REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Accelerating the transition to climate neutrality for Europe’s security and prosperity EU Climate Action Progress Report 2022
Date: 2023-03-01
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU Member State, EU environmental policy, adaptation to climate change, environmental cooperation, forestry policy, greenhouse gas, land use, pollution control measures, reduction of gas emissions

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 1.3.2023  COM(2022) 514 final/2  CORRIGENDUM This document corrects document COM(2022) 514 final of 26.10.2022 Concerns all language versions. The text shall read as follows: REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Accelerating the transition to climate neutrality for Europe’s security and prosperity                                                               EU Climate Action Progress Report 2022 {SWD(2022) 343 final/2}  
 
 
1  EMISSION TRENDS, POLICIES AND ACHIEVEMENTS 

GREENHOUSE GAS EMISSIONS AND THE EU’S INTERNATIONAL COMMITMENTS  
The  latest  Intergovernmental  Panel  on  Climate  Change  (IPCC)  reports1  confirm  that  transformative 
global  action  must  be  taken  if  we  are  to  meet  the  goals  of  the  Paris  Agreement,  including  limiting 
global  warming  to  well  below  2°C  and  pursuing  efforts  to  limit  it  to  1.5°C.  Global  greenhouse  gas 
(GHG) emissions need to peak in the 2020-25 period and then fall by around 43% below 2019 levels 
by  2030  in  order  to  keep  the  increase  in  average  global  temperature  to  1.5°C  by  the  end  of  this 
century. Under current policies,2 the world is not on a path to meet the temperature goal of the Paris 
Agreement. Meeting all new pledges made by countries before COP26 in Glasgow would improve our 
prospect, but still be insufficient.3  

In 2021, global emissions rebounded to pre-pandemic levels. Preliminary JRC data4 show that global 
GHG  emissions  rose  by  4.2%  in  2021  to  52.9  billion  tonnes  of  CO2  equivalent  (CO2-eq),  a  level 
slightly  above  2019  emissions,  as  the  global  economy  rebounded  from  the  pandemic.  Power  sector 
emissions  and  other  industrial  combustion  emissions  rose  above  pre-pandemic  levels  (+1.3%  and 
+2.1%  respectively,  compared  to  2019),  also  due  to  increased  use  of  coal,5  while  emissions  from 
transport  and  buildings  remained  lower  (-5.2%  and  -3.7%,  respectively).  The  last  year  saw  further 
devastating impacts associated with a warming climate, reinforcing the warning from scientists.  

Limiting  global  warming  requires  unprecedented  action  by  all  countries  and  all  sectors.  To  achieve 
net-zero emissions by 2050,6 we must cut GHG emissions in a rapid, deep, and sustained way, while 
enhancing the planet’s capacity to absorb carbon through nature-based solutions and carbon removal 
technologies. The IPCC findings strengthen the EU’s determination to become climate neutral by 2050 
and climate resilient, key objectives now set in the European Climate Law.   

Under  the  UNFCCC,  the  EU  and  its  Member  States  committed  to  a  joint,  economy-wide  target  to 
reduce GHGs by 20% compared to 1990 levels by 2020 (‘the Cancun pledge’). As set out in the EU’s 
2022  GHG  inventory  submission,7    the  EU  has  substantially  overachieved  this  target,  so  that  its 
Member States and the United Kingdom have also fulfilled their emission reduction obligations under 
the Convention.8 Total GHG emissions, excluding land use, land use change and forestry (LULUCF) 
and  including  international  aviation,  fell  by  34%  in  the  EU-27  +  UK  compared  to  1990  (or  32% 

1  In    2021  and  2022,  the  IPCC  released  reports  produced  by  three  working  groups  for    its  Sixth  Assessment  Report-the 
Physical  Science  Basis  report  (Working  Group  I  )  in  August  2021,  the  report  on    impacts,  adaptation  and  vulnerability 
(Working Group II ) r in February 2022 and  the report on climate change mitigation (The Working Group 3) in April 2022. 
2  IPCC  Working  Group  3:  Mitigation  of  Climate  Change  (2022),  for  mitigation  efforts  consistent  with  national  policies 
implemented by the end of 2020. 
3 Latest scientific analyses suggest temperatures across European land areas will continue to increase throughout this century 
at a higher rate than the global average (EEA: Global and European temperatures)  
4 https://edgar.jrc.ec.europa.eu/dataset_ghg70 
5 https://www.iea.org/news/global-co2-emissions-rebounded-to-their-highest-level-in-history-in-2021 
6  Net  zero  emissions  means  achieving  a  balance  between  anthropogenic  emissions  by  sources  of  greenhouse  gases  and 
removals by sinks, so all residual greenhouse gas emissions going into the atmosphere are offset by human-induced removals 
from the atmosphere, resulting in net zero emissions. 
7 https://unfccc.int/sites/default/files/resource/European%20Union-BR4_C_2019_8832_and_SWD_2019_432_2.pdf  
8 The UK was  part of the joint EU 2020 target together with the 27 EU Member States. 

1 

 
 
 
                                                           
without UK). This is a reduction of 1.94 billion tonnes of CO2-eq by 2020 (or 1.55 GtCO2-eq without 
UK).9 The EU and its Member States jointly met their target by implementing the 2020 EU Climate 
and Energy Package.    

However,  provisional  data  show  that  the  EU’s  domestic  GHG  emissions,  excluding  international 
aviation,  rose  by  4.8%  in  2021  from  their  exceptionally  low  2020  pandemic  level,  though  they 
remained below 2019 level (i.e. -4.0%).10 Emissions from stationary installations covered by the EU 
Emissions Trading System (ETS) increased by 6.6% and non-ETS emissions by 3.5%, driven by the 
recovery from the pandemic. For all main sectors and gases, except buildings, emissions are expected 
to  remain  below  pre-pandemic  levels,  continuing  the  overall  downward  trend  of  the  past  30  years 
(Figure 1). Provisional 2021 data for the emission removals from LULUCF, however, do not show a 
reversal  of  its  recent,  concerning,  declining  trend.  The  unprecedented  surge  in  gas  prices  from  the 
second half of 2021 had a  clear  impact  on emissions from  electricity generation due to a temporary 
switch from gas to coal fuel (Box 1). 

Figure 1: EU-27 domestic GHG emissions by sector (2019-2021)11  

The GHG emission intensity of the economy – the ratio between emissions and GDP – fell by 7 gCO2-
eq/EUR  compared  to  2019.  Overall,  EU  net  domestic  emissions  in  2021,  including  LULUCF,  were 
30% lower than 1990 levels, broadly consistent with the trajectory to achieve the EU 55% reduction 
target by 2030. However, the speed of reduction needs to increase significantly (Figure 2). In 2021 the 

9 GHG emissions and removals for 1990-2020 are based on CRF tables submitted by EU Member States to the UNFCCC by 
27  May  2022  in  their  inventory  submissions  under  Regulation  (EU)  No  525/2013.  Figures  may  change  following 
resubmissions resulting from later reviews.  
10  GHG  net  emissions  figures  for  2021  are  based  on  approximated  GHG  inventories  submitted  under  Regulation  (EU) 
2018/1999. 
11  European  Environment  Agency’(EEA):  2022  GHG  inventory  and  approximated  EU  GHG  inventory  for  2021  based  on 
Member States’ submissions. Notes: (1) Energy sector refers to electricity and heat production and petroleum refining. (2) 
Industry includes fuel combustion in manufacturing and construction and emissions in industrial processes and product use. 
(3)  Buildings  include  emissions  from  energy  use  in  residential  and  tertiary  buildings,  and  energy  use  in  agriculture  and 
fishery sectors.  

