COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people
Date: 2020-09-17
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU energy policy, EU environmental policy, climate change, energy efficiency, environmental cooperation, green economy, greenhouse gas, reduction of gas emissions, renewable energy

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   EUROPEAN COMMISSION  Brussels, 17.9.2020  SWD(2020) 177 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Stepping up Europe’s 2030 climate ambition               Investing in a climate-neutral future for the benefit of our people      {COM(2020) 562 final} - {SEC(2020) 301 final} - {SWD(2020) 176 final} - {SWD(2020) 178 final}  
 
 
Executive Summary Sheet 

Impact  assessment  on  the  Communication  ‘’Stepping  up  Europe’s  2030  climate  ambition  Investing  in  a 
climate-neutral future for the benefit of our people’’ 

A. Need for action 

What is the problem and why is it a problem at EU level?  

The  EU  has  adopted  an  objective  to  become  climate  neutral  by  2050,  i.e.  to  reduce  its  greenhouse  gas 
(GHG) emissions to  net  zero.  Its  current  climate target  for 2030 to  achieve at  least  40% GHG emission 
reductions,  as  well  as  the  climate,  energy  and  transport  legislation,  were  adopted  in  a  perspective  of 
reducing  greenhouse  gas  emission  by  at  least  80%  by  2050.  The  current  2030  climate  ambition, 
encompassing  both  target  and  legislation,  therefore  risks  incentivising  decisions  by  policymakers, 
investors and citizens that could lock in EU emissions trends inconsistent with reaching climate neutrality 
by 2050.  

What should be achieved? 

The  first  general  objective  of  this  initiative  is  to  increase  the  EU’s  GHG  emission  reductions  target  for 
2030  to  between  50%  and  55%  by  2030  compared  to  1990  and  to  amend  the  proposed  Climate  Law 
accordingly. This would put the EU on a balanced and credible pathway to achieve its objective of climate 
neutrality by 2050 and provide stakeholders with increased predictability. The second general objective of 
this initiative is to  prepare the ground for the necessary adaptation  of the climate and energy legislation 
playing a key role in the decarbonisation of the European economy, including determining the future role 
and application of carbon pricing and its interaction with other policies. 

What is the value added of action at the EU level (subsidiarity)?  

Coordinated  EU  action  can  effectively  supplement  and  reinforce  national  and  local  action  and  benefits 
from  the EU’s single market.  Increasing climate  ambition requires  policy responses in  many fields.  The 
impacts  of  such  ambition  increase  and  related  policies  on  growth  and  jobs  creation,  fairness  and  cost-
effectiveness are examples of elements that can be better considered at the EU level. Climate change is a 
transboundary problem and EU action is of importance to drive forward global action.  

B. Solutions 

What are the various options to achieve the objectives? Is there a preferred option or not? If not, 
why? 

The  impact  assessment  confirms  that  an  ambition  increase  within  the  range  of  50%  to  55%  GHG 
reductions  is  possible  in  a  responsible  and  socially  fair  manner,  that  it  can  spur  sustainable  economic 
growth  and  employment,  and  accelerate  the  clean  energy  transition,  particularly  when  combined  with 
adequate  enabling  policies  and  use  of  carbon  revenues.  Economic  risks  of  increasing  ambition  to  55% 
GHG greenhouse gas reductions are limited, while it increases investor certainty and reduces the risk of 
carbon  lock  in,  and  accomplishes  significant  overall  environmental  benefits.  The  impact  assessment 
confirms that a step- up of ambition will require a review of many EU policy instruments to deliver it. The 
impact  assessment  sees  particularly  benefits  in  deploying  a  broad  mix  of  policy  instruments,  including 
carbon  pricing  and  increased  energy  and  transport  sectoral  regulatory  policy  ambition,  and  clearly 
suggests that there is no single policy instrument being capable of achieving all the objectives considered 

 
 
in the assessment alone. 

What are different stakeholders' views? Who supports which option?  

A large majority of public consultation replies endorsed the most ambitious options for climate, renewable 
and energy efficiency. Nearly 80% of the respondents to the public  consultation expressed the view that 
the greenhouse gas target should be increased to at least 55% and as a consequence nearly 70% expressed 
the view that the current renewable energy target should be increased to a share higher than 40% and more 
than 60% of respondents preferred a target greater than 40% of improvement in (primary and final) energy 
efficiency.  Nevertheless,  replies  of  notably  business  associations  were  more  equally  distributed  across 
ambition  levels.  By  and  large,  the  public  consultation  particularly  stressed  the  need  for  additional 
regulatory policies accompanying any carbon pricing initiatives. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise of main ones)?                                     

