REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL EU Climate Action Progress Report 2024
Date: 2024-10-31
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU environmental policy, adaptation to climate change, carbon neutrality, climate change, environmental cooperation, forestry policy, investment, land use, pollution control measures

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 31.10.2024  COM(2024) 498 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL EU Climate Action Progress Report 2024 {SWD(2024) 249 final}  
 
 
CONTENTS 

1 

EMISSION TRENDS AND PROGRESS IN CLIMATE ACTION ................................. 2 

1.1  Climate change and greenhouse gas emissions: recent trends .................................... 2 

1.2  Towards the climate-neutrality objective .................................................................... 6 

1.3 

Progress on climate action in the EU ........................................................................... 8 

1.4  Climate action for people .......................................................................................... 10 

2 

THE EU EMISSIONS TRADING SYSTEM .................................................................. 12 

2.1  Emission trends .......................................................................................................... 12 

2.2  Revenues raised by the EU ETS ................................................................................ 13 

2.3  Action in aviation and maritime transport ................................................................. 15 

3 

EFFORT SHARING EMISSIONS .................................................................................. 17 

3.1 

Progress in overall Effort Sharing emissions towards 2030 ...................................... 17 

3.2  Emission trends by type of gas under the effort sharing legislation .......................... 20 

3.3  Road transport ............................................................................................................ 22 

4 

LAND USE, LAND USE CHANGE AND FORESTRY (LULUCF) ............................. 24 

4.1  Assessment of progress in the LULUCF sector ........................................................ 24 

4.2  Action to step up land monitoring ............................................................................. 26 

4.3  Related initiatives in agriculture and forestry ............................................................ 27 

4.4 

incentives for removals and sustainable practices ..................................................... 27 

5 

PREPAREDNESS FOR AND RESILIENCE TO CLIMATE CHANGE IMPACTS .... 29 

5.1  Context: EU adaptation action ................................................................................... 29 

5.2 

Further developing EU adaptation action .................................................................. 30 

5.3  Adaptation in EU sector policies ............................................................................... 30 

5.4  The EU Mission on Adaptation to Climate Change .................................................. 34 

6  ALIGNING INVESTMENTS WITH CLIMATE NEUTRALITY ................................. 35 

6.1 

Investment trends in the EU ...................................................................................... 35 

6.2  EU Funding from the EU Emission Trading System ................................................ 37 

6.3  Mainstreaming climate policies in the EU budget ..................................................... 39 

6.3.1  Cohesion Policy .................................................................................................. 42 

7 

INTERNATIONAL CLIMATE ACTION ....................................................................... 44 

7.1  Overview and developments ..................................................................................... 44 

7.2  Multilateral and bilateral engagement ....................................................................... 46 

7.3  Climate Finance and International Cooperation ........................................................ 47 

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1  EMISSION TRENDS AND PROGRESS IN CLIMATE 

ACTION 

1.1  CLIMATE CHANGE AND GREENHOUSE GAS EMISSIONS: RECENT TRENDS  

The  pace  of  anthropogenic  global  warming  continues  to  accelerate  and  is  impacting  all 
regions  of  the  world,  with  Europe  warming  twice  as  fast  as  the  global  average 1.  To  limit 
warming to the 1.5 °C Paris Agreement temperature target, secure a liveable future for all, and 
avoid  the  worst  impacts  of  climate  change,  global  greenhouse  gas  emissions  should  fall  by 
43%  below  2019  levels  by  2030  and  by  84%  by  2050 2.  Climate  change  makes  extreme 
events,  including  deadly  heatwaves,  extreme  rainfall,  hurricanes,  forest  fires  and  droughts 
more frequent and intense 3. After 60 000 – 70 000 heat-related deaths in Europe in 2022 4,5, 
heatwaves in 2023 killed nearly 50 000 Europeans 6.  

More  catastrophic  events  took  place  in  2024  and  projections  show  a  strong  net  increase  in 
temperature-related  mortality  rates  already  for  mid-century  7 .  The  deadly  floods  in 
Afghanistan,  which  killed  at  least  300  people  in  May  2024,  were  followed  by  dangerous, 
intense and extended summer heatwaves that affected hundreds of millions of people globally. 
At least 10 countries recorded daily temperatures of more than 50 °C 8.  Temperatures of over 
40 °C were recorded in many places in Europe, with Greece, Spain, France, Italy and Portugal 
experiencing  extreme  heat  that  caused  fatalities,  fuelled  wildfires,  and  required  emergency 
measures  to  protect  the  population  from  heat  stress  9.  In  September,  storm  Boris  caused 
catastrophic  flooding  in  several  European  countries,  while  wildfires  in  Portugal  caused 
fatalities.  Urgent  and  decisive  climate  action  is  needed  to  save  lives  and  livelihoods,  avoid 
economic losses and safeguard natural systems.  

Despite years of warnings from the scientific community that greenhouse gas emissions need 
to  decline  rapidly  to  net-zero  if  we  are  to  halt  global  warming,  preliminary  Joint  Research 
Centre  (JRC)  data 10 show  that  global  greenhouse  gas  (GHG)  emissions  (excluding  the  net 
removals  from  land  use,  land  use  change  and  forestry,  LULUCF)  have  reached  53  billion 
tonnes  of  CO2  equivalent  (CO2-eq)  in  2023.  This  is  1.9%  above  the  2022  level  and  3.3% 
above  pre-pandemic  (i.e.  2019)  emissions  (Figure  1.1.a).  In  2023,  transport  was  the  main 
driver of increased  global emissions (+3.7%, or 301  MtCO2-eq) and now surpasses the pre-
pandemic  level.  It  was  followed  by  the  power  industry  (+1.6%,  or  234  MtCO2-eq)  and 
industrial combustion (+2.9%, or 184 MtCO2-eq). Among the larger emitters (Figure 1.1.b), 
the most significant increases were in China (+5.2%, or 784 MtCO2-eq) and India (+6.1%, or 

1 Copernicus, European State of the Climate: Summary 2023, 2024. 
https://climate.copernicus.eu/sites/default/files/custom-uploads/ESOTC%202023/Summary_ESOTC2023.pdf 
2 IPCC, Climate Change 2023: Synthesis Report - Summary for Policymakers, IPCC, Geneva, 2023. 
3 European Climate Risk Assessment (EUCRA) report. https://www.eea.europa.eu/publications/european-climate-risk-assessment 
4 Ballester J. et al., ‘Heat-related mortality in Europe during the summer of 2022’ Nature Medicine, No 29, 1857-1866, 2023.  
5 Commission Communication on managing climate risks, March 2024 
6 Gallo et al., Heat-related mortality in Europe during 2023 and the role of adaptation in protecting health. Nature Medicine, 2024. 
https://www.nature.com/articles/s41591-024-03186-1 
7 https://www.exhaustion.eu/ 
8 World  Meteorological  Organisation  (WMO).  Extreme  heat  continues  throughout  July  with  devastating  impacts.  8  August  2024. 
https://wmo.int/media/news/extreme-heat-continues-throughout-july-devastating-impacts 
9 https://www.worldweatherattribution.org/deadly-mediterranean-heatwave-would-not-have-occurred-without-human-induced-climate 
change/ 
10 Crippa,  M.  et  al.,  GHG  emissions  of  all  world  countries,  Publications  Office  of  the  European  Union,  Luxembourg,  2024. 
https://edgar.jrc.ec.europa.eu/report_2024 

  - 

2 

 
 
 
236 MtCO2-eq). Compared with 1990 levels, the EU’s GHG emissions have decreased more 
significantly than those of all the other top emitting economies. The decades-long decreasing 
trend in the  EU’s  GHG emissions means that they now represent 6.1%  of global emissions, 
which is a sharp decrease from 14.9% in 1990 11. 

Figure 1.1: Global GHG emissions by main emitters (and rest of the world, RoW, 1990-
2023) and annual changes 12 (2019-2023) 

Figure 1.1.a 

Figure 1.1.b 

In the EU, provisional data 13 for 2023 show that total net GHG emissions, reflecting the EU 
target scope 14, decreased by 8.3% compared with 2022 15. In the same year, economic activity 
in the EU broadly stagnated, with GDP growing by 0.5% in real terms. In absolute terms, the 
fall in GHG  emissions in 2023 was the largest  annual cut in several decades, excluding the 
COVID-19  pandemic  year  of  2020  (Figure  1.2.a).  Consequently,  in  2023  total  net  GHG 
emissions were 37% below their 1990 level, with GDP growing by 68% over the same period, 
showing the continued decoupling between emissions and economic growth 16.  

11 Including LULUCF it will be 5.6% in 2023 and 14.5% in 1990. 
12 EDGAR  (Emissions  Database  for  Global  Atmospheric  Research)  Community  GHG  Database  (a  collaboration  between  the  European 
Commission,  Joint  Research  Centre  (JRC),  the  International  Energy  Agency  (IEA),  and  comprising  IEA-EDGAR  CO2,  EDGAR  CH4, 
EDGAR N2O, EDGAR F-GASES version EDGAR_2024_GHG, European Commission, 2024. 
13 The Governance Regulation (Regulation (EU) 2018/1999) requires Member States to report approximated GHG inventories annually by 31 
July. The EEA compiles an approximated EU GHG inventory based on that reported data or on the EEA’s own estimates if a Member State 
has not communicated its approximated GHG emissions by that date. This provides an early estimate of GHG emissions ahead of the full 
GHG inventory. 
14 The EU GHG emission aggregate, which better reflects the exact legal scope as provided by the European Climate Law, can be obtained 
by  adding the  EU-27  emissions  from  international  aviation  and  maritime transport  regulated under  EU law to the  EU-27’s total domestic 
GHG  emissions  (including  LULUCF  net  emissions  or  removals).  For  more  details,  see  Chapter  2  of  the  accompanying  staff  working 
document. 
15 GHG  emissions  and  removals  for  1990-2022  are  based  on  the  2024  GHG  inventories  as  submitted  by  EU  Member  States  to  the 
Commission by 15 March 2024. In 2024, however, the inventory reporting timeline has been exceptionally extended until the second half of 
the year due to the delivery of the UNFCCC Enhanced Transparency Framework (ETF) reporting tool. Member Staes will be able to submit 
an updated final GHG inventories to EEA by 15 September. The figures may therefore change following possible resubmissions resulting 
from  later  reviews.  Together  with  the  aggregated  EU-level  emission  data,  the  GHG  inventory  will  be  submitted  to  the  UNFCCC  under 
Regulation (EU) No 525/2013 by the 15 December 2024.  
16 The EU GDP growth rate (1990-2023) at constant price is based on our calculation using EUROSTAT (1995-2023, chain-linked volumes, 
2015, National accounts) and by applying the World Bank real GDP growth rates (constant 2015 US$), back to 1990.  

3 

 
 
 
 
 
Figure 1.2: EU GHG net emissions (EU target scope) and by sector 17  

Figure 1.2.a 

Figure 1.2.b 

The sectoral composition of the year-on-year emission changes (Figure 1.2.b) is still shaped 
by the dramatic events of the past four years. The emission reductions in 2021 were still the 
result of the COVID-19 lockdowns and restrictions, especially in sectors such as international 
and domestic transport, which only recovered in 2022. Russia’s full-scale invasion of Ukraine 
in 2022 prolonged and exacerbated the energy crisis that had already started in 2021, driving 
energy prices, particularly for natural gas, to record highs. Coming at a time of lower level of 
nuclear  and  low  hydro  power  production,  this  meant  that  the  use  of  coal  and  lignite  use  in 
power generation, was greater in 2022 than in 2021 and this in turn boosted emissions in the 
energy  sector.  However,  the  reduced  demand  for  both  industrial  and  household  energy  in 
response to high energy prices more than compensated for the increase. 