2 

 
 
  
                                                           
European Commission put forward a package of proposals to adjust policies so they can meet the EU's 
updated climate objectives. 

 Figure 2: EU-27 net domestic GHG emissions (including LULUCF)12  

In the EU, verified emissions from aircraft operators generated 26.87 million tonnes of CO2 in 2021, 
8.7% higher than the 24.71 million tonnes reported in 2020, but still 61% lower than the 68.2 million 
tonnes of CO2 in 2019, before the pandemic. Since 2021, the EU ETS no longer covers flights from 
the UK. Without these, ETS emissions from aviation increased by about 30% compared with 2020 and 
decreased by 50% compared with 2019.13 

Maritime transport is a substantial CO2 emitter, generating around 3-4% of total EU CO2 emissions. In 
2021, shipping companies reported a fall in emissions from transport activities related to the EU since 
pre-pandemic years due to the UK withdrawal from the EU. 

Box 1: Impact of 2021 surge in gas prices on GHG emissions 

In 2021, average wholesale gas prices reached a record EUR 49/MWh (Megawatt per hour), with daily peaks 
as high as EUR 183/MWh. By comparison, gas prices oscillated between EUR 15 and 25/MWh between 2010 
and 2019, and quickly recovered to similar levels from a historic low of EUR 3-4/MWh in May 2020. Several 
concurrent events caused the price surge including cold weather in the beginning of the year, EU storage level 
below  the  seasonal  average,  low  wind  and  solar  availability  during  the  summer  and  increasing  geopolitical 
tensions on the borders of the EU. The high gas price resulted in a substantial gas-to-coal and gas-to-lignite 
switch in the EU power system, with coal and lignite power plants increasing running hours at the expense of 
gas-fired plants. Compared to 2020, coal and lignite generation increased by +68 TWh, more than half of the 
total  production  increase  (+118  TWh),(a)  while  gas  generation  fell  (-16  TWh).  The  rest  of  the  additional 
production rise was generated by renewables and nuclear (+65 TWh), despite lower onshore wind production.  

The switch from gas to coal and gas to lignite resulted in CO2 emissions from the power system rising above 
2020 levels in 2021 (+8.3%). Nevertheless, CO2 emissions in the sector in 2021 were still 7.3% lower than in 

12 Based on the 2022 GHG inventory and approximated EU GHG inventory for 2021, based on Member States’ submissions, 
excluding  international  bunkers.  The  net  zero  by  2050  linear  trajectory  is  made  consistent  with  the  EU's  target  of  -55% 
emission reduction by 2030.  
13 Two thirds of the climate impact of aviation are non-CO2 emissions., co-legislators started considering these in the ‘Fit for 
55’ discussions, to monitor and mitigate these short-lived pollutants.  

3 

 
 
 
 
                                                           
2019(b) (Figure 3), following the long-term progressive decarbonisation of the EU power system.(c)   

Figure 3 - Electricity generated by coal, lignite and gas and  CO2 emissions of the power system, 2019-
2021(d). 

In 2022, abnormally high gas prices persisted. The Russian invasion of Ukraine contributed to extremely high 
price  uncertainty.  At  the  time  of  writing,  the  market  does  not  anticipate  a  return  to  past  price  levels  in  the 
short-term.   

The ‘Fit for 55’ package along with the REPowerEU(e) plan aim to reduce the EU's dependence on fossil fuel 
imports and to achieve  the 2030 climate target by accelerating the rollout of renewable energy, diversifying 
supplies,  and  boosting  energy  efficiency  significantly.  Investment  to  diversify  supplies  should  avoid  future 
stranded assets. 

(a)  European Commission, Quarterly report on electricity market, Volume 14 (covering fourth quarter of 2021). Figure 18. 
(b) https://ec.europa.eu/clima/news-your-voice/news/emissions-trading-greenhouse-gas-emissions-73-2021-compared-2020-2022-04-

25_en 

(c)  Emission trends in EU-27 for the IPCC sector 1.A.1.a – Public Electricity and Heat production at the EEA greenhouses gases – data 

viewer https://www.eea.europa.eu/data-and-maps/data/data-viewers/greenhouse-gases-viewer.   

(d) For 2019-2020, CO2 emissions values corresponds to IPCC sector 1.A.1.a. The value for 2021 is extrapolated assuming the same trend 

as for the emissions of the European Union Transaction Log for the corresponding sectors. 

(e)  COM/2022/230. 

PROGRESS ON CLIMATE ACTION IN THE EU 

The EU has made substantial progress under the European Green Deal, the blueprint for a green and 
inclusive transition.  

The European Climate Law,14 in force since July 2021, writes into law the EU’s targets to become 
climate neutral by 2050 and to reduce GHG emissions by at least 55% by 2030 compared to 1990, the 
commitment the EU and its Member States made under the Paris Agreement.  

In 2021, the Commission proposed a package of climate and energy legislation to ensure that the EU 
policy  framework  is fit  to achieve  the  EU’s  higher  climate  target  for 2030. The  proposals  are  being 

14 Regulation (EU) 2021/1119 (‘European Climate Law’), OJ L 243, 9.7.2021, p. 1. 

4 

 
 
 
 
 
 
 
                                                           
negotiated  by  the  European  Parliament  and  the  Council.  This  year  has  seen  progress  on  other 
provisions  of  the  European  Climate  Law.  The  European  Scientific  Advisory  Board  on  Climate 
Change was appointed in 2022, to provide independent scientific advice on EU measures and climate 
targets.  The  Commission  adopted  climate  proofing  guidance15  and  updated  its  better  regulation 
instruments16  to  ensure  it  takes  the  same  approach  when  assessing  whether  draft  measures  are 
consistent with climate-neutrality and progress on adaptation, as set out in the Climate Law.  

The transition to climate neutrality and climate resilience requires substantial investments.  

