  industry,  the  Commission's  proposal  for  a 
revision  of  the  Emissions  Trading  System  foresees  450  million  emission  allowances  to  be 
reserved for this purpose.   

3.2.4.  Fair social transition and new skills 

The low-carbon transition is expected to reduce occupations in traditional markets (related to 
fossil fuels, in particular carbon-intensive industries), while new jobs (related to renewables, 
energy efficiency and electrification of vehicle transport) will be created. That means also the 
need  to  anticipate  and  mitigate  the  societal  impact  of  the  transition  in  specific  regions  and 
socio-economic sectors, including through the European Structural and Investment Funds.  

Since  skills  will  be  the  key  pathway  to  employability  and  prosperity,  the  Commission  has 
adopted  a  new  comprehensive  Skills  Agenda  for  Europe12.  To  help  tackle  skills  challenges, 
the Commission is launching actions, which will make skills more visible and improve their 
recognition  at  local,  national  and  EU  levels,  from  schools  and  universities  to  the  labour 
market. Among others, the agenda addresses re-skilling and up-skilling and sets a "Blueprint 
for Sectoral Cooperation on Skills" to improve skills intelligence and address skills shortages 
in specific economic sectors including green technologies. 

3.2.5.  Trade and export opportunities 

Increased  trade  flows  are  expected  to  help  the  rapid  spread  of  green  goods,  services  and 
technologies  around  the  world  and  the  shift  to  a  low-carbon  economy.  The  EU  is  a  world 
leader in exports and imports of environmental goods. In 2013, EU exports of the green listed 
products amounted to EUR 146 billion (around 8% of the EU's total) and imports to EUR 70 
billion.  European  companies  should  aim  to  continue  developing  and  exporting  their 
innovation ingenuity and know-how.  

As  a  member  of  the  World  Trade  Organisation,  the  EU  actively  promotes  liberalisation  of 
goods  and  services,  which  can  deliver  environmental  benefit.   Together,  with  six  other 
members of the World Trade Organisation, it has been working closely together with the aim 
of  concluding  an  ambitious  environmental  goods  agreement  with  all  participants  ahead  of 
when G20 leaders meet in China later this year for the G20 Summit. Also in its bilateral trade 
agreements,  the  EU  pursues  early  liberalisation  of  environmental  goods  and  services  and 
facilitation  of  trade  and  investment  in  renewable  energy  generation,  contributing  to  climate 
policy goals. 

4.  Conclusions 

Europe's transition to the low-carbon economy needs to accelerate. The EU needs more jobs 
and  growth  and  more  investment  and  this  agenda  has  the  potential  to  deliver  them  and 

12  COM  (2016)  381  A  New  Skills  Agenda  for  Europe:  Working  together  to  strengthen  human  capital, 
employability and competitiveness. 

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modernise  Europe's  economy.  In  the  long-term,  this  will  profoundly  change  our  economic 
landscape. 

The  climate-related  legislative  proposals  attached  to  this  communication  and  last  year's 
proposal to reform of the EU Emission Trading System need to be addressed as a priority by 
the Council and the Parliament.  

The  Commission  will  immediately  start  or  accelerate  better  regulation  processes  (including 
public  consultations  and  impact  assessments)  to  turn  the  Action  Plan  on  low-emission 
mobility into a set of efficient and proportionate measures without delay. By the end of the 
year, the Commission will also present the remaining initiatives to complete the delivery of 
the EU's Energy Union Strategy.  

Member States have already started to prepare their post-2020 energy and climate strategies. 
This set of initiatives provides them with the necessary clarity and tools, also allowing them 
to  proceed  with  the  domestic  ratification  process  of  the  Paris  agreement  in  climate  change. 
Member States should make the maximum use of the EU's enabling environment to make the 
transition to low-carbon economy as smooth and fair as possible.  

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