The emission reductions in 2023 is clearly linked to the acceleration of the energy transition, 
providing  a  solid  basis  for  the  future  and  increasing  confidence  that  the  EU  can  meet  its 
climate targets, in a fair and competitive manner. The energy sector was the most significant 
driver  of  the  record  decrease  in  emissions,  with  emissions  from  the  energy  industry  18 
decreasing by a remarkable 18% (167 MtCO2-eq) compared with 2022. This drop was due to 
a  substantial  increase  in  renewable  electricity  production  (primarily  wind  and  solar),  at  the 
expense of both coal and gas  and,  to a lesser  extent, a decrease in  both electricity and heat 
supply (-3.1% and -2.3% respectively) compared with 2022 19, and to the recovery of hydro 
and nuclear power. Preliminary data for 2023 20 show that renewable energy sources were, for 
the  first  time  by  such  a  clear  margin,  the  leading  source  for  electricity  generation  (44.7% 
versus  32.5%  from  fossil  fuel  and  22.8%  from  nuclear  power).  The  increase  in  renewable 

17 These values are based on 2024 GHG inventory and the approximated EU GHG inventory for 2023. These are based on Member States’ 
submissions,  with  estimated  values  for  international  aviation  and  maritime  emissions  regulated    in  EU  law  (see  Chapter  2  of  the 
accompanying  staff  working  document).  Notes:  (1)  Energy  sector  refers  to  electricity  and  heat  production  and  petroleum  refining  (1.A.1 
GHG  inventory  code).  It  also  includes  indirect  CO2  emissions,  emissions  from  other  sectors  (1.A.5  GHG  inventory  code),  and  fugitive 
emissions  (1.B  GHG  inventory  code)  (2)  Industry  includes  fuel  combustion  in  manufacturing  and  construction  (1.A.2)  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  (1.A.4  GHG  inventory  code).  (4)  Negative  values  for  the  LULUCF  sector  indicate  an  increase  of  GHG 
removals. 
18 Including fugitive emissions and indirect CO2 emissions. 
19 Eurostat (nrg_ind_pehcf) and (nrg_ind_pehnf). This refers only to heat that was sold – auto consumed heat is not reflected in these figures. 
20 https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20240627-1 

4 

 
 
 
 
 
energy  is  primarily  the  result  of  the  considerable  amount  of  new  solar  and  wind  capacity 
installed in the last 2 years, with new records for the installation of solar PV 21.  
Emissions  in  the  industry  sector  22  were  also  6%  down  on  2022,  especially  for  energy 
intensive  industry  (e.g.  -8.4%  and  -7.8%  in  the  mineral  and  metal  industries,  respectively). 
The  emission  reductions  in  industry  are  the  result  of  a  combination  of  reduced  output  and 
continued  efficiency  gains.  The  physical  volume  of  EU  industrial  production  fell  by  2%  in 
2023  but  is  still  higher  than  in  2019  and  2021 23.  However,  above-average  reductions  were 
seen in the sectors that are most energy-intensive or use fossil fuels as feedstocks (e.g. pulp 
and paper, basic metals and chemicals). Efficiency gains in EU industry have been recorded 
over several years. These gains can be shown as the volume of emissions needed for one unit 
of production (e.g. emission intensity, GHG per unit of Gross Value Added). The most recent 
trend  shows  a  steady  decline  in  emission  intensity  for  the  energy-intensive  industries  (from 
10% to 13% depending on the specific sector in 2017-2021). 
Of relevance is the -5.6% (or 27 MtCO2-eq) expected decline in emissions from buildings 24. 
This  was  notably  driven  by  a  relatively  milder  winter  25 .  The  Energy  Performance  of 
Buildings  Directive,  which  was  adopted  in  April  2024,  will  inject  additional  momentum  in 
decarbonising the EU building stock 26. 

Emissions  from  domestic  transport  activities  decreased  only  marginally  in  2023  (-0.8%), 
despite a noticeable reduction in road freight transport (-3.2%, in terms of tonne/kilometres) 27 
and the continued increase in the adoption of electric vehicles (48.5% year-on-year increase 
on 2022, up to a total number of 4.5 million electric vehicles) 28. 

Overall,  2023  emissions  covered  by  the  EU  Emissions  Trading  System  (EU  ETS)  saw  a 
record  decrease  of  15.6%  compared  with  2022  (where  emissions  reductions  in  the  energy 
sector  due  to  the  uptake  in  renewable  sources  have  most  impact).  In  the  Effort  Sharing 
sectors, emissions also decreased, although less markedly, by 1.6%, compared with 2022.  

Provisional 2023 data for GHG emissions and removals from the Land Use, Land-use Change 
and Forestry (LULUCF) sector show an increase in net carbon sinks of 8.5% (or 20 MtCO2-
eq) compared to 2022, although approximated emissions remain subject to large revisions. 

In the EU, verified emissions from aircraft operators increased compared to 2022 by around 
9.5%  as  the  industry  continued  to  rebound  from  the  very  low  levels  of  activity  during  the 
COVID-19 pandemic. 

21 In 2023, 55.9 GW of solar capacity and 16.2 GW of wind capacity was installed in the EU – on top of the 41.3 GW of solar capacity and 
15.6 GW of wind capacity that had already been installed in 2022. This translates into a 36% cumulative increase of installed solar and wind 
capacity between 2021 and 2023, saving approximately 35 billion cubic meters (bcm) of gas over 2 years. 
22 Industry includes fuel combustion in manufacturing and construction and emissions in industrial processes and product use. 
23 This  refers  to  the  volume  in  the  physical  units  –  kilograms,  square  and  cubic  metres,  numbers  of  items  etc.  Eurostat.  Sold  production, 
exports and imports (ds-056120). 
24 Buildings include emissions from energy use in residential and tertiary buildings, and energy use in agriculture and fishery sectors. 
25 As  one  of  the  most  commonly  used  real-time  indicator  for  progress  in  energy  efficiency,  the  number  of  heat  pumps  sold  in  2023  was 
similar to 2022 (around 3 million), according to the European Heat Pump Association (EHPA). If annual sales remain at this level, around 45 
million heat pumps would be installed by 2030 – about 25% short of the EU’s aims. 
26 Directive (EU) 2024/1275. http://data.europa.eu/eli/dir/2024/1275/oj 
27 Eurostat (road_go_tq_tott)  
28 Eurostat (road_eqs_carpda). 

5 

 
 
1.2  TOWARDS THE CLIMATE-NEUTRALITY OBJECTIVE 

Overall, provisional data for 2023 show that the EU’s GHG net emissions are currently in line 
with  the  hypothetical  linear  reduction  path  to  the  EU’s  2030  target  of  reducing  GHG 
emissions by at least 55% compared with 1990 levels (see Figure 1.3.a). Going forward,  an 
emission reduction of 134 MtCO2-eq needs to be achieved every year from now until 2030, 
on average. This is a slightly larger reduction compared with the annual average cut of about 
120  MtCO2-eq  seen  over  2017-2023.  This  will  require  the  full  implementation  of  the  legal 
framework  for  2030  and  the  supporting  investment  flows.  Beyond  2030,  the  pace  of 
reductions must be at least maintained to allow the EU to reap the benefits of the transition. 
Efforts  will  have  to  focus  increasingly  on  the  ‘harder-to-abate’  sectors  and  on  enhancing 
removals in the  post-2040 period,  to  ensure the  EU achieves its  climate-neutrality objective 
by 2050 (see Figure 1.3.a). 

EU Member  States’  GHG projections provide an indication of how  EU GHG emissions are 
expected to develop. In 2024, 11 Member States updated their projections 29. The aggregation 
at  EU  level  of  these  national  projections  shows  the  same  reduction  level  as  analysed  in  the 
assessment of the draft NECP 30 (i.e., -51% for domestic GHG net emissions, when existing 
and  additional  measures  are  both  considered)  31 .  A  preliminary  analysis  of  the  14  final 
updated  National  Energy  and  Climate  Plans  (NECPs)  submitted  at  the  time  of  drafting  this 
report points to a significant reduction of this identified gap to the EU’s 2030 target of 55%.   

At  sectoral  level,  transport,  buildings,  and  industry  pose  the  greatest  challenges  to  reducing 
emissions.  Based  on  its  modelling  outcomes, the  Commission  expects  sizeable  emission 
reductions in those sectors in the next few years, but Member States’ projections have so far 
shown  little  progress  or  have  fallen  significantly  short  of  the  required  outcomes  (Figure 
1.3.b). The same sectors will also face significant decarbonisation challenges in the post-2030 
period,  but  current  Member  States’  projections  fail  to  address  these  challenges.  Agriculture 
seems likely to achieve the emissions cuts expected by 2030. However, the limited reduction 
of  emissions  in  recent  years  and  the  efforts  needed  in  the  next  decade,  merit  additional 
analysis  and  better  measurement  of  the  impact  of  policies  and  measures.  It  may  call  for 
targeted  initiatives  in  the  agri-food  value  chain,  including  outside  the  farm  gate,  providing 
further incentives for emission reductions 32.  

Lastly, the LULUCF carbon sink has been decreasing over the period 2014-2022, although it 
is  estimated  to  have  increased  in  2023  compared  with  2022,  back  to  2018  level.  It  is  very 
important  to  ensure  that  the  carbon  sink  from  the  LULUCF  sector  can  be  enhanced  and 
contribute to meeting our EU climate targets. Member States’ projections are still falling short 
of  the  EU  land-based  net-removal  2030  target  of  an  additional  -42  million  tonnes  of  CO₂ 
equivalent (MtCO₂-eq) 33 by around 45-60 MtCO2-eq. 

29 Member States submitted their emission projections by March 2023. In 2024, being a non-compulsory reporting year, only BE, DK, DE, 
EE, IE, IT, LV, LT, LU, AT and SE submitted updated projections due to substantial changes. The EEA gap-filled missing ‘projections with 
additional  measures’  with  ‘projections  with  existing  measures’.  Since  the publication  of  this  report  coincides with the update cycle  of  the 
NECPs – with final versions due by June 2024 – not all Member States have reported the most up-to-date projections.  
30 COM/2023/796 final. 
31 This translates into a reduction of GHG emissions of 49% compared to 1990 when international maritime and aviation emissions regulated 
under EU Law, reflecting the EU target scope, are included. 
32 See, for example, the Communication on the EU’s climate target for 2040, p. 21. 
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52024DC0063 
33 As compared to the yearly average of net removals over the period 2016-2018. 

6 

 
 
Figure 1.3: EU GHG net emissions, projections and targets. Past and expected emission 
reductions by sectors 34  

Figure 1.3.a 

Figure 1.3.b 

As required under the European Climate Law, the Commission assessed for the first time in 
its 2023 Climate Action Progress Report 35 the collective progress made by the Member States 
in  achieving  the  EU  climate-neutrality  objective  and  the  consistency  of  national  measures 
with that objective. It concluded that although EU GHG emissions continue to fall and there 
are encouraging signs of action on the ground, it is still necessary to intensify implementation 
efforts  and  significantly  accelerate  emissions  reduction  to  stay  on  track  to  reach  climate 
neutrality by 2050. 
In  December  2023,  and  based  on  its  assessment  under  the  Climate  Law 36,  the  Commission 
issued  specific  recommendations  on  climate  neutrality  to  ten  Member  States 37.  It  urged  to 
step  up  their  climate  mitigation  efforts,  by  making  tangible  progress  on  the  existing  and 
planned  policies  and  to  consider  additional,  urgent  measures  to  align  the  expected  GHG 
emission reductions and projections with the climate-neutrality objective. Where relevant, the 
Commission also called for Member States to update and increase the ambition and quality of 
their national long-term strategy. 