In  2021,  the  Member  States  submitted  their  recovery  and  resilience  plans  (RRPs)  to  rebuild  their 
economies after the pandemic. For the 26 RRPs adopted by mid September 2022, 40% of total planned 
expenditure  is  earmarked  for  climate  investments,  above  the  37%  obligation  set  by  the  RRF 
Regulation (see Chapter 6).17  

In  May  2022,  the  Commission  proposed  its  REPowerEU  Plan18  in  response  to  the  energy  market 
disruption  caused  by  Russia’s  invasion  of  Ukraine.  The  plan  estimates  that  EUR  210  billion  of 
additional investments in  energy efficiency, energy infrastructure and renewable energy are required 
for the EU to reduce its fossil fuel use and cut Russian  gas imports by two-thirds  between now and 
2027.  It  proposes  measures  to  bring  down  emissions  and  energy  costs  for  consumers  and  industry, 
including increasing the 2030 energy efficiency target to 13% and increasing the share of renewables 
in the EU’s energy consumption from 22.1% in 2020 to 45% in 2030, above the 40% target in the ‘Fit 
for 55’ proposal.19 The EU could save nearly EUR 100 billion per year on Russian fossil fuel imports. 

EUR 225 billion remaining in the Recovery and Resilience Facility (RRF) will be available for action 
under REPowerEU. The plan proposes a further EUR 20 billion in grants from the sale of allowances 
from the Market Stability Reserve of the EU ETS to increase financing under the RRF. Member States 
could also redirect certain EU funds towards REPowerEU objectives. More money than ever is being 
pumped into climate projects. At least 30% of the EU budget for 2021-2027 – the biggest share ever – 
and of Next Generation EU is allocated to climate action (up from 20% in 2014-2020) (see Chapter 6). 

In July, the Commission adopted the save energy for a safe winter Communication,20 including a gas 
demand reduction plan and a regulation proposal on coordinated demand reduction measures for gas.21 
Member States are taking measures to reduce their energy consumption.  

Under  the  Sustainable  and  Smart  Mobility  Strategy,  the  Commission  this  year  proposed  a  new  EU 
Urban Mobility framework and an action plan to increase long-distance and cross-border rail traffic, 
making rail travel more attractive for passengers.  

15 Commission Notice giving technical guidance on the climate proofing of infrastructure in the period 2021-2027 (2021/C 
373/01, OJ C 373, 16.9.2021, p. 1), implementing Article 5(5) of the European Climate Law.   
16 Communication from the Commission – Better Regulation: Joining forces to make better laws, better regulation guidelines, 
and better regulation toolbox of November 2021. 
17 In line with conditions in the annexes to the Council implementing decisions approving national RRPs.  
18 COM/2022/230 final; COM/2022/240 final. 
19 Directive 2009/28/EC. 
20 COM(2022) 360 final. 
21 COM(2022) 361 final. 

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INVESTING IN INNOVATION 

The  ETS  Innovation  Fund,  continues  to  provide  support  to  EU  industry,  to  develop  cutting-edge 
technologies and to scale up innovation in renewable hydrogen and other clean-tech solutions. Since 
the first round, funds available have increased by more than 50%, a big boost for the decarbonisation 
of industry in the EU, complementing instruments such as Horizon Europe (see Chapter 6). 

MOBILISING MORE PRIVATE CAPITAL IN GREEN FINANCE 

The  Commission  is  working  to  align  capital  market  rules  with  climate  objectives,  including  to 
implement  the  renewed  sustainable  finance  strategy22.  The  Commission  has  proposed  a  Corporate 
Sustainability  Reporting  Directive23  for  comparable  climate-related  information,  a  Corporate 
Sustainability Due Diligence Directive24, and targeted amendments to the EU banking25 and insurance 
rules26 to ensure that they integrate climate risks in their management and operations.  

The  Commission  has  proposed  specific  treatment  of  certain  energy  activities  under  the  Taxonomy 
Regulation.27  It  has  collected  evidence  for  possible  legislative  proposals  on  credit  ratings  and  on 
environmental,  social,  and  governance  ratings,28  as  well  as  on  the  review  of  the  macroprudential 
framework.29  

STRENGTHENING SOCIAL FAIRNESS AND ECONOMIC RESILIENCE  

To  be  a  success,  the  green  transition  must  be  fair  and  inclusive  in  line  with  the  European  Pillar  of 
Social  Rights,  supporting  those  who  face  the  greatest  challenge.  The  geopolitical  situation  and 
developments in energy prices highlight the need to accelerate the transition while building social and 
economic resilience.  

A Council recommendation on ensuring a fair transition towards climate neutrality was adopted in 
June 202230 to provide guidance for Member States designing and implementing policy packages on 
employment,  skills,  social  and  distributional  aspects  of  the  transition.31  Given  rising  energy  prices, 
Member States are putting in place measures to provide people on low incomes with access to energy 
and transport. A range of EU funding instruments offer support for a fair and social transition (Chapter 
6).32 

ENGAGING PEOPLE   

Transition  to  a  climate-neutral  society  is  about  people:  how  we  produce,  consume,  move,  heat  and 
cool  our  homes,  work  and  live  together.  Active  public  participation  is  paramount.  The  European 

22 SWD (2021) 180 final. 
23 https://ec.europa.eu/info/publications/210421-sustainable-finance-communication_en#csrd  
24 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0071  
25 https://ec.europa.eu/info/publications/211027-banking-package_en  
26 https://ec.europa.eu/info/publications/210922-solvency-2-communication_en  
27 Regulation (EU) 2020/852 and Delegated Regulation (EU) 2022/1214.  
28 https://ec.europa.eu/info/consultations/finance-2022-esg-ratings_en 
29https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13188-EU-banking-sector-review-of-
macroprudential-rules-to-limit-systemic-risk_en 
30 Council Recommendation 2022/C 243/04 
31 Implementation will a be monitored through the NECPs.  
32 COM(2021) 801 final. 

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Climate  Pact33  gives  everyone  a  voice  and  a  platform  to  design  new  climate  actions,  amplify 
activities,  share  information  and  knowledge,  launch  and  connect  grassroots  activities  and  showcase 
solutions.  

The  pilot  phase  focused  on  translating  climate  science  and  policy  into  our  daily  lives.  The  Climate 
Pact Ambassadors are now almost 1 000 people from all walks of life, from scouts to Mayors, active 
in local communities, networking and exchanging knowledge across Europe.  The Pact has  created a 
system  for  individual  and  organisations’  commitments.  Individual  pledges,  collected  in  partnership 
with  Count  Us  In,34  have  so  far  led  to  almost  54 000  Europeans  taking  more  than  3  million  CO2 
reducing ‘steps’. Over 300 organisations (including the European Commission) or groups have made 
pledges  (1 800  in  total)  to  get  on  a  path  to  climate  neutrality.  By  showcasing  initiatives,  the  Pact 
inspires others to act.  

MOBILISING CITIES  

The  Mission  on  Climate  Neutral  and  Smart  cities  has  selected  100  diverse  cities  across  Europe  to 
become climate neutral by 2030 in a socially inclusive way. The cities benefit from tailored support 
from the NetZeroCities35 platform and are co-creating ‘Climate City Contracts’ with action plans and 
investment strategies.  