The  main  benefit  is  that  the  emission  reduction  pathway  to  climate  neutrality  by  2050  is  not  delayed, 
increasing investor certainty and reducing carbon lock-in risks. Investments in a low carbon economy can 
spur  economic  growth  and  jobs,  accelerate  clean  energy  transition  and  can  play  a  role  in  green  recover 
following  the  COVID-19  crisis.  Carbon  pricing  instruments  can  raise  revenues  that  can  be  recycled  in 
green  investments  and  lower  distortionary  taxes  such  as  labour  taxes,  spurring  economic  growth  and 
employment. Energy efficiency and renewable energy would deploy much more strongly and as a result, 
the energy system would be more secure and less dependent on imports, with savings on fossil fuel import 
bills as large as EUR 325 billion and EUR 375 billion over the period 2021-2030. Energy efficiency and 
renewables  deployment  would  help  to  shield  the  consumers  from  impact  of  rising  energy  prices.  Air 
pollution impacts would reduce, with reductions higher than 60% compared to 2015 levels by 2030 for the 
highest  greenhouse  gas  reduction  target.  The  EU’s  land  use  sector  would  see  improved  sustainable 
management providing increased incentives for afforestation and restoration of degraded lands to reverse 
the decrease of the EU natural carbon sink.  

What are the costs of the preferred option (if any, otherwise of main ones)?                                    

Increases in  energy system costs are very limited, from 10.6% of GDP in 2015 to around 11% in 2030. 
Annual average investments in the energy system, including transport, need to increase in the period 2021-
2030 compared to the period 2011-2020 with EUR 312 billion to achieve 50% GHG emission reductions 
and with around 350 billion to achieve 55% GHG emission reductions. Both system cost and investment 
needs  depend  on  the  policy  options  implemented,  but  the  magnitude  of  the  variation  is  limited. 
Investments  are  to  a  large  extent  repaid  over  time  through  reduced  fuel  payments  but  it  will  be  a 
significant challenge to mobilise the necessary scale of finance by 2030. The COVID crisis has not altered 
this challenge as it does not reduce the amount of structural investments needed by the end of the decade. 
This  underlines the importance of a  recovery  package that is  focussed on green investments  in physical 
and  human  infrastructure.  The  analysis  shows  that  the  share  of  energy–related  expenses  in  households 
budgets  increases  only  slightly  when  GHG  target  is  increased,  but  attention  should  be  paid  to 
asymmetrical  impacts.  For  low-income  households  energy  costs  represent  a  larger  share  of  income  and 
they will be more significantly impacted by the transition. Carbon revenues could be used to fund policies 
reducing negative distributional effects (e.g. through targeted support for energy efficiency investment or 
transfers  to  low-income  households).  Targeted  revenue  recycling  of  carbon  pricing  can  actually  reverse 
anticipated negative impacts. 

 
 
What are the impacts on SMEs and competitiveness?  

Impacts on the EU’s overall competitiveness are positive, by improving energy efficiency and circularity 
and promoting innovation. The EU  gains  from  a  first  mover advantage with increasing  global  action on 
climate change. Free allocation under the EU Emission Trading System could still contribute to preventing 
carbon leakage but other measures are also under consideration. SMEs are expected to play a key role in 
the transition, notably as a source of innovations in all economic sectors.  

Will there be significant impacts on national budgets and administrations?  

Distributional impacts at Member State level will be assessed with specific legislative proposals that will 
follow the 2030 Climate Target Plan. 

Will there be other significant impacts?  

EU  action  alone  cannot  deliver  the  required  global  emission  reductions  but  the  EU  has  accepted  the 
challenge  of  demonstrating  to  our  partners  that  increased  climate  ambition,  economic  prosperity  and 
sustainable growth can go hand in hand. The next major UN climate conference in Glasgow in 2021 will 
be important in this context. Parties are expected to update their contributions to the Paris Agreement (the 
UN climate agreement). 

Proportionality?  

The proposed action is proportional to achieve net zero greenhouse gas emissions by 2050. 

D. Follow up 

When will the policy be reviewed?  

EU  climate  and  energy  legislation  provides  for  a  comprehensive  framework  to  track  progress  towards 
meeting EU targets and review policies. The overarching framework is provided by the Climate Law and 
the detailed monitoring and reporting framework is provided by the Regulation on the Governance of the 
Energy Union and Climate Action. Progress is reviewed every five years, in line with the global stock take 
exercise under the Paris Agreement.