All  the  concerned  Member  States  have  notified  the  Commission  on  how  they  intend  to 
address  the  recommendations  (see,  for  more  details,  Chapter  3.3  of  the  accompanying  staff 
working document). In a year’s time, the Commission will reassess the situation based on the 
information included in the 2025 NECP progress report. 

Chapter 3 of the accompanying staff working document, provides an update of the assessment 
of progress towards the EU climate-neutrality objective, including an update of the Climate-
Neutrality  Dashboard,  with  additional  indicators  going  beyond  the  headline  GHG  emission 
data (i.e. Share of renewable, Zero-Emission energy, Greening industry, Sustainable mobility, 
Waste  prevention,  Climate  mitigation  investment,  Sustainable  consumption).  Overall,  the 
climate-neutrality dashboard highlights that, compared to last year’s report, around two third 

34 Expected emission reductions at sectoral level are based on the modelling outcomes of the core policy scenario supporting the Fit-for-55 
initiatives and on the impact assessment analysis accompanying the 2040 target Communication. For data and sectoral aggregation, please 
refer to footnote 17. 
35 Report from the Commission to the European Parliament and the Council of 24 October 2023, EU Climate Action Progress Report 2023, 
COM(2023) 653. 
36 In accordance with Article 7(3) of the European Climate Law. 
37 Czechia, Estonia, Ireland, Croatia, Italy, Cyprus, Latvia, Malta, Austria, and Poland. 

7 

 
 
 
 
 
of the indicators have improved, mainly due to the strong reduction in GHG net emissions in 
2023.  Among  the  seven  complementary  indicators,  the  ‘sustainable  mobility’  and  the  ‘zero 
emissions  energy’  levers  have  improved  in  almost  all  Member  States,  but  changes  in 
‘sustainable consumption’ have been mixed. Among the Member States that in 2023 received 
specific recommendations under the European Climate Law due to their insufficient progress 
towards the EU’s climate-neutrality objective, the dashboard highlights progress for Estonia, 
Italy, Latvia and Austria. 

1.3  PROGRESS ON CLIMATE ACTION IN THE EU  

The  co-legislators  have  now  adopted  all  the  proposals  in  the  Fit-for-55  package,  except  the 
Revision  of  the  Energy  Taxation  Directive 38,  so  that  EU  policies  are  now  aligned  with  the 
updated  2030  target  set  in  the  European  Climate  Law  (Regulation  (EU)  2021/1119).  The 
focus is currently on their implementation, which will enable the EU and its Member States to 
reduce  by  2030  net  GHG  emissions  by  at  least  55%  compared  with  1990  levels 39,  and  to 
make steady progress on adaptation to climate change (See Chapter 5).  

The  Commission  has  adopted  secondary  legislation  to  implement  the  strengthened  EU  ETS 
(which includes the maritime sector and the revised provisions for aviation), the new ETS for 
buildings,  road  transport,  and  small  industry  (Regulation  (EU)  2023/957,  Directive  (EU) 
2023/958,  Directive  (EU)  2023/959),  and  the  Social  Climate  Fund  (Regulation  (EU) 
2023/955).  It  has  also  adopted  rules  to  implement  the  revised  Effort  Sharing  Regulation 
(Regulation  (EU)  2023/857),  the  revised  LULUCF  Regulation  (Regulation  (EU)  2023/839) 
and  the  revised  regulation  strengthening  CO2  emissions  standards  for  new  cars  and  vans 
(Regulation (EU) 2023/851). 

The  regulations  that  revise  the  rules  on  fluorinated  gases  and  ozone-depleting  substances, 
which will eliminate an additional 500 MtCO2-eq of emissions by 2050, were also adopted by 
co-legislators and entered into force in March 2024. 

The Commission has adopted around 39 delegated and implementing acts related to climate 
initiatives.  The  Member  States  have  also  started  to  implement  the  Fit-for-55  package,  by 
integrating at national level the updated climate and energy targets as reflected in their NECPs 
(see below). 

The  co-legislators  have  adopted  a  number  of  other  acts  that  will  help  to  reach  the  climate 
targets:  the  regulation  strengthening  CO2  emissions  standards  for  new  heavy-duty  vehicles 
setting  new  ambitious  CO2  emissions  reduction  targets  for  2030,  2035  and  2040  and  the 
regulation on the EU-wide certification scheme for carbon removals, which sets out rules for 
the  independent  verification  of  carbon  removals,  as  well  as  rules  for  the  recognition  of 
certification schemes that can be used to demonstrate compliance with the EU framework. In 
June  2024,  the  co-legislators  adopted  the  Nature  Restoration  Law  to  restore  ecosystems, 
habitats and species across the EU’s land and sea areas to enable the long-term and sustained 

 38 This includes the revised EU ETS Directive, a new ETS for buildings, road transport and fuels, the Market Stability Reserve,  the Effort 
Sharing  Regulation,  CO₂  standards  for  cars  and  vans,  the  Land  Use,  Land  Use  Change  and  Forestry  Regulation,  the  Carbon  Border 
Adjustment  Mechanism,  the  establishment  of  the  Social  Climate  Fund,  FuelEU  Maritime,  the  Alternative  Fuel  Infrastructure  Regulation 
(AFIR),  ReFuel  EU  Aviation,  the  Energy  Efficiency  Directive  and  the  Renewable  Energy  Directive.  Only  the  proposed  revised  energy 
taxation directive is still pending agreement. 
39 The  legislation as adopted is estimated  to  result  in  a  net domestic  reduction of  GHG emissions  of 57% by 2030  compared  to 1990.  An 
overview of targets is presented in Chapter 1 of the accompanying staff working document. 

8 

 
 
recovery  of  biodiverse  and  resilient  nature,  contribute  to  achieving  the  EU’s  climate 
mitigation, and climate adaptation objectives and to meet international commitments. 

In  February  2024,  as  required  by  the  European  Climate  Law,  the  Commission  published  a 
Communication on the EU’s climate target for 2040, which is an intermediate step on the path 
to  climate  neutrality  in  2050.  The  Commission  recommended  reducing  the  EU’s  net 
greenhouse gas emissions by 90% by 2040 relative to 1990. Furthermore, in March 2024, the 
Commission published a Communication on Industrial Carbon Management, which provides 
details on how technologies that can capture CO2 or remove it directly from the atmosphere 
and  then  store  or  utilise  it  could  contribute  to  this  2040  target  and  to  reaching  climate 
neutrality by 2050.  

In  March  2024,  the  Commission  published  a  Communication  on  managing  climate  risks 
which  sets  out  how  the  EU  can  effectively  get  ahead  of  growing  climate-related  risks  and 
build greater resilience to the impact of climate change. The Communication is a response to 
the  European  Climate  Risk  Assessment  and  is  part  of  the  implementation  of  the  2021  EU 
Adaptation Strategy (see Chapter 5 for more details). 

In 2023 the Commission proposed a regulation on a forest monitoring framework, to set up a 
comprehensive  and  high-quality  monitoring  system  covering  all  forests  and  other  wooded 
land in the EU to better counter all pressures and hazards (see Chapter 4). 

In September 2024, the Commission published a report on the functioning of the Regulation 
on the Governance  of  the Energy  Union and Climate Action 40, along with an evaluation  of 
the  Regulation  41 .  The  Governance  Regulation  is  a  critical  piece  of  legislation  that  sets 
common  rules  for  planning,  reporting  and  monitoring  to  ensure  progress  towards  the  EU’s 
energy  and  climate  targets.  The  evaluation  concluded  that  the  Regulation  has  achieved  a 
significant part of its objectives by making planning and reporting more coherent, integrated, 
and streamlined, by helping to put the EU on track to meet its 2030 energy and climate goals. 
However, the evaluation identifies certain areas for improvement that could be considered in 
the  event  of  a  future  revision  of  the  Regulation,  including  the  need  to  improve  the  future 
NECPs as true green transition investment plans, and enhancing the climate adaptation related 
provisions of the Regulation.  

To strengthen the Commission’s engagement with industry and social partners, President von 
der Leyen announced in the 2023 State of the Union a series of Clean Transition Dialogues. 
The Communication on the Clean Transition Dialogues published in April 2024 takes stock of 
these  Dialogues  and  gives  input  for  building  blocks  that  can  contribute  to  a  reinforced 
industrial approach for a sustainable Europe. 

The  EU’s  Carbon  Border  Adjustment  Mechanism  (CBAM),  which  put  a  fair  price  on  the 
carbon emitted during the production of carbon intensive goods that are entering the EU, will 
be implemented mirroring the phase out of free allocation in the EU ETS to prevent the risk of 
carbon  leakage 42.  Since  the  start  of  the  transitional  phase  of  the  CBAM,  in  October  2023, 
CBAM EU importers are subject to reporting obligations on a quarterly basis but without any 
financial  obligations.  In  preparation  for  the  definitive  regime  (1  January  2026),  the 
Commission  is  developing  the  implementing  and  delegated  acts  as  well  as  a  review  report 
(2025), necessary for the implementation of the measure. 

40 COM(2024) 550 final 
41 SWD(2024) 200 final 
42 EU  sectors  covered  by  the  CBAM  (i.e.  steel,  aluminium,  fertilisers,  cement,  electricity,  hydrogen)  will  have  to  phase  out  their  free 
allowances completely by 2034. 

9 

 
 
By 30 June 2024, Member States were due to submit their final updated National Energy and 
Climate Plans (NECPs) in line with Article 14 of the Governance Regulation. The NECPs are 
10-year strategic documents where Member States have the opportunity to set out policies and 
measures that will align their efforts with the EU’s higher level of climate ambition under the 
European Green Deal. At the time of drafting this report, 14 Member States have submitted 
their  final  NECPs  to  the  Commission 43.  As  the  draft  NECPs  fell  short  of  achieving  the 
climate  target  of  at  least  -55%  net  GHG  emissions  by  2030  compared  to  1990,  the  final 
NECPs need to demonstrate significant increase in efforts to reduce emissions. Member States 
also need to significantly step up their efforts on climate adaptation aspects of their NECPs.  

1.4  CLIMATE ACTION FOR PEOPLE 

lifestyles,  and 

in  our  society, 

Climate  Change  and  the  green  transition  are  affecting  the  entire  economy  and  leading  to 
significant  changes 
job  opportunities.  The  ongoing 
transformations affect skills, occupations, wages, working conditions and demand for labour. 
The number of workers moving from one sector to another is expected to increase as a result. 
The EU is acting to support a successful skills transition. The European Skills Agenda aims at 
backing  skill  partnerships  that  address  labour  market  needs,  support  green  and  digital 
transitions, and promote local and regional growth strategies. In 2022 and 2023, its flagship 
initiative  Pact  for  Skills  provided  training  to  more  than  3.5  million  workers  through  2 500 
organisations 44. According to a recent study 45, the installation of additional wind turbines and 
solar  panels  to  deliver  the  EU  Green  Deal  targets  will  require  about  130 000  to  145 000 
additional  skilled  workers  in  the  EU  and  associated  investment  in  skills  of  EUR  1.1  to  1.4 
billion by 2030 46.  

The  EU  has  continued  to  inject  resources  to  realise  these  opportunities.  Almost  200 000 
workers will gain new skills in projects financed by the Just Transition Fund.  For example, 
between now and  2029 in  Bulgaria, 3 000  unemployed people will be supported to get new 
green jobs, the inhabitants of more than 3 300 dwellings will benefit  from improved energy 
performance, while 80 SMEs will be supported to invest in new skills for smart specialisation, 
industrial transition and entrepreneurship.  

The  sale  of  allowances  in  the  EU  Emission  Trading  System  (ETS)  continued  to  raise 
substantial  revenues  for  Member  States’  budgets  (see  Chapter  2).  For  example,  Greece 
reported to have allocated EUR 1.1  billion  to its Greek Energy Transition  Fund, supporting 
among others energy subsidies for low-income households, business support in transitioning 
areas, reskilling programmes and green infrastructure projects.  