33 https://europa.eu/climate-pact/index_en  
34 https://europa.eu/climate-pact/pledges/individual-pledging_en  
35 https://netzerocities.eu/ 

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2  THE EU EMISSIONS TRADING SYSTEM 

By  2021,  the  EU  ETS  had  driven  emissions  from  stationary  installations  down  by  34.6%36  against 
2005 levels. In parallel,  Member States have raised  over EUR 100 billion in auction revenues since 
2013, available for further climate action and energy transformation.  

In  2021,  EU  ETS  emissions  increased  slightly  compared  with  2020,  reflecting  both  the  economic 
recovery  from  COVID-19  and  the  developing  energy  crisis.  While  2021  emissions  remained  on  a 
downward trend compared with 2019 pre-pandemic emissions, more action is needed in ETS sectors 
to meet the 2030 climate target. This is the aim of the package proposed by the European Commission 
in 2021 to deliver the  European Green Deal, currently being negotiated by the European Parliament 
and  Council. This  includes  a  reform  of  the  ETS, strengthening  the  cap  and  extending  the  system  to 
cover maritime emissions, and a parallel system to cover buildings and road transport. 

EMISSIONS TRENDS 

In  2021,  stationary  installations  generated  1 335  million  tonnes  of  CO2-eq  emissions.  This  is  6.6% 
higher  than  emissions  in  2020,  but  still  5.6%  lower  than  in  2019.37  The  power  sector  saw  an  8.4% 
increase in 2021, mainly driven by a switch back from use of natural gas to coal linked to the rise in 
gas  prices  and  higher  demand  for  electricity  to  fuel  the  economic  recovery  after  the  pandemic. 
However, overall power sector emissions in 2021 were still 8.1% below 2019 levels, with very similar 
demand for electricity in these two years.  

Emissions from industry under the ETS were  also  higher in 2021 (by 4.6%) than in  2020, but 2.6% 
lower  than  in  2019.  High  increases  were  observed  in  most  sectors,  including  iron  and  steel  and 
chemicals. Following a more than 60% drop in 2020, EU ETS aviation emissions rebounded in 2021 
by 30% but remained 50% lower than in 2019.38 

Figure 4: Verified ETS emissions 2005-2021, Member State projections with existing measures 2021-2030, 
ETS  cap  phases  2,  3  and  4,  and  accumulated  surplus  of  ETS  allowances  2008-2021  including  UK 
(Northern Ireland), Norway and Iceland NB: adjust for cap phase 4  

36 Update reflecting the departure of the UK from the EU and the ETS.  
37 As of 2021, the UK is no longer part of the EU ETS. Comparison with 2020 is adjusted accordingly. 
38 Comparison with adjusted 2020 and 2019 verified emissions, including only outgoing flights to the UK and  0.3 million 
tonnes CO2-eq under the Swiss ETS.  

8 

 
 
 
 
                                                           
RESOURCES GENERATED BY THE ETS 

The  EU  ETS  implements  the  polluter  pays  principle  but  also  generates  substantial  resources  for 
climate action (see Chapter 6). 

Figure 5: Auctioning revenues and reported usage, 2013-2021 (€ bn), EU-27  

As the carbon price increased during 2021, so did ETS auction revenue, amounting to some EUR 31 
billion in total.39 This means that revenue almost doubled from the EUR 16.5 billion raised in 2020. Of 
these EUR 31 billion, EUR 25 billion went directly to the 27 Member States. In 2021, they reported 
that  an  average  of  76%  of  revenues  was  spent  for  climate  and  energy  purposes,40  in  line  with  an 
average  of  75%  over  the  2013-2020  period  (Figure  5).  About  24%  of  Member  State  revenues  are 
earmarked for specific climate and energy actions, 25% went into dedicated environmental funds and 
51% went to national budgets.  

In  2021,  several  Member  States  also  used  their  auction  revenue  to  cushion  the  social  impact  of  the 
energy price crisis.  

ACTION IN AVIATION AND MARITIME TRANSPORT 

Emissions from extra-European aviation, from incoming flights to the European Economic Area and 
flights departing to countries outside the EEA, with the exception of flights departing to the UK and 
Switzerland, are currently not priced under the EU ETS under the ‘stop the clock’ provision in the EU 
ETS Directive.  

The  Commission’s  proposal  to  extend  the  EU  ETS  to  include  emissions  from  maritime  transport  is 
now  being  negotiated  by  the  European  Parliament  and  the  Council.  The  proposal  builds  on  the 
Monitoring,  Reporting  and  Verification  Regulation,41  which  tracks  CO2  emissions  from  large  ships 
calling  at  EU  ports  since  2018.    The  EU  continues  to  support  development  of  ambitious  measures 
under the International Maritime Organisation strategy on GHG emission reductions, such as potential 
fuel GHG intensity standards and market-based measures.  

39 EU-27 + EEA countries.  
40 The remaining 24% is not necessarily spent on other purposes. Part will be spent in later years or go to a general budget 
used for multiple purposes, including climate change and energy.  
41 Regulation (EU) 2015/757. 

9 

 
 
 
                                                           
EU CARBON MARKET  

The  EU  carbon  price  has  followed  a  consistent  upward  trend  since  2018.  In  2021,  it  continued  to 
increase due to high gas prices and market anticipation of the increased 2030 climate ambition as well 
as related policy reforms. The higher carbon price contributed to higher electricity wholesale prices, 
but to a much smaller extent than the increase in gas prices. In the October 2021 Communication on 
energy prices, the Commission estimated the effect of the gas price increase on the electricity price to 
be nine times higher than the effect of the carbon price increase.42 Gas prices have since continued to 
increase sharply, whilst ETS prices have remained within a similar range. A report from the European 
Securities and Markets Authority, completed in March 2022, excluded a role for speculation in driving 
the carbon price increase43 (see Carbon Market Report).44 

42 COM(2021) 660 final. 
43 https://www.esma.europa.eu/press-news/esma-news/esma-publishes-its-final-report-eu-carbon-market 
44 COM(2022) 516. 

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3  EFFORT SHARING EMISSIONS  

Since  2013,  EU-wide  emissions  in  the  effort  sharing  sectors  have  been  below  the  annual  limit,  as 
shown  in  Figure  6.  EU-27  emissions  covered  by  the  Effort  Sharing  Decision45  (ESD)  were  16.3% 
lower in 2020 than in 2005; the EU overachieved its 2020 target by six percentage points.  After the 
pronounced  fall in  2020 emissions due  to  the  pandemic,  emissions  in the  ESR  sectors rebounded  in 
2021. Based on approximated data, effort sharing emissions in 2021 were 3.5% higher than in 2020. 
The  increase  was  most  pronounced  for  transport  (with  an  increase  in  emission  of  more  than  7% 
compared  to  2020), followed  by  emissions  from  buildings  (3.1%  rise). The agriculture sector  saw  a 
slight  decrease  in  emissions  in  2021  compared  to  2020  of  above  0.3%, but overall  the  decrease  has 
been small compared to 2005 (around 2%). 