Under  the  ETS  Modernisation  Fund,  disadvantaged  carbon-dependent  regions  received 
support for a just transition in the energy sector, like in the case of Croatia where one scheme 
will support 80 MW of new renewable energy sources and 20 MW of energy storage capacity. 

43 On 15 October  2024, the following Member States had submitted their final NECPs: Germany, Denmark, Finland, France, Ireland, Italy, 
Luxembourg, Latvia, Lithuania, Hungary, the Netherlands, Spain, Romania, Sweden. 
44 https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1619 
45 European Commission, Estimating labour market transition costs and social investment needs of the green transition  – a new approach, 
Fair Transitions Working Papers, 2024. The results of the Working Paper have been developed under two joint projects between Directorate-
General  Employment,  Social  Affairs  and  Inclusion  (DG  EMPL)  and  the  Joint  Research  Centre  (JRC)  of  the  European  Commission. 
https://ec.europa.eu/social/main.jsp?langId=en&catId=1588 
46 Job creation nonetheless differs across Member States, and those with relatively higher shares of renewable installed capacity today may 
present lower re-training costs per worker in 2030. 

10 

 
 
This  will  lead  to  energy  consumption  savings  of  140 000  Megawatt  hours  (MWh)  per  year 
which roughly equal to the electricity consumption of 31 thousand Croatian households.  

Under  the  Recovery  and  Resilience  Facility,  Romanian  households  receive  at  least  122 000 
vouchers  to  invest  in  the  energy  efficiency  renovations  of  at  least  33 000  homes  and  the 
installation  of  PV  panels  and  storage  batteries  to  produce  renewable  energy  for  their  own 
consumption,  as  part  of  the  REPowerEU  chapter.  One-stop-shops  at  regional  level  inform 
households about the benefits, practicalities, and funding opportunities for energy efficiency 
renovations 47. Slovakia will build more than 160 km of new cycling infrastructure by 2026 to 
support  citizens  to  shift  from  individual  road  transport  to  cycling 48.  More  than  9.8  million 
people  across  the  EU  are  better  protected  against  natural  disasters  thanks  to  the 
NextGenerationEU (see Chapter 6). 

The  EU  Mission  on  Adaptation  to  Climate  Change  empowers  European  regions  and  local 
authorities  to  build  resilience  against  climate  change  impacts.  It  aims  to  help  at  least  150 
communities  understand  climate  risks,  develop  pathways  for  preparation  and  implement 
innovative solutions by 2030 (see Chapter 5.4).  

The  transition  also  brings  benefits  in  terms  of  health  and  well-being.  For  example,  lower 
energy  consumption  and  a  shift  to  non-emitting  renewable  energy  sources  and  to  less 
polluting combustion fuels improve air quality. The analysis of the 2040 climate target impact 
assessment estimates that achieving the 90% target could reduce premature deaths due to air 
pollution from 466 000 per year in 2015 to 196 000 per year in 2040.  

47 Recovery  and  resilience  scoreboard.  Thematic  analysis  Energy  efficiency  in  buildings.  https://ec.europa.eu/economy_finance/recovery-
and-resilience-scoreboard/assets/thematic_analysis/scoreboard_thematic_analysis_efficiency.pdf  
48 Recovery  and  resilience  scoreboard.  Thematic  analysis  Sustainable  Mobility.  https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/assets/thematic_analysis/scoreboard_thematic_analysis_sustainable_mobility.pdf 

11 

 
 
 
 
2  THE EU EMISSIONS TRADING SYSTEM  

The  EU  Emissions  Trading  System  (ETS)  implements  the  polluter  pays  principle  in  the 
electricity  and  heat  generation,  industrial  manufacturing,  aviation  and  maritime  transport 
sectors,  which  represent  some  40%  of  EU’s  total  emissions.  It  is  a  cornerstone  of  EU’s 
climate action since 2005, with the system’s scope having been expanded over time. 

In the covered sectors, the EU ETS sets a cap on emissions, which decreases annually in line 
with the system’s contribution to the EU’s overarching climate target. The cap is expressed in 
allowances,  which  companies  must  surrender  annually  to  cover  their  emissions.  Companies 
primarily purchase allowances in auctions, which raise revenue for Member States to further 
support climate action and energy transformation. With the price of allowances determined by 
the market, the EU  ETS  incentivises  emission reductions in a cost-effective and  technology 
neutral way.  

By  2023,  the  EU  ETS  had  helped  drive  down  emissions  from  the  electricity  and  heat 
generation  and  industrial  manufacturing  by  47.6%  compared  to  2005  levels.  This  reduction 
has  been  achieved  largely  with  a  progressive  decarbonisation  of  electricity  and  heat 
generation  –  a  deployment  of  renewable  energy  sources  and  a  gradual  replacement  of  coal 
with gas use, as well as energy efficiency improvements. See Section 2.1 for further detail on 
emission trends in the EU ETS. 

In  parallel,  the  EU  ETS  has  raised  over  EUR  200 billion  in  auction  revenue  that  Member 
States  have  largely  used  to  support  projects  in  renewable  energy  sources,  energy  efficiency 
improvement and low-emission transport development. Since June 2023, Member States are 
required  to  use  all  revenue  from  the  EU  ETS  (or  a  financial  equivalent)  to  support  climate 
action and energy transformation, including measures to address the associated social aspects. 
The obligation is among the changes agreed in the 2023 revision of the ETS Directive. See the 
upcoming Carbon Market Report 2024 49 for further detail about the revised EU ETS and the 
system’s functioning in 2023. 

2.1  EMISSION TRENDS 

In  2023,  total  emissions  under  the  EU  ETS  amounted  to  1 149.1  MtCO2-eq  (down  from 
1 361.9  MtCO2-eq  in  2022).  Emissions  from  power  and  industry  installations  accounted  for 
1 095.9 MtCO2-eq, 16.5% less than in 2022 50. This is the highest reduction achieved to date. 

The most important driver for the record decrease in EU ETS emissions has been the power 
sector,  with  emissions  from  electricity  production  having  decreased  by  24%  compared  to 
2022.  This  decrease  is  due  to  a  substantial  increase  in  renewable  electricity  production 
(primarily wind and solar) and gas replacing coal. In 2023, renewable energy was the leading 
source  of  electricity  in  the  EU,  accounting  for  44.7%  of  all  electricity  production 51.  At  the 
same  time,  electricity  generated  from  fossil  fuels  decreased  by  19.7%  compared  with  the 
2022, contributing 32.5% of the total electricity production. With 16 GW capacity installed in 

49 At the time the current report is being finalised, the Carbon Market Report 2024 (the report on the functioning of the EU ETS in 2023) is 
expected to be adopted in early November. Once adopted, the Carbon Market Report 2024 will be available on the website of the Directorate 
General Climate Action ‘What is the EU ETS’.  
50 Emissions in this section refer to verified emissions within the scope of EU ETS, reported by Member States. This is different from the 
sectoral scope of other sections. For example, small thermal installations are typically excluded from EU ETS.  
51 https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20240627-1.  

12 

 
 
2023,  wind  surpassed  natural  gas  to  become  the  EU’s  second  largest  source  of  electricity 
behind nuclear 52.  

In the energy-intensive industry sectors, a reduction of emissions of 7.5% compared to 2022 
was observed, due to a combination of a reduced output and efficiency gains. Output levels 
for  installations  within  the  scope  of  EU  ETS  are  not  available  at  time  of  publication. 
However, industrial production statistics from Eurostat show that overall industrial production 
fell slightly in 2023 but remains higher than in 2019 and 2021 (i.e., immediately before the 
COVID-19 pandemic and Russia’s invasion of Ukraine). 

In  aviation, year-on-year  emissions have  continued  to  increase  after dipping substantially  in 
2020 due to the COVID-19 travel lockdown and economic downturn (see Section 2.3 below). 
Emissions from maritime transport have only been included in the EU ETS since 1 January 
2024 (see Section 2.3 below). 

Figure  2.1:  Emissions  cap  in  the  EU  ETS  compared  with  verified  emissions  (2005-
2023) 53. 

2.2  REVENUES RAISED BY THE EU ETS 

The sale of allowances in the EU ETS auctions raises substantial revenues for Member States’ 
budgets  to  support  energy  transformation  and  decarbonisation  of  ETS  sectors.  Overall,  the 
ETS has raised over EUR 200 billion to date (EUR 113 billion in the 2021-2023 period).  In 
2023,  the  total  ETS  revenue  amounted  to  EUR 43.6 billion.  Of  those,  EUR 33 billion  went 
directly  to  Member  States.  Of  the  remaining  revenue,  EUR 7.4 billion  supplied  the  ETS 
Innovation Fund and the Modernisation Fund (See Chapter 6) and EUR 2.8 billion supplied 
the Resilience and Recovery Facility, which Member States use to advance the clean energy 
transition and boost energy security. 

With the 2023 revision  of  the  ETS  Directive,  the rules  on the use  of  auction revenues have 
changed.  Member  States  are  obliged  to  use  all  ETS  revenues  for  climate  action  and  energy 
transformation (or an equivalent financial value), except for any revenue that Member States 

52 State of the Energy Union Report 2024, COM(2024) 404 final, 11.9.2024. 
53 The figure considers the 2023 revision of the ETS Directive, i.e. rebasing of the cap in 2024 and 2026, including the maritime transport 
sector in the EU ETS from 2024 and the linear reduction factor of 4.3% in 2024-2027 and 4.4% from 2028. Aviation is not included. Due to 
changes  in  scope,  the  2005-2007  figures  are  not  directly  comparable  with  the  latest  ones.  From  2021,  the  EU  ETS  no  longer  covers 
installations  in  the  UK,  only  electricity  generators  in  Northern  Ireland.  Legend:  bars  (cap),  light  shaded  bars  in  2014-2016  (allowances 
backloaded from auctions), light shaded bars from 2019 (feeds of allowances to the Market Stability Reserve), dark shaded bars from 2024 
(maritime scope extension), dashed line (verified emissions). 

13 

 
 
 
spend  in  aid  for  indirect  carbon  costs 54.  Under  the  Governance  Regulation,  Member  States 
report annually to the Commission on how they spend their ETS revenue. Reporting for 2023 
is analysed in Chapter 7 of the accompanying staff working document. 

Overall,  of  the  2023  revenues  subject  to  the  obligation  mentioned  above,  72%  was  already 
disbursed and another 3% committed to a specific action. Future reports will account for how 
Member  States  will  have  used  the  remainder.  Member  States  reported  having  disbursed 
EUR 22.7 billion to support projects in energy supply, grids and storage (EUR 9.7 billion), in 
energy efficiency, heating and cooling of buildings (EUR 2.3 billion) and in public transport 
and mobility (EUR 5.1 billion) (see Figure 2.2 for the 2023 disbursement of ETS revenue split 
in categories). Examples of projects include installation of photovoltaics systems in Romania, 
grants  for  energy  efficiency  improvements  for  low-income  households  in  France,  and 
expansion of the metro networks in Lisbon and Porto in Portugal. 

In addition, Member States reported having allocated EUR 0.7 billion to projects in industry 
decarbonisation (low-carbon technologies, CCUS and energy efficiency in industrial sectors), 
including  financial  and  technical  support  to  business  in  the  Walloon  region  of  Belgium  in 
their  transition  to  a  net-zero  economy.  Member  States  also  reported  having  allocated 
EUR 2.7 billion to actions in social support and just transition.  

For  EUR  1.4  billion  in  2023  disbursements,  Member  States  reported  the  ‘Other’  category, 
which includes actions that do not fit any other categories or fit multiple categories. Examples 
include  the  Swedish  Climate  Leap  fund  that  supports  various  emission  reduction,  biogas, 
biodiversity and research projects. 

The EU ETS  auction revenue has been an  essential contribution to these and to many other 
impactful projects in the Member States. The case-studies of thirteen projects (co-) financed 
from  auctioning  revenues,  accessible  on  the  European  Environment  Agency’s  website  55, 
showcase the positive effects that revenues have for the EU’s climate transition. See Chapter 
7  of  the  accompanying  staff  working  document  for  more  detailed  data  on  the  use  of  ETS 
revenue. 

54 For more information see Carbon Market Report 2024. 
55 https://climate-energy.eea.europa.eu/topics/climate-finance/use-of-ets-auctioning-revenues/good_practices. Other good practices have been 
highlighted  by  the  Life  ETX  project,  which  received  funding  from  the  European  Union’s  LIFE  Programme  under  grant  agreement 
no.LIFE20 GIC/BE/001662 (see https://etxtra.org/lifeetx-national-human-stories/ ) 

14 

 
 
Figure  2.2:  Split  per  category  of  the  EUR  22.7  billion  reported  as  disbursed  in  the 
Member State reports on the year 2023 56.  

2.3  ACTION IN AVIATION AND MARITIME TRANSPORT 

Maritime 

Maritime transport contributes to around 3-4% of total EU CO2 emissions. In 2023, emissions 
from the sector, as collected under the Monitoring, Reporting and Verification Regulation 57, 
amounted to 126.7 million tonnes CO₂ when considering all emissions from voyages to and 
from EEA ports. Following the revision of the ETS Directive, the EU ETS started covering 
the EU’s fair share  (50% in case of voyages starting  or ending  outside of the EEA) of CO2 
emissions from large ships calling at EU ports as of 1 January 2024. For a smooth phase-in of 
the sector, for the year 2024 shipping companies will have to surrender allowances to cover 
40% of the emissions reported under the EU ETS. This will increase to 70% for 2025 and to 
100% from 2026 onwards. Non-CO2 emissions (methane and nitrous oxide) are already being 
reported in 2024 under the Monitoring and Reporting Regulation and will be included within 
the EU ETS scope as of 2026.   

At  international  level,  the  EU  successfully  supported  the  revision  of  the  International 
Maritime  Organisation  greenhouse  gas  reduction  strategy,  agreed  in  July  2023,  now  setting 
the goal of net-zero emissions from ships by or around, i.e. close to, 2050, including through 
indicative  checkpoints  for  2030  and  2040.  To  deliver  on  these  reduction  targets,  the  EU  is 
supporting the adoption, by 2025, of a basket of mid-term measures, to cover both a marine 
fuel  standard  and  a  maritime  GHG  emissions  pricing  mechanism,  including  through  a 
Comprehensive Impact Assessment in 2024 to support the decision-making process. 

56 The combined categories under EUR 500 million include (in EUR million): Road transport (309), Adaptation (155), International purposes 
and  international  climate  finance  (110),  LULUCF,  agriculture  and  land-based  removals  (59),  Administrative  expenses  (54),  Waste 
management (29), Maritime transport (17), Aviation (13), Permanent removals (3). 
57 Regulation (EU) 2015/757. 

15 

 
 
 
Aviation 

In 2023, ETS aviation emissions continued to rise to a total of 53.2 million tonnes CO₂. This 
is  9.5%  higher  than  in  2022 58.  Throughout  2024  and  2025,  the  Commission  is  adopting 
implementing legislation 59 following the revision of the ETS Directive, to strengthen the EU 
ETS  for  aviation  and  increase  the  sector’s  contribution,  and  to  implement  the  Carbon 
Offsetting  and  Reduction  Scheme  for  International  Aviation  (CORSIA)  for  extra-European 
flights of EU-based airlines. The EU is among the first jurisdictions worldwide to implement 
CORSIA in law. The  purpose of  CORSIA  is to offset aviation emissions from international 
flights  above  a  certain  level 60.  As  of  autumn  2024,  this  level  has  not  been  reached,  and 
airlines have not had any offsetting obligations under CORSIA.  

The overall climate impact of aviation is currently two to four times higher than the effect of 
its past CO₂ emissions alone 61, with non-CO₂ emissions accounting for 66% of the aviation’s 
climate impact 62. This analysis of the impact of non-CO₂ emissions is based on models. Both 
at European and international level, there are projects to measure non-CO₂ aviation emissions. 
There  is  no  monitoring yet  by  Member  States  of  non-CO₂  emissions  from  aviation.  From  1 
January  2025,  the  revised  ETS  Directive  tasks  aircraft  operators  to  monitor  and  report  the 
impacts  of  non-CO₂  emissions  per  flight  annually 63.  By  31  December  2027,  based  on  the 
results  of  the  application  of  the  monitoring  framework  of  non-CO₂  aviation  effects,  the 
Commission will submit a report and, where appropriate, a legislative proposal to mitigate the 
non-CO₂ effects. 

58 Emissions figures for 2019 were a total of about 68,2 million tonnes CO2, this included figures for the UK.  
59 For example, as of mid-October 2024, the following have been adopted: the implementing regulation on the list of states other than EEA 
countries, Switzerland the United Kingdom considered to be applying CORSIA for emissions of the year 2023 was adopted in February 2024 
(Commission  Implementing  Regulation  (EU)  2024/622);  the  list  of  aircraft  operators  for  2024  adopted  in  March  2024  (Commission 
Implementing Regulation (EU) 2024/1030); the aviation cap for 2024 (updated version) adopted in June 2024 (Commission Decision (EU) 
2024/1797);  the  detailed  rules  for  the  calculation  of  offsetting  requirements  under  CORSIA  published  on  9  July  2024  (Commission 
Implementing Regulation (EU) 2024/1879). 
60 The level above which airlines should start to offset emissions is set as 85% of 2019 CO2 emissions for the years 2024-2035 (where 2019 
was the year with the highest ever aviation emissions). 
61 Aviation and the Global Atmosphere, IPCC, 1999, https://www.ipcc.ch/site/assets/uploads/2018/03/av-en-1.pdf  
62 Updated analysis of the non-CO2 climate impacts of aviation and potential policy measures pursuant to the EU Emissions Trading System 
Directive Article 30(4), SWD(2020) 277 final. 
63 The MRV system covers flights to, from and within Europe. To facilitate the start, reporting is mandatory for flights within  Europe. This 
means in 2025  and 2026 voluntary  reporting on all  routes  is  encouraged.  From  2027, the  reporting obligation  automatically applies  to all 
flights. Consult the draft implementing legislation here: Emissions trading system (ETS) Monitoring and Reporting Regulation amendment 
in response to the ETS revision (europa.eu). 

16 

 
 
 
 
3  EFFORT SHARING EMISSIONS 

The  Effort  Sharing  Regulation  (ESR)  covers  GHG  emissions  from  domestic  transport 
(excluding CO₂ emissions from aviation), buildings, agriculture, small industry, and waste 64. 
These  account  for  around  65%  of  the  EU’s  domestic  emissions.  The  ESR  sets  binding 
national targets to  reduce  emissions  in those sectors compared to 2005  levels for the period 
2021-2030. 

Based on approximated data, emissions from the effort sharing sectors in 2023 were 2% lower 
than in 2022 or 19.2% lower than in 2005. The reduction in emissions resulted in particular 
from  buildings,  which  decreased  its  emissions  by  5.5%  compared  with  2022,  followed  by 
agriculture with a decrease of 2.0% compared with 2022. Emissions from the transport sector, 
which  is  the  largest  sector  under  the  ESR  and  accounts  for  over  one  third  of  total  effort 
sharing emissions, reduced by 0.8%. 

Figure  3.1:  Emissions  in  sectors  covered  by  effort  sharing  legislation  2005-2030  and 
annual emission allocations, EU-27 

3.1  PROGRESS IN OVERALL EFFORT SHARING EMISSIONS TOWARDS 2030 

This  section  provides  an  indication  of  each  Member  State’s  progress  in  meeting  its  annual 
emissions allocations (particularly for 2022). This is based on the final GHG inventory data 
for  2022 65 and  for  2021,  the  approximated  GHG  emissions  for  2023  and  the  2024  GHG 
projections  for  2024-2030.  The  2021-2025  compliance  cycle  is  due  in  2027  (following  a 
comprehensive  review  of  the  2021-2025  emissions)  and  the  compliance  cycle  2026-2030  is 
due in 2032 (following a comprehensive review of the 2026-2030 emissions). 

All Member States met their obligations under the Effort Sharing Decision (ESD) which set 
annual emission limits for each year in the period 2013-2020. The ESR, which was adopted in 
2018  and  amended  in  2023,  sets  the  EU-wide  target  to  reduce  emissions  from  the  effort 

64 Regulation (EU) 2018/842 of 30 May 2018, as amended by Regulation (EU) 2023/857 of 19 April 2023. 
65 GHG emissions and removals for 1990-2022 are based on 2024 GHG inventory as submitted by EU Member States to the Commission by 
15  March 2024.  In 2024,  however,  the inventory  reporting timeline is  exceptionally extended until  the  second  half of  the  year due  to the 
delivery of the UNFCCC Enhanced Transparency Framework (ETS) reporting tool. Member Staes will be able to submit an updated final 
GHG inventories  to  EEA by 15  September.  Therefore,  figures  may  change  following  possible  resubmissions  resulting  from  later  reviews. 
Together  with  the  aggregated  EU-level  emission  data,  the  GHG  inventory  will  be  submitted  to  the  UNFCCC  under  Regulation  (EU)  No 
525/2013 by the 15 December 2024. 

17 

 
 
 
sharing sectors by 40% by 2030 compared with 2005 levels. The overall ESR target for the 
EU  translates  into  national  GHG  emission  reduction  targets  for  2030  and  annual  GHG 
emissions  limits.  Member  States  can  also  use  flexibilities  to  comply  with  their  annual 
emission  limits  and  their  2030  targets.  These  flexibilities  entail  banking,  borrowing,  buying 
and selling, as well as accessing credits from the land use sector and for some Member States 
the possibility to access allowances from the EU ETS (for more details see Chapter 8 of the 
accompanying  staff  working  document).  Iceland  and  Norway  also  implement  the  ESR,  but 
only the trends in (projected) emissions for the EU Member States are presented below. 

In 2022, EU-wide  emissions  in the ESR sectors  were 3.1% below the aggregated  emissions 
limit,  while  emissions  exceeded  the  annual  emission  allocations  (AEAs)  in  eight  Member 
States 66. This was similar  to  the achievement in 2021 67. The emission data  for 2023 is still 
provisional; but it is expected that 10 Member States generated emissions that exceeded their 
AEAs 68.  The  ESR  emissions  for  2021,  2022  and  2023  will  be  reviewed  in  2027,  when  the 
compliance for each of the years 2021 to 2025 will be checked and determined. At that stage, 
Member States can use the flexibilities available under the ESR to comply with their annual 
emission  limits.  However,  the  emission  projections  that  Member  States  submitted  in  March 
2023 and March 2024 can already be used at this stage to gain insights into progress towards 
ESR targets.  

By 30 June 2024, Member States were due to submit their final updated National Energy and 
Climate  Plans  (NECPs)  in  line  with  Article  14  of  the  Governance  Regulation.  Taking  into 
account  the  14  final  NECPs  that  have  been  submitted  to  the  Commission  by  the  time  of 
drafting this report 69 and the emission projections that Member States reported in March 2023 
and  March  2024,  according  to  the  most  ambitious  aggregated  projections,  emissions  at  EU 
level are expected to reduce by over 37% in 2030 compared with 2005 levels (see Figure 3.2). 
This  is  an  improvement  compared  to  the  aggregated  projections  calculated  based  on  draft 
updated NECPs, namely around  34% reduction  of ESR emissions  in  2030 70.  However,  this 
still leaves a gap to the EU-wide ESR target of reducing emissions by 40% by 2030 compared 
with 2005 levels. 