Figure  6:  Emissions  in  sectors  covered  by  effort  sharing  legislation  2005-2030  and  annual  emission 
allocations (AEAs), EU-27 (Mt CO2-eq) (see details in the SWD).46  

RESULTS OF THE EFFORT SHARING DECISION 2013-2020  

All Member States met their effort sharing obligations in all years between 2013 and 2019. Malta 
exceeded its annual emissions allocations (AEAs) every year, but covered the deficit by buying AEAs 

45 Decision No 406/2009/EC. 
46  From  projections  reported  by  Member  States  under  Regulation  (EU)  2018/1999,  compiled  and  checked  by  the  EEA. 
Figures include EU-27 only. 

11 

 
 
 
 
 
                                                           
from Bulgaria. In 2019, Austria, Belgium, Cyprus, Estonia, Finland, and Luxembourg also exceeded 
their AEAs but used saved surpluses from previous years to cover the deficit. Germany and Ireland did 
not  have  enough  saved  surplus  to  cover  their  deficit.  Germany  carried  forward  AEAs  from  2020  to 
meet  its  obligation  for  2019,  while  Ireland  used  international  credits  from  the  Clean  Development 
Mechanism to meet its obligations. All Member States except Hungary, Sweden and the UK banked 
surplus AEAs for possible use in 2020.   

The compliance cycle for 2020, the final year under the Effort Sharing Decision, is ongoing. Based 
on the annual inventory review under the ESD, emissions in four Member States exceeded their AEAs 
(Figure  7).  Cyprus’  emissions  exceeded  its  AEAs  by  6%;  it  has  sufficient  surplus  of  AEAs  from 
previous years to comply in 2020. As Germany carried forward part of its 2020 AEAs for compliance 
in 2019, its 2020 emissions exceed the remaining 2020 AEAs by 2%. Malta and Ireland’s emissions 
exceeded their AEAs by 12% and 15% respectively and, with Germany, they will need to buy AEAs 
from  other  Member  States  and/or  use  international  credits  to  comply  in  2020  as  they  do  not  have 
enough banked AEA surplus. 

Figure  7:  Difference  between  Member  States’  2020  target  under  the  ESD  and  emissions  in  the  effort 
sharing sectors in 2020 (in percentage of 2005 emissions).47  

47 Pursuant to Commission Implementing Decision (EU) 2022/1953. 

12 

 
 
 
 
                                                           
PROGRESS ON 2030 TARGETS UNDER THE EFFORT SHARING REGULATION   

As of 2021, the Effort Sharing Regulation48 (ESR) sets national emissions targets for 2030 and AEAs 
for each year between 2021-2030, including for Iceland and Norway.49  

Member  States  are  planning  and  implementing  policies  and  measures  to  achieve  their  current  2030 
effort  sharing  targets  under  the  ESR.  In  aggregate  for  the  EU-27,  current  national  policies  would 
reduce emissions by 22% by 2030 compared with 2005 (Figure 8), well below the current 29% overall 
effort sharing emissions reduction target. If Member States implement all additional policies they have 
reported,  the  EU  would  only  just  meet  the  29%  reduction  target  under  the  existing  ESR.The 
Commission has proposed to  amend the ESR to deliver the higher ambition for 2030 of at least 55% 
GHG  domestic  emission  reduction,  with  a  proposed  increase  of  the  2030  target  for  effort  sharing 
sectors to  40%  emission reduction  compared  to  2005.  This  is  in    negotiation  between the  European 
Parliament and the Council. 

This highlights the strong, imminent need for Member States to plan and implement additional climate 
action  in  effort  sharing  sectors  in  their  updated  integrated  national  energy  and  climate  plans.  As 
Member  States  must  submit  draft  updated  plans  by  30  June  2023,50  the  Commission  is  preparing 
guidance to assist their preparations.  

Approximated  inventory  data  for  2021  shows  that  four  Member  States  are  expected  to  exceed  their 
current AEAs for that year, by 1 percentage point for Czechia, by 2 percentage points for Italy, by 5 
percentage  points  for  Ireland  and  14  for  Cyprus.  As  2021  is  the  first  year  under  the  ESR,  any 
remaining  surplus  under  the  ESD  is  not  carried  over.  However,  Member  States  will  be  able  to  use 
other flexible options under the ESR.  

Figure 8: Gap between 2030 ESR targets and projected emissions51 with existing measures and additional 
measures,  as  a  percentage  of  2005  emissions  for  EU-27,  Iceland  and  Norway.  Positive  values  indicate 
targets forecast to be exceeded; negative values indicate that they are not going to be met. 

48 Regulation (EU) 2018/842. 
49 The ESR no longer allows Member States to use international credits to reach their targets, but they can offset part of their 
GHG  emissions  in  effort  sharing  sectors  with  net  removals  in  the  LULUCF  sector  and,  for  some  Member  States,  by 
cancelling allowances in the existing EU ETS. 
50  Article 14 of Regulation (EU) 2018/1999. 
51  Member  States  submitted  their  emission  projections  by  March  2021.  Denmark,  Ireland,  Latvia,  and  Iceland  submitted 
updated reports in 2022 due to substantial changes. The EEA gap-filled missing 'projections with additional measures' with 
'projections with existing measures'. The original data have different metrics, which a conversion approximately corrects. The 
gaps are provided here for illustrative purposes only. See the annex for more details. 

13 

 
 
 
                                                           
POLICIES IN KEY SECTORS  

- Transport  

CO2  emission  standards for  new cars  and  vans and for  heavy-duty  vehicles  are  key  drivers  for road 
transport emissions reduction. Average emissions from new cars  fell from 130.3 g CO2/km WLTP52 
(i.e.  107.5  g  CO2/km  NEDC53)  in  2020  to  114.7  g  CO2/km  in  2021,  according  to  provisional 

52 Worldwide Harmonised Light Vehicles Test procedure. 
53 New European Driving Cycle Test procedure. 

14 

 
 
 
 
 
                                                           
monitoring  data  for  2021.54  This  continues  the  steep  downward  trend  seen  since  2019  in  CO2 
emissions  of  new  cars  registered  in  the  EU,  thanks  to  stricter  EU  fleet-wide  CO2  targets  that  have 
applied since 2020. Moreover, the share of battery electric cars has increased spectacularly. In 2021, 
10% of newly registered cars in the EU was battery electric (up from 2% in 2019 and 6% in 2020). 
Provisional data shows that, in 2021, the average emissions for vans also decreased to 193.8 g CO2/km 
WLTP,  from  200.3  g  CO2/km  WLTP  (i.e.  155.0  g  CO2/km  NEDC)  in  2020,  also  thanks  to  stricter 
targets applying since 2020 (Figure 9). 

Figure 9: CO2 emissions and EU fleet-wide targets, cars and vans 

Heavy-duty  vehicles  (HDV),  such  as  lorries,  heavy  vans  and  buses,  generate  about  30%  of  all  CO2 
emissions  from  road  transport.  Existing  legislation  requires  the  average  CO2  emissions  of  a 
manufacturer’s fleet of new heavy lorries to be reduced by 15% by 2025 and 30% by 2030 from 2019 

54 Monitoring of CO2 emissions from passenger cars and vans – Regulation (EU) 2019/631; published by the EEA. 

15 

 
 
 
 
                                                           
levels. A legislative proposal by the Commission due at the end of 2022 is expected to tighten existing 
standards and extend the scope to most remaining HDV vehicle groups.  

The  Fuel  Quality  Directive  also  reduced  transport  emissions;  it  stipulates  that  the  life-cycle  GHG 
emission  intensity  of  fuels  must  be  reduced  by  6%  by  2020  compared  to  2010  levels.  The  average 
GHG  intensity  of  fuels  supplied  in  2020  was  5.5%  lower  than  in  2010.  The  progress  by  EU  fuel 
suppliers varies greatly across Member States (Figure 10). 

Figure 10: Reductions in GHG intensity of fuels achieved by  EU fuel suppliers in  EU-27, 2010-2019 and 
2010-2020 (Source: EEA)  

-  F-gases 

Fluorinated gases (‘F-gases’) have a global warming effect up to 25 000 times greater than CO2. After 
2014,  a  decade-long  trend  of  rising  emissions  of  F-gases  was  reversed  due  to  the  current  F-gas 
Regulation (Regulation (EU) No 517/2014). EU-27 emissions fell by 20% from 20914 to 2020 and the 
supply of hydrofluorocarbon (HFC) gas to the market fell by 47% in CO2-eq between 2015 and 2019, 
notably  due  to  refrigeration  shifting  to  more  climate-friendly  alternatives.  In  April  2022,  the 
Commission proposed a new F-gas Regulation for additional emission savings by 2050.  

-  ODS 

Ozone-depleting substances (ODS) are also very strong greenhouse gases. Their use and production in 
the EU has fallen by 99% over past decades, as part of global action to protect the ozone layer under 
the Montreal Protocol. The largest remaining  EU sources of ODS are legacy foams for insulation in 
buildings over 20 years old, emitted when buildings are renovated or demolished. A new proposal for 
ODS Regulation, adopted by the Commission in April 2022, aims to avoid emissions by requiring the 
collection and destruction or reuse of these pollutants. 

16 

 
 
 
 
4  LAND USE, LAND USE CHANGE AND FORESTRY  

Land  use,  land  use  change  and  forestry  (LULUCF)  will  play  a  crucial  role  in  achieving  the  EU’s 
climate neutrality goal, as land can both release GHG emissions to the atmosphere and remove CO2 from 
it,depending on the use made of the land. In the EU, LULUCF emits less GHG into the atmosphere than 
the  CO2  it  removes  through  biogenic  processes,  but  recent  years  have  seen  a  decline  of  this  natural 
carbon  sink.  For  2013  to  2020,  Member  States  committed  to  accounting  for  additional  action  in 
LULUCF,  in  reported  GHG  emissions  and  CO2  removals,  to  assess  the  target  under  the  Kyoto 
Protocol.55  

Figure  11:  Reported  (R)  and  preliminary  accounted  (A)  emissions  and  removals  under  the  Kyoto 
Protocol, second commitment period, EU-27 56 

Figure 11 shows a decreasing sink of ‘reported’ emissions and removals by activity for the EU for the 
second  commitment  period  of  the  Kyoto  Protocol  (2013-2020).  Average  net  removals  were 
320.2 Mt CO2-eq  over  the  period.  With  Kyoto  Protocol  accounting  rules,  the  ‘accounted’  balance 
produced  an  average  carbon  sink  (or  credit)  of  83.4 Mt CO2-eq,  with  net  credits  decreasing 
from  -123.2  in  2013  to  -51.3 Mt CO2-eq  in  2020.57  This  includes  both  ‘elected’  and  ‘mandatory’ 
activities (afforestation/reforestation, deforestation and forest management).58  

The main cause of this sink decline is the decrease in reported net removals and accounted net credits 
from forest management for 2013-2020.59 The decline in carbon removals is due to a mix of factors, 
including  higher  demand  for  wood  (e.g.  2018  in  Finland),  an  increasing  share  of  forests  reaching 

55 What matters to meet the Kyoto targets is not the absolute quantities of removals or emissions, but the changes in removals 
and emissions compared to a benchmark and a particular reference year, as set out in the accounting rules.  
56 Reported emissions and removals from LULUCF under the Kyoto Protocol are based on specific activities and are not the 
same as land-based emissions and removals from LULUCF under the UNFCCC Convention inventory 
57 The pattern in the time series of reported emissions and removals for the EU is similar between accounting and reporting, 
with the differences due to the application of accounting rules. 
58  DK,  DE,  IE,  ES,  IT  and  PT  elected  to  include  cropland  management.  DE,  DK,  IE,  IT  and  PT  also  elected  to  include 
grazing land management and RO to include revegetation. 

17 

 
 
 
 
                                                           
 
harvest  maturity  (Estonia, Latvia) and  an  increase  in natural  disturbances such as  insect  infestations 
(Czechia  since  2015),  storms  (2019  in  Poland),  droughts  and  forest  fires  (e.g.  2017  in  Italy  and 
Portugal).  According to preliminary estimates, using accounting rules for the Kyoto Protocol second 
commitment period, Belgium, Bulgaria, Czechia, France, Croatia, Cyprus, Slovenia and Finland have 
average net LULUCF debits.60 

The current LULUCF Regulation61 and secondary legislation62 require that, as of 2021, each Member 
State  offset  their  GHG  emissions from  the  sector  by at  least  an equivalent  amount  of  CO2  removed 
from the atmosphere, under the ‘no-debit rule’.  

For  the  first  time  under  the  ‘Fit  for  55’  package,  the  Commission  proposed  –  an  EU  net  removals 
target of 310 million tonnes of CO2-eq in 2030 for the LULUCF sector. This EU-wide target is to be 
implemented through binding national targets. Looking further ahead, the Commission has proposed a 
land  sector  focus,  combining  emissions  from  agriculture  (mainly  livestock  and  fertiliser)  and  net 
removals  from  LULUCF.  The  aim  is  to  reach  climate  neutrality  in  the  land  sector  by  2035  and  net 
negative emissions thereafter. 

The  Commission  Communication  on  Sustainable  Carbon  Cycles63  of  December 2021  sets  goals  and 
action plans to achieve carbon removals through nature-based solutions64 and industrial technologies.  
The  Commission  is  developing  a  regulatory  framework  for  EU  certification  of  carbon  removals  to 
reward  land  managers  for  carbon  sequestration,  in  full  respect  of  ecological  principles  (‘carbon 
farming’). It will also help create an EU internal market for the capture, use, storage and transport of 
CO2, using innovative technologies, such as Earth Observation (Copernicus programme).65  

60 Grassi, G., et al., Brief on the role of the forest-based bioeconomy in mitigating climate change through carbon storage and 
material  substitution,  Sanchez  Lopez,  J.,  Jasinevičius,  G.  and  Avraamides,  M.  editor(s),  European  Commission,  2021, 
JRC124374. 
61 Regulation (EU) 2018/841. 
62 Delegated Regulation (EU) 2021/268 and SWD/2020/0236 final. 
63 COM(2021) 800 final. 
64 https://research-and-innovation.ec.europa.eu/research-area/environment/nature-based-solutions_en 
65 Certification of carbon removals – EU rules (europa.eu). 