The  Commission  has  also  used  Member  States’  latest  emission  projections  to  assess  their 
progress towards their annual emission limits in 2021-2030, taking into account the potential 
use of the  flexibilities  available under the  ESR 71. If Member States used  saved AEAs from 
previous years (banking) or use AEAs from future years (borrowing) and/or the existing ETS 
flexibility  and/or  the  LULUCF  flexibility  2021-2025  to  cover  excess  ESR  emissions,  11 
Member States would still have excess emissions in at least one year in 2021-2030 72. The fact 
that  Cyprus,  Croatia  and  Italy  already  had  excess  emissions  in  the  first  compliance  period 

66 Croatia, Cyprus, Hungary, Italy, Ireland, Lithuania, Malta, Romania. 
67 In 2021, EU-wide emissions in the ESR sectors remained 3.3% below the aggregated emissions limit. 
68 Cyprus, Czechia, Denmark, Estonia, Ireland, Italy, Lithuania, Malta, Poland, Romania. 
69 14 Member States (Germany, Denmark, Finland, France, Ireland, Italy, Luxembourg, Latvia, Lithuania, Hungary, the Netherlands, Spain, 
Romania, Sweden) have submitted their final updated NECPs to the Commission as of 15 October 2024. 
70 COM(2023) 796. 
71 Article  8  of  the  ESR  provides  that  in  case  the  Commission  finds  that  there  is  not  sufficient  progress,  Member  States  must  prepare  a 
corrective action plan. See table 8.2 in the accompanying staff working document for detailed data for each Member State. 
72 Bulgaria, Cyprus, Germany, Estonia, Croatia, Hungary, Ireland, Italy, Malta, Poland, Slovakia have excess emissions in at least one year in 
2021-2030. Austria, Belgium, Denmark, Greece, Spain, Finland, Lithuania, Luxembourg, Latvia, Portugal, Sweden and Slovenia would have 
emissions below their AEAs each single year using banking and/or ETS flexibility. France and the Netherlands would expect a surplus of 
AEAs over the period 2021 to 2030 based on their final updated NECPs. 

18 

 
 
(2021-2025)  increases  the  challenge  because  there  is  now  less  time  available  to  develop 
additional policies to drive down emissions. 73 

Under  Article  9(2)  of  the  ESR,  any  net  debit  (i.e.  excess  emissions)  under  the  LULUCF 
Regulation in 2021 - 2025 is automatically deducted from Member States’ AEAs during the 
first ESR compliance period. Based on available estimated LULUCF emission data for 2021–
2025,  trends  in  Finland,  France  and  Portugal  give  rise  to  concern  (see  Chapter  4).  If  these 
LULUCF  trends  are  confirmed,  those  Member  States  may  struggle  to  achieve  their  ESR 
targets each year in the first compliance period 74.  

Under  the  ESR,  nine  Member  States  can  use  a  limited  amount  of  ETS  allowances  to  offset 
emissions in the effort sharing sectors. The revision of the ESR allowed four of these Member 
States  to  increase  their  amounts  of  ETS  flexibility 75.  Malta  and  Sweden  have  notified  the 
Commission  that  they  intend  to  use  this  flexibility.  Moreover,  Member  States  that  perform 
well under the LULUCF Regulation can use such overachievement, up to a limit, to cover any 
excess ESR emissions. Member States can also transfer AEAs among themselves in order to 
match emissions with AEAs 76. However, current projections suggest that there may only be a 
limited amount of AEAs available for purchase. 

Currently  available  information  indicates  that  the  EU’s  ESR  emissions  are  still  below  the 
aggregated emissions limits in the years 2021, 2022 and 2023. The expected GHG emissions 
reduction  in  the  ESR  for  2030  has  also  been  improving  with  the  draft  updated  NECPs  and 
based on currently available information, final updated NECPs appear to result in better than 
expected  GHG  emissions  reduction  for  2030.  In  December  2023,  the  Commission  made 
recommendations to Member States based on their draft updated NECPs to step up action in 
the effort sharing sectors to reduce GHG emissions.  At the time of drafting this report only 
14 Member States had notified their final NECP. It is important to have assessed the complete 
information from the final updated NECPs before concluding whether or not a Member State 
is  making  sufficient  progress.  Based  on  the  currently  available  information,  six  Member 
States  would  have  to  use  the  flexibilities  available  under  the  ESR  and  acquire  additional 
AEAs in order to comply with their annual emission limits already in the period 2021 to 2025 
period and eight others in the period 2026 to 2030 77. As these Member States could be at risk 
of not making  sufficient  progress  towards their  obligations  under the  ESR, the Commission 
will already engage with them on their efforts to ensure compliance with the ESR obligations. 

73 Available historical and approximated data is used for Member States’ ESR emissions in 2021, 2022 and 2023 and projections for other 
years; Final ESR emissions will only be established following a comprehensive review in 2027 (for 2021-2025) and 2032 (for 2026-2030). 
The AEAs for 2026-2030 are estimated as they will only be set after a comprehensive review in 2025. For more details, see Chapter 8 of the 
accompanying staff working document. 
74 For the purposes of this assessment, the excess emissions under LULUCF in the period 2021 – 2025 are equally distributed over the years 
2021 to 2025 for calculating the reduction in AEAs under the ESR. Flexibilities under the LULUCF Regulation are not taken into account. 
75 Belgium, the Netherlands, Sweden, and Malta. ETS flexibility allows a Member State to notify to the Commission an amount of EU ETS 
allowances to be available for ESR compliance. The EU ETS allowances are deducted from the amounts  that would normally be auctioned 
under the EU ETS. 
76 Iceland and Norway can also buy AEAs from and sell AEAs to Member States. 
77 Croatia, Cyprus, and Italy would be in such situation already in the period 2021-2025, and Finland, France and Portugal as well due to their 
LULUCF trends as explained above. Bulgaria, Germany, Estonia, Hungary, Ireland, Malta, Poland and Slovakia would be concerned for the 
period 2026-2030. 

19 

 
 
Figure 3.2: Gap between ESR 2030 targets and projected GHG emissions (in percentage 
points) 78 

3.2  EMISSION TRENDS BY TYPE OF GAS UNDER THE EFFORT SHARING LEGISLATION 

More than two thirds of total emissions from the effort sharing sectors are CO₂ emissions, the 
remaining third are  non-CO₂  emissions. Non-CO₂ greenhouse gases include methane (CH₄), 
nitrous oxide (N₂O), and fluorinated  gases  (NF₃ , HFCs, PFCs,  SF₆ , HFCs). While most  of 
the  emissions  in  the  energy  sector  are  covered  by  the  EU  ETS,  methane  emissions  in  this 
sector  fall  under  the  ESR.  These  non-CO₂  gases  are  emitted  from  a  range  of  sectors  and 
processes, and all have much higher global warming potentials than CO₂ by degrees of tens to 
tens  of  thousands  depending  on  the  gas.  As  a  result,  non-CO₂  emissions  have  an  important 

78 The  graph  is  based  on  the  latest  emission  projections  that  Member  States  submitted,  including  from  March  2023,  March  2024,  draft 
updated NECPs or final NECPs.  

20 

 
 
 
 
impact  on  climate  change  and  are  key  sources  of  potential  emission  reductions  in  several 
sectors.  Mitigating  non-CO₂  emissions  can  lessen  global  temperature  increases  rapidly. 
Reducing non-CO₂ emissions is also important to achieve our targets under the ESR. Around 
half  of  the  non-CO₂  emissions  come  from  the  agriculture  sector.  All  sectors  have  reduced 
non-CO₂ emissions from 2005 to 2022 but the most significant reductions were made in the 
non-ETS energy (‘other energy’), small industry and the waste sector. Over the same period, 
non-CO₂ emissions from agriculture, transport and buildings have remained relatively stable. 
Most emission reductions were nitrous oxide emissions from non-ETS industry, and methane 
in  the  waste  sector,  while  the  level  of  F-gas  emissions  has  reduced  but  to  a  lesser  extent 
(Figure 3.3). The EU methane strategy aims to reduce methane emissions in the energy sector, 
as well as in the agriculture and waste sectors, and thus also supports the achievement of the 
ESR targets. 

Figure 3.3: Non-CO2 emissions under the ESR in 2005 and 2022, by sector and gas type  

F-gases 

Fluorinated  greenhouse  gases  (‘F-gases’)  have  a  global  warming  effect  up  to  24  000  times 
greater  than  CO₂.  F-gas  emissions  in  the  EU  amount  to  2.5%  of  the  EU’s  total  GHG 
emissions.  Hydrofluorocarbons  (HFCs)  are  the  most  important  F-gases.  Thanks  to  the 
implementation of the 2014 F-gas Regulation (Regulation (EU) No 517/2014), there has been 
a consistent and significant reduction in F-gas emissions across the EU. Since this regulation 
entered into force in 2015, total F-gas emissions have declined by 27.6% after having doubled 
between 1990 and 2014. The biggest improvements were seen in the cooling industries, like 
refrigeration and air conditioning that have been shifting to more climate-friendly alternatives. 
The  regulation  was  also  successful  in  terms  of  facilitating  the  global  agreement  reached  in 
2016  to  phase  down  HFCs  under  the  Montreal  Protocol  (“Kigali  Amendment”),  which  is 
estimated to prevent  up to 0.5  degrees Celsius  of global warming  by 2100. Since  11 March 
2024, an even more ambitious F-gas Regulation (Regulation (EU) 2024/573) applies. Under 
the new rules, the amount of HFCs used must be reduced by around 95% in 2030 compared to 
2015  and  be  phased  out  in  2050.  These  reduced  F-gas  emissions  will  continue  to  support 
Member States’ efforts to reach their target under the Effort Sharing Regulation. 

21 

 
 
 
 
3.3  ROAD TRANSPORT 

Domestic  transport  emissions  represent  a  quarter  of  the  EU’s  overall  GHG  emissions  and 
have  decreased  only  slightly  since  2005.  Efforts  to  decarbonize  the  transport  sector  need  to 
accelerate  in  order  to  meet  the  EU’s  2030  and  2050  climate  objectives.  Inventory  data 
indicated an average annual increase of 4 MtCO₂-eq between 1990 and 2022, a trend that is 
clearly not in line with meeting the EU 2030 domestic target 79. The road transport sector is 
responsible  for  the  great  majority  of  transport  emissions  (around  95%,  or  73%  when 
international  shipping  and  aviation  are  included),  with  more  than  70%  of  road  transport 
emissions originating from passenger cars and vans. Between 2005 and 2022, emissions from 
road transport decreased by only 4% and emissions from heavy-duty vehicles even increased 
by  1%.  This  shows  that  improved  vehicle  efficiency  and  the  uptake  of  low-emission 
powertrains  have  hardly  outweighed  the  effect  of  the  continued  increase  in  road  transport 
activity. 

The EU CO₂ emission standards for new cars and vans and for new heavy-duty vehicles are 
key policies for reducing road transport CO2 emissions.  

According  to  the  provisional  monitoring  data  for  new  cars  and  vans  registered  in  the  EU, 
Iceland, and Norway in 2023 80, the average CO₂ emissions 81 further decreased compared to 
2022, from 108.1 gCO₂/km to 106.6 gCO₂/km for cars (-1.4%) and from 183.8 gCO2/km to 
180.9  gCO₂/km  (-1.5%)  for  vans.  This  is  a  continuation  of  the  downward  trend  in  CO₂ 
emissions  observed  since  2020,  when  stricter  targets  started  applying.  In  2023,  average 
emissions were 28% (cars) and 11% (vans) below 2019 levels. This is mainly due to the surge 
in the share of zero-emission vehicle registrations. In 2023, 15.5% of new cars and 8% of new 
vans had no tailpipe emissions (up from 2.2% and 1.4% respectively in 2019). Progress has 
been  made  therefore  in  the  past  years,  but  significant  further  emission  reductions  are  still 
needed to deliver on the future targets (Figure 3.4). By 2035, all new cars and vans should be 
zero-emission.  

Figure 3.4: Average CO₂ emissions (dots) and EU fleet-wide targets (lines) for new cars 
and vans since 2020 

Figure 3.4.a New cars 

Figure 3.4.b New vans 

79 EEA greenhouse gases — data viewer — European Environment Agency (europa.eu) 
80 Monitoring of CO2 emissions from passenger cars (europa.eu) 
81 Determined during type-approval using the Worldwide Harmonised Light Vehicles Test Procedure (WLTP). 

22 

 
 
 
 
 
Heavy-duty  vehicles  (HDVs),  such  as  lorries,  buses  and  coaches,  generate  27%  of  all  CO₂ 
emissions from  road  transport. The  EU has recently adopted revised CO₂ standards for new 
HDVs  to  further  tighten  existing  standards  and  extend  the  scope  to  smaller  lorries,  buses, 
coaches and trailers. Under the revised regime, CO₂ emissions must be reduced by 15% from 
2025 (unchanged by the revision), by 45% from 2030, by 65% from 2035 and by 90% from 
2040 onwards compared with the 2019 baseline. There is also a new 90% zero-emission target 
for new city buses from 2030 and a 100% target from 2035 onwards. The provisional data of 
the  reporting  year  from  July  2022  to  June  2023 82 show  a  fall  in  lorries’  CO₂  emissions,  a 
small increase in the number of new zero-emission lorries, and that about one quarter of new 
city buses are electric. 

The  Fuel  Quality  Directive  also  contributes  to  reducing  transport  emissions  by  setting 
quality  requirements  for  road  transport  fuels.  Compliance  with  fuel  quality  limits  is  high  in 
the  EU.  Almost  all  key  fuel  parameters  in  the  samples  taken  in  2022  were  reported  to  be 
within  the  tolerance  limits  (including  the  maximum  sulphur  content),  and  Member  States 
reported  the  actions  taken  when  non-compliant  samples  were  identified.  This  confirms  that 
the fuel quality monitoring system currently in place ensures that high-quality fuels are sold in 
the  EU  according  to  the  requirements  of  the  Fuel  Quality  Directive.  Until  2023,  Member 
States  were  also  required  to  report  on  the  6%  life  cycle  GHG  emission  intensity  target  for 
road  transport  fuels  compared  with  2010  levels,  whereafter  this  decarbonisation  target  was 
taken  over  by  the  new  Renewable  Energy  Directive.  The  average  GHG  intensity  of  fuels 
supplied in 2022 was 5.6% lower than in 2010. For more information on fuel quality, please 
see Chapter 5 of the accompanying staff working document. 

82 To be published soon.  

23 

 
 
 
 
4  LAND USE, LAND USE CHANGE AND FORESTRY 

(LULUCF) 

The  land  use,  land-use  change,  and  forestry  (LULUCF)  sector  plays  a  significant  role  in 
achieving  the  EU’s  climate  neutrality  goal.  In  the  EU,  the  LULUCF  sector  absorbs  more 
GHGs than it emits, removing significant volumes of carbon from the atmosphere. The sector 
also provides biomaterials that substitute fossil or carbon intensive materials, which is equally 
important in the transition to a climate-neutral economy. However, carbon removals have and 
continue to decline at a worrying speed in recent years. 

This negative trend is, to a large degree, due to a decrease in forest-related removals, mainly 
as  a  consequence  of  an  increase  in  harvesting,  combined  with  a  stabilisation  or  slight 
reduction in forest growth, especially in ageing forests in certain Member States. The annual 
net  gain  in  living  biomass  is  determined  by  photosynthesis  minus  harvest,  mortality,  and 
respiration. Climate change itself is having an increasing impact too. The growing frequency 
and severity of disturbances such as forest fires, wind throw, droughts, and insect and fungus 
outbreaks, is undermining  the  role of  forests as  a carbon sink and  has in  some cases turned 
them  temporarily  into  carbon  sources.  There  are  many  indications  that,  because  of  climate 
change, the future robustness of EU forest removals is far from guaranteed. At the EU level, 
cropland,  grassland,  wetlands,  and  settlements  are  the  main  sources  of  LULUCF  emissions, 
with managed organic soils generating particularly high emissions 83.  

4.1  ASSESSMENT OF PROGRESS IN THE LULUCF SECTOR 

A greater role for the LULUCF sector to support climate action. 

The  LULUCF  target  is  to  increase  land-based  net  removals  in  the  EU  by  an  additional  -42 
million tonnes of CO₂ equivalent (MtCO₂-eq) by 2030 84. This will result in total net removal 
at the EU level of -310 MtCO₂-eq 85. 

For  the  period  2021-2025,  specific  accounting  rules  apply  for  different  land  accounting 
categories,  which  take  into  account  specific  historical  benchmarks  (such  as  the  forest 
reference  level).  Member  States  are  to  comply  with  the  ‘no-debit’  rule,  meaning  that 
‘accounted’ emissions must not exceed ‘accounted’ removals. 

For  the  period  2026-2030,  reporting  is  simplified,  with  the  accounting  rules  and 
corresponding  benchmarks  abolished.  The  additional  -42  MtCO₂-eq  target  covers  all 
LULUCF  reporting  categories  and  is  distributed  among  Member  States  through  individual 
targets,  based  on  their  share  of  total  managed  land  area.  The  national  2030  targets  require 
each Member State to increase its climate ambition and implement additional agriculture and 
forestry  policies.  (for  more  details,  see  Chapter  9  of  the  accompanying  staff  working 
document). 

83 On average, organic soils are reported to lose 7.9 tonnes of carbon per hectare per year (tC/ha/year). 
84 As compared to the yearly average of net removals over the reference period 2016-2018. 
85 The  average  yearly  net  removals  for  the  years  2016,  2017  and  2018,  as  reported  in  the  2020  greenhouse  gas  inventory 
submission, plus the additional  -42 MtCO2-eq net removals result in total net removals of  -310 MtCO₂-eq at the EU level. 
Any methodological adjustments in the inventory data reporting will be taken into account in the compliance check against 
the 2030 target. 

24 

 
 
 
Assessment of progress in the LULUCF sector 

The  negative  trend  of  shrinking  removals  observed  in  recent  years  persists.  While  the  EU 
appears to be on track to meet the ‘no-debit’ commitment in 2025, it is not on track to meet its 
2030 target,  with  the level of net removals  having  dropped significantly as compared to the 
reference period of 2016-2018.  

Based on the 2024 GHG inventory submissions, the provisional ‘accounted’ balance for 2021 
and  2022  shows  for  the  EU  a  total  accounted  credits  of  -68  MtCO₂-eq,  exceeding  the  ‘no-
debit’  commitment  for  the  first  two  years  of  the  compliance  period  from  2021  to  2025. 
However,  due  to  further  methodological  improvements  of  the  greenhouse  gas  inventories 
expected in the future, these figures are subject to change in the next years. An update of the 
reference levels used for accounting is also foreseen at the end of the compliance period 2021-
2025, to adjust them to these methodological improvements since 2020. 

Figure 4.1: Land sector emissions and removals in 2022 based on MS reported data by 
main land use category. 

Based upon data for two years within the compliance period (2021 and 2022) and excluding 
flexibilities  available  to  Member  States  at  the  end  of  the  compliance  period,  eight  Member 
States showed accounting debits, meaning they may face challenges meeting the commitment 
in 2025, with France, Finland and Czechia showing the biggest debit 86. In 19 Member States, 
the  accounted  removals  are  higher  than  accounted  emissions,  meaning  they  are  in  line  with 
the ‘no-debit’ commitment, with Romania, Spain and Germany having the largest net credit in 
the  EU  87 .  As  above,  the  figures  are  subject  to  change  due  to  further  methodological 
improvements of the greenhouse gas inventories expected in the future. 

Looking further ahead to reaching the 2030 net removal targets, Member States need to reflect 
on  the  role  of  the  land  sector  when  updating  their  National  Energy  and  Climate  Plans 
(NECPs) for the 2021-2030 period. As part of this process, they should provide projections of 
the climate performance of their policies and measures up to 2030 and beyond. 

86 Member States with debits in decreasing order of magnitude: France, Finland, Czechia, Portugal, Slovenia, Estonia, Belgium and Cyprus. 
87 Member  States  with  credits  in  increasing  order  of  magnitude:  Malta,  Luxembourg,  Latvia,  Netherlands,  Slovakia,  Croatia,  Greece, 
Bulgaria, Poland, Lithuania, Italy, Austria, Ireland, Hungary, Sweden, Denmark, Germany, Spain, Romania. 

25 

 
 
 
 
Projections provided by Member States 88 show that the EU as a whole is not on track to meet 
its  target  of  generating  additional  -42  MtCO₂-eq  net  removals  by  2030,  leaving  a  gap  of 
around  45-60  MtCO₂-eq.    In  particular,  Poland,  France,  Sweden,  Italy,  Spain  and  Germany 
project  the  biggest  gap  to  their  national  2030  targets,  while  Portugal,  Austria  and  the 
Netherlands project to have the biggest surplus compared to the 2030 target (Figure 4.2). 

Figure  4.2:  Projected  gap  to  the  national  2030  targets,  based  on  Member  States’ 
projections for 2030. 

Most  final  updated  NECPs  do  not  set  out  sufficient  ambition  nor  sufficient  climate  action 
related to the land sector. Very few Member States have proposed a clear pathway to reaching 
their national net removal targets for 2030. Moreover, at the time of drafting this report, only 
14 Member States have submitted their final plan. It is paramount that Member States swiftly 
design and implement adequate policies to put them firmly on track to reaching their climate 
targets.  This  should  include  measures  to  assist  farmers,  foresters  and  other  stakeholders  in 
building sustainable business models in line with these targets. 

4.2  ACTION TO STEP UP LAND MONITORING 

The  LULUCF  Regulation  requires  that  all  Member  States  set  up  systems  to  monitor,  inter 
alia,  soil  and  biomass  carbon  stocks.  Better  data  on  land,  soil  and  forests  will  help  identify 
measures that unlock the highest climate benefits. The Commission’s legislative proposal for 
soil monitoring, and for forest monitoring and resilience  89, as well as the revised LULUCF 
Regulation  are  mutually  reinforcing.  A  resilient  land  sector,  including  soils  and  forests, 
sequesters  and  stores  more  carbon,  while  the  LULUCF  objectives  promote  the  sustainable 
management of soils and forests. 

Member  States  GHG  inventories  underpin  climate  action  and  are  also  continuously 
developing.  Recalculations  based  on  better  data  and  improved  methods  can  be  seen  in  the 
inventories  themselves.  Further  improvements  are  expected  in  response  to  new  needs  for 

88 The following sources of Member States’ projections were used in the analysis in this report, based on the order of availability: final NECP 
submission (scenario with additional measures), final NECP submission (scenario with existing measures), projections reported biennially by 
Member States (scenario with additional measures), projections reported biennially by Member States (scenario with existing measures). 
89 Proposal for a Regulation on a Forest Monitoring Framework ; Proposal for a Directive on Soil Monitoring and Resilience. 