18 

 
 
 
 
 
                                                           
5  ADAPTING TO CLIMATE CHANGE 

Implementing  the  EU’s  2021  strategy  on  adaptation  to  climate  change  is  a  multi-year  project,  with 
important achievements this year.  

The  Commission  published  technical  guidance  on  climate  proofing  of  infrastructure  for  2021-
2027,  as  required  under  the  European  Climate  Law.66  These  enable  investors  to  make  informed 
decisions on projects compatible with the Paris Agreement and the EU’s climate targets. 

The European Climate and Health Observatory, launched in March 2021 by the Commission and 
the EEA, already plays a key role,67  closing an important knowledge gap, helping overcome barriers 
that  prevent  us  from  tackling  fast-growing  and  negative  health  impacts  of  climate  change.  The 
observatory  provides  information  and  tools  to  assess  climate  change  and  health.  It  also  provides 
effective solutions and interventions to integrate and improve climate adaptation strategies in national 
and  sub-national  health  policies.  The  new  sustainable  finance  and  forest  strategies  bridge  the 
climate  protection  gap  and  to  boost  forest  resilience.  The  first  ever  EU  Adaptation  Communication 
was submitted to the UNFCCC in October 2021.68 

The Mission on Adaptation to Climate Change has made good progress in fostering a step-change 
in  adaptation  action  at  sub-national  level.  It  supports  at  least  150  EU  regions  and  communities  in 
accelerating  their  transformation  to  achieve  climate  resilience  by  2030.  118  regions  and  local 
authorities from 18 Member States have signed the Mission Charter to  join a community of practice 
and it has issued 12 calls for funding amounting to EUR 240 million.  

The EEA plans a full report on the status of national adaptation action in late 2022. The report will 
be based on reporting by national authorities from March 2021 under the Energy Union Governance 
Regulation69 and other sources.  

66 https://op.europa.eu/en/publication-detail/-/publication/23a24b21-16d0-11ec-b4fe-01aa75ed71a1/language-en 
67 https://climate-adapt.eea.europa.eu/observatory 
68 COM(2021) 572 final. 
69 Article 19 of Regulation (EU) 2018/1999. 

19 

 
 
 
 
 
 
                                                           
6  FINANCING CLIMATE ACTION 

The transition to climate neutrality and climate resilience requires substantial investment. At EU level 
funding is available from various sources. 

FUNDING FROM THE EU EMISSIONS TRADING SYSTEM 

The  Innovation  Fund  is  one  of  the  world’s  largest  public  funding  programmes  for  rollout  of 
innovative low-carbon technologies. It is financed by auctioning 450 million allowances from the EU 
ETS over this decade, representing some EUR 38 billion.70 Since its start in 2020, about EUR 3 billion 
have been invested in 54 projects. In 2021, two calls for projects were completed: one for large-scale 
investments71 of EUR 1.146 billion and one for small-scale investments72 of EUR 109 million.  

Under the first call for large-scale projects, seven grants were awarded, with successful bids in ETS 
sectors, including chemicals, steel, cement, refineries, and power and heat. For the first call for small-
scale projects, 32 were awarded grants in a broader range of ETS sectors including green hydrogen, 
energy storage, glass, heat and carbon capture.  

In July 2022, 17 projects were pre-selected under the second large-scale call for projects in cement, 
hydrogen, chemicals, and others for a total of EUR 1.8 billion in Bulgaria, Finland, France, Germany, 
Iceland, the Netherlands, Norway, Poland and Sweden. These projects aim to save up to 136 million 
tonnes of CO2-eqin their first 10 years of operation.  

The  next  large-scale  call,  to  be  launched  in  autumn  2022,  has  an  unprecedented  budget  of  EUR  3 
billion, with sections for projects to implement the REPowerEU plan, on hydrogen and electrification, 
clean-tech manufacturing and pilots.   

The  Modernisation  Fund,  also  from  the  EU  ETS,  supports  lower-income  Member  States  to 
modernise  their  energy  systems  and  improve  energy  efficiency.  Until  2030,  over  640  million 
allowances (representing some EUR  51 billion)73  will be auctioned to support these Member States. 
Since 2021, EUR 3.3 billion have been transferred to Croatia, Czechia, Estonia, Hungary, Lithuania, 
Poland,  Romania  and  Slovakia  funding  71  investments  for  transition  in  areas  such  as  photovoltaics 
and power grids for electric car charging.  

MAINSTREAMING CLIMATE POLICIES IN THE EU BUDGET    

At EU level, investment for the transition will flow from two main sources: the EU’s EUR 1.2 trillion 
‘multiannual  financial  framework’  for  2021-2027  and  the  EUR  806.9  billion  NextGenerationEU, 
supporting the EU’s recovery. At least 30% of these two sources combined (potentially over EUR 670 
billion in current prices) will be spent on fighting climate change.74 

70 Estimate based on current ETS prices.  
71 Large-scale projects have a total capital expenditure higher than EUR 7.5 million. 
72 Small-scale projects have a total capital expenditure not exceeding EUR 7.5 million. 
73 Estimate based on current ETS prices. 
74  The  draft  budget  2023  estimates  that  EUR  557  billion  or  31.5%  of  the  EU  budget  NGEU  will  contribute  to  climate 
objectives. These reflect loans currently requested in the RRF and exclude the Innovation and Modernisation Funds. 

20 

 
 
                                                           
Spending programmes under the EU’s 2021-2027 budget also have climate spending targets of at least 
30%.  These  include  the  European  Regional  Development  Fund  (ERDF)  (30%),  Horizon  Europe 
(35%), the Cohesion Fund (37%), the Connecting Europe Facility (60%), and LIFE (61%).  

PROGRAMMES AND FUNDS 

The EU’s Recovery and Resilience Facility – centrepiece of NextGenerationEU with a value of up to 
EUR 723.8 billion – enables Member States to significantly increase climate investments. To qualify 
for the Facility’s grants (EUR 338 billion) and loans (EUR 385.8 billion), Member States must prepare 
recovery and resilience plans setting out investments and policy reforms that create added value for the 
EU from green transition. Each national plan must allocate a minimum of 37% of planned expenditure 
to climate action and every measure must comply with the ‘do no significant harm’ principle.   

All 26 plans adopted by mid September exceed the 37% benchmark; 40% of their collective financial 
means  is  dedicated  to  climate  objectives,  though  some  Member  States  have  used  more  than  half  of 
their allocation to fund climate policy. About 44% of the funding allocated to climate is expected to 
target  renewable  energy  and  energy  efficiency,  and  34%  sustainable  mobility.75  Subject  to  the 
adoption  of  the  REPowerEU  proposals  of May  2022  to  address  the  energy  implications  of  Russia’s 
invasion of Ukraine, Member States will have the option to update their plans and increase support for 
energy efficiency and renewable energy. 

At least 30% of the InvestEU programme’s target budget of EUR 372 billion in additional investment 
over the period 2021-27 will be allocated to climate objectives. Under the Sustainable Infrastructure 
Window, 60% of the funding must be spent on climate and environment.76 The EIB, the EIF and other 
implementing partner banks will use InvestEU guarantees  for private-sector investments in line with 
climate  and  environmental  tracking  and  the  sustainability  proofing  guidance  developed  by  the 
Commission. 

Research  and  innovation  enable  the  green  transition  by  testing  and  demonstrating  solutions, 
developing breakthrough innovations and knowledge  for policies based on  latest scientific evidence. 
The Horizon Europe programme will devote at least 35% of its EUR 95.5 billion budget to research 
and  innovation  to  support  a  just  transition,  empowering  citizens  to  actively  participate  in  the  green 
transition. New partnerships are developing, scaling up technologies necessary for climate neutrality. 
Horizon Europe invested almost EUR 4.2 billion in climate action by end 2021.77 

The  European  Regional  Development  Fund  and  Cohesion  Fund78  support  Member  States  in 
promoting  economic,  social  and  territorial  cohesion,  while  advancing  the  transition  to  climate 
neutrality  and  other  EU  priorities.  Each  Member  State  has  prepared  a  Partnership  Agreement, 
outlining  an  investment  strategy  for  their  cohesion  policy  funding  for  2021-2027.  The  funds  will 
deliver at least EUR 78 billion in investment in climate action in t 2021-2027 (30% of the total ERDF 
and  37%  of  the  total  Cohesion  Fund  budget  allocation).  Preliminary  data  from  draft  and  adopted 
programmes suggest that funds allocated to climate will exceed the target. 

75 Source: Recovery and Resilience Scoreboard, Green transition pillar. 
76 https://investeu.europa.eu/what-investeu-programme_en 
77 Preliminary figures. 
78 Cohesion Policy 2021-2027 - Regional Policy - European Commission (europa.eu) 

21 

 
 
 
                                                           
Figure 12: Distribution of cohesion policy Funds climate allocation by thematic area (preliminary data) 

The Just Transition Fund has an EU contribution of EUR 19.2 billion for investment over 2021-2027 
in regions across Europe that will be most affected by the transition to climate neutrality in terms of 
impact  on  their  economic  structure  and  social  effects.  Following  the  creation  of  the  Fund,  Member 
States are now preparing territorial just transition plans (TJTPs), to be adopted by the Commission as 
part  of  cohesion  policy  programmes.  The  Greek,  Cypriot,  Austrian,  North  Rhine  Westphalia  and 
Swedish plans have been approved.  

The European Social Fund, ESF+, supports employment and investments in human capital. By mid-
September roughly a third of ESF+ programmes were adopted for the period 2021-2027. Negotiations 
are still ongoing; all ESF+ programmes are expected to be adopted by the end of the year. To support 
the creation of green job and the adaptation of skills and qualifications to the transition to a climate-
neutral economy, Member States plan to develop new types of training, curricula, apprenticeship and 
business model such as social entrepreneurship. 

The Technical Support Instrument continued tailored technical support to Member States to design 
and implement reforms for European Green Deal priorities. 17 Member States79 received support via 
the  additional  dedicated  REPowerEU  call  to  identify  suitable  reforms  and  investments  to  phase  out 
dependency on Russian fossil fuels. 

The  LIFE  Programme  is  the  EU’s  funding  instrument  for  the  environment  and  climate  action.  In 
2021,  more  than  EUR  290  million  were  awarded  to  132  projects,  including  projects  in  areas  like 
climate  neutral  farming,  peatland  restoration,  heat  recovery  in  iron  and  steel  manufacturing  and 
adaptation of forests and infrastructures to climate. There will be around EUR 755 million for climate 
and environment projects in 2022, including for  clean energy transition.  In June, Ukraine joined the 
LIFE  programme  and  could  benefit  from  LIFE  support  to  help  restore  its  environment  after  the 
destruction brought from the Russian invasion. 

79 BE, CZ, EE, IE, EL, ES, FI, HR, IT, CY, HU, PL, PT, SI and SK. 

22 

 
 
 
 
 
                                                           
7  INTERNATIONAL CLIMATE ACTION 

As  we  completed  the  first  five-year  cycle  of  the  Paris  Agreement,  the  past  year  has  seen  intense, 
productive  international  exchanges,  particularly  at  the  Ministerial  meetings  on  Climate  Action  co-
convened by the EU, China and Canada, the Petersberg Climate Dialogue, the Rome G20 Summit, and 
the UN climate change conference in Glasgow (COP26).  

Following the EU's lead, almost all major economies have committed to achieve net-zero greenhouse 
emissions  by  or  around  mid-century.  Many  have  increased  their  2030  emission  targets  (nationally 
determined  contributions)  significantly,  proving  that  the  Paris  Agreement  works,  and  that  the  EU  is 
inspiring  others  to  accelerate  action.  Nonetheless,  under  current  national  policies  and  measures,  the 
world is not on track to achieve the Paris Agreement temperature goal. If countries fulfil all their new 
pledges,  the  world  may  be  avoiding  some  severe  climate  impacts,  however  the  warming  will  still 
exceed 1.5°C by the end of the century.  

The EU and its Member States keep raising awareness of the opportunities from green transition and 
the consequences from delayed action. The EU is encouraging and assisting international partners to 
deliver more robust and sustained responses to our common threat of climate change.  

The  EU  and  its  Member  States  are  the largest  provider  of  public  climate  finance  in  the  world,  with 
EUR 23.4 billion committed in 2020 to reduce emissions and build resilience to the effects of climate 
change  in  developing  countries,  including  EUR  5.2  billion  committed  at  EU  level  (EU  budget, 
European Development Fund and European Investment Bank). Public funding and regulatory reforms 
are contributing to mobilising capital and scaling up private investment needed to make the transition 
EU research and innovation framework programmes make an important contribution to global climate 
assessments and action, with the EU among the top funders of the evidence base underpinning reports 
of the Intergovernmental Panel on Climate Change.80 

New  initiatives  spearheaded  by  the  EU  over  the  last  year  include  the  USD  8.5  billion  Just  Energy 
Transition  Partnership  between  South  Africa  and  a  group  of  donors,  the  Global  Methane  Pledge 
launched  by  Presidents  von  der  Leyen  and  Biden  and  joined  by  over  100  countries  so  far,  a  Green 
Alliance between the EU and Japan, and the G20 Leaders’ decision to end international public finance 
for unabated coal power generation. 

80 Informing global climate action: Contribution of the Framework Programmes (FP7 and H2020) to the knowledge base of 
recent IPCC reports based on openly available data. 

23