26 

 
 
 
 
targeted and efficient policy making in both agriculture and forestry at the national level. Such 
improvements  are  in  line  with  the  requirements  on  high-quality  and  geographically  explicit 
statistics in the revised LULUCF Regulation. Improved greenhouse gas inventories, based on 
harmonised  and  refined  activity  data  and  removal/emissions  factors  will  be  critical  to 
facilitate action. Enhanced, more timely and mapped data will assist Member States and the 
EU identify optimal policy solutions, putting us on track to reaching our climate objectives. 

Advanced technologies, such as those available under EU programmes, provide digital maps 
updated  with  high  resolution  satellite  and  ground  observations.  New  steps  are  being 
undertaken  to  integrate  information  from  the  Copernicus  Earth  Observation  satellite  data, 
products,  applications  and  services  with  other  data  such  as  those  used  for  the  Common 
Agricultural Policy (CAP). 

4.3  RELATED INITIATIVES IN AGRICULTURE AND FORESTRY 

In  addition  to  the  Fit  for  55-package,  several  other  European  Green  Deal  initiatives  aim  to 
increase  the  resilience  of  the  LULUCF  sector  while  protecting  and  promoting  ecosystem 
services  and  the  transition  to  a  resource  efficient  circular  economy  and  a  sustainable 
bioeconomy. 
The recently adopted EU framework for the certification of carbon removals 90 is designed to 
facilitate  and  speed  up  the  deployment  of  high-quality  carbon  removals  and  emission 
reductions.  It  includes  three  distinct  types  of  activities:  carbon  farming,  carbon  storage 
products, and permanent removals. The framework will not only provide land managers with 
new business opportunities, but also support growth of the sustainable circular bioeconomy by 
certifying  carbon  storage  products,  such  as  wood-based  construction.  Ultimately,  this  can 
assist  Member  States  in  attaining  their  LULUCF  targets.  To  boost  the  industrial  capture  of 
carbon and its utilisation in bio-based products or storing it permanently. 

Healthy ecosystems contribute to carbon sequestration and climate resilience and improve the 
wellbeing  of  populations.  Activities  such  as  the  rewetting  of  peatlands  can  have  a 
significantly  positive  impact  on  biodiversity.  The  Nature  Restoration  Regulation,  a  key 
element  of  the  EU  biodiversity  strategy,  calls  for  binding  targets  to  restore  degraded 
ecosystems,  in  particular  those  with  the  most  potential  to  capture  and  store  carbon  and  to 
prevent and reduce the impact of climate change 91. 

4.4  INCENTIVES FOR REMOVALS AND SUSTAINABLE PRACTICES 

Many  funding  mechanisms  and  incentives  are  available  or  being  developed  to  encourage 
carbon removals, through public or private sector sources. The EU provides funding under the 
CAP, other EU programmes such as LIFE, Horizon Europe (in particular the Mission Soil), 
and  the  Cohesion  Policy  funds.  In  2023,  the  Commission  adopted  guidance  on  EU  funding 
opportunities  for  healthy  soils 92.  Member  States  can  also  support  the  uptake  of  sustainable 
management  practices  under  State  aid  rules,  which  have  been  revised  and  allow  for  the 
provision of forest ecosystem services such as climate regulation and biodiversity restoration. 
The Commission guidance on payment schemes for forest ecosystem services provides further 
information  for  actors.  The  CAP  and  State  aid  cover  funding  for  investments  and  measures 

90 EUR-Lex - 52022PC0672 - EN - EUR-Lex (europa.eu) 
91 Regulation (EU) 2024/1991 
92 Commission Staff Working Document on the Guidance on EU funding opportunities for healthy soils.  

27 

 
 
such as training, advice or cooperation, that help maximise effects. Private initiatives linked to 
voluntary carbon markets, or a combination of different funding options can supplement and 
further promote large-scale deployment of carbon farming. 

The  carbon  removal  certification  framework  will  help  ensure  the  transparent  identification, 
through standardised methodologies, of carbon farming and industrial  solutions  that remove 
CO₂  from  the  atmosphere  and  store  it  long-term.  Carbon  removal  certificates  can  also  help 
organisations  back  credible  carbon  removal  claims  and  meet  stakeholders'  expectations  that 
carbon  removals  should  not  be  used  for  greenwashing,  in  line  with  the  Corporate 
Sustainability  Reporting  directive  93  and  the  proposed  directive  on  green  claims  94 .  To 
facilitate  future  implementation,  the  Commission  has  set  up  an  Expert  Group  on  carbon 
removals 95. 

93 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32022L2464 
94 Proposal for a Directive on green claims - European Commission (europa.eu) 
95 Register of Commission expert groups and other similar entities (europa.eu) 

28 

 
 
 
 
5  PREPAREDNESS FOR AND RESILIENCE TO CLIMATE 

CHANGE IMPACTS 

In 2023, Europe witnessed its largest wildfires ever recorded, one of the wettest years, major 
marine  heatwaves,  widespread  devastating  flooding,  and  a  continuing 
increase  of 
temperatures.  The  Commission’s  adaptation  progress  assessments  of  the  end  of  2023  show 
that  the  need  for  climate  adaptation  and  preparedness  is  increasingly  understood  and  its 
importance rising on the political agenda. 

However, the EU’s and the Member States’ climate adaptation policies and measures are not 
keeping  pace  with  the  rapidly  growing  risks  and  impacts.  The  first-ever  European  Climate 
Risk  Assessment  (EUCRA)  report  of  March  2024 96 identified  36  major  climate  risks  for 
Europe. Eight of them require urgent action today, and without further action all of them will 
become  critical  or  even  catastrophic  in  the  future.  Bolder  policies  and  more  significant 
measures  are  urgently  needed,  and  the  Commission  put  forward  proposals  during  the 
reporting year. This marks a turning point for the EU’s climate adaptation action. 

5.1  CONTEXT: EU ADAPTATION ACTION 

The  European  Climate  Law  requires  the  EU’s  institutions  and  the  Member  States  to  ensure 
continuous progress on adaptive capacity, strengthening resilience and reducing vulnerability, 
in line with the Paris Agreement. Implementation of the 2021 EU Adaptation Strategy is in 
full swing. Cohesion policy and other key budgetary programmes have embraced the ‘do no 
significant harm’ principle and prepared climate proofing practice to reduce the climate risk 
exposure  of  EU-funded  investments.  A  range  of  sectoral  policies  are  being  updated  for 
climate risks. The Member States are improving adaptation action. 
The  findings  of  recent  Commission  assessments  are  nevertheless  mixed 97.  Steady  progress 
has been made at EU level with implementing the EU Adaptation Strategy, but the Member 
States  need  to  do  much  more  on  governance  aspects,  awareness-raising,  fair  and  just 
the  Commission 
financing,  and  nature-based  solutions, 
resilience, 
recommendations on adaptation progress in individual Member States. 

line  with 

in 

The European Court of Auditors (ECA) adopted a special report on EU climate adaptation in 
October  2024  in  which  it  concluded  that  while  the  overall  EU  framework  for  adaptation 
policy  was  sound,  there  were  weaknesses  and  gaps  in  its  implementation 98.  Besides  others, 
the  ECA  recommended  to  improve  reporting  on  climate  adaptation,  better  develop  and 
promote EU tools for climate adaptation, and ensure that all relevant EU-funded projects are 
adapted to the current and future climate conditions. 

The latest Commission assessments of the draft updated NECPs noted that the NECPs and the 
Member  States’  planned  and  implemented  adaptation  policies  and  measures  were  not 
synchronised. The Commission has issued recommendations to address this concern. 

The  first  years  of  the  implementation  of  the  European  Climate  Law  were  analysed  by  the 
Commission in spring 2024 99. Providing for continuous progress on adaptation, the European 

96 European Climate Risk Assessment — European Environment Agency (europa.eu) 
97  60a04592-cf1f-4e31-865b-2b5b51b9d09f_en  (europa.eu),  SWD(2023)  338  final,  COM(2023)  796  final  and  31  linked 
recommendation documents, SWD(2023) 932 final  
98 https://www.eca.europa.eu/en/publications/SR-2024-15 
99 COM(2024)196 final 

29 

 
 
Climate  Law  together  with  the  EU  Adaptation  Strategy  have  set  the  long-term  direction  of 
travel  and  increased  investment  predictability  by  providing  for  continuous  progress  on 
adaptation (See Chapter 1.3). 

5.2  FURTHER DEVELOPING EU ADAPTATION ACTION  

The EEA published the first EUCRA report in March 2024 to help identify policy priorities 
for  climate  change  adaptation  and  for  climate  sensitive  sectors.  This  innovative  assessment 
mobilised  over  100  scientists  across  Europe  and  classified  the  36  major  climate  risks  for 
Europe in five clusters: food, health, ecosystems, infrastructure, and the economy and finance. 
Eight of these are urgent and more than half require more action now, primarily to conserve 
ecosystems,  protect  people  from  heat,  protect  people  and  infrastructure  from  floods  and 
wildfires, and to secure the viability of EU solidarity mechanisms. The assessment shows that 
the  EU’s  policies  and  adaptation  measures  are  not  keeping  pace  with  the  rapidly  growing 
risks.  Incremental  adaptation  will  often  not  be  sufficient  and  urgent  action  is  likely  to  be 
needed even on risks that are not yet critical, because many measures which improve climate 
resilience take effect slowly over prolonged periods. 

In  response  to  the  findings  of  the  EUCRA  report,  the  March  2024  Commission 
Communication  on  managing  climate  risks  -  protecting  people  and  prosperity  demonstrates 
the Commission’s resolve to take the risks and concerns seriously and tackle them head-on. 
The policy document sets out how the EU can effectively get ahead of the growing climate-
related risks and build systematically greater resilience to climate change impacts. It identifies 
measures to be implemented by stakeholders in order to meet their responsibilities (at the EU, 
national and subnational levels), and measures for both policymakers and the private sector. It 
underscores  the  point  that  action  to  improve  climate  resilience  is  essential  for  maintaining 
societal functions and protecting people, economic competitiveness and the health of the EU 
economies and companies. It identifies four horizontal areas where progress can systemically 
improve EU climate resilience: 

• 

improved  governance  (in  particular  clarity  on  risk  ownership  implementation  at 
national level); 

•  better  tools  for  empowering  risk  owners  (especially  tools  that  provide  clarity  on 

climate data and scenarios); 

•  harnessing  structural  policies  (spatial  planning  and  the  protection  of  critical 

infrastructure in the Member States); and 

•  setting the right preconditions for financing climate resilience. 

The  Communication  is  the  start  of  a  dialogue  and  of  further  work  to  promote  societal 
preparedness,  sound  risk  management,  climate  adaptation  and  resilience  through  legislative 
and non-legislative activities.  

See  also  Section  7  for  the  UAE  Framework  for  Global  Climate  Resilience  and  the  UAE-
Belém work programme on indicators, as important drivers for EU adaptation action. 

5.3  ADAPTATION IN EU SECTOR POLICIES 

a)  Ecosystems 

Climate change is a key driver of biodiversity loss and ecosystem degradation in the EU. Of 
the  five  major  climate  risk  clusters  identified  in  the  EUCRA  report,  the  ecosystems  cluster 
had  most  risks  requiring  urgent  or  more  action.  Climate  impacts  on  land,  freshwater  and 
ocean ecosystems  can cascade into  food production and security, human  and animal  health, 

30 

 
infrastructure, land use and the wider economy. Risks to marine and coastal ecosystems are 
particularly severe and require most urgent action. 
In  line  with  the  findings  of  the  International  Panel  on  Climate  Change  100  and  the 
Intergovernmental  Science-Policy  Platform  on  Biodiversity  and  Ecosystem  Services 101,  the 
Commission’s Communication on managing climate risks states that, to maintain and restore 
the resilience of ecosystems and the services they provide, some 30 - 50% of the Earth’s land, 
freshwater and oceans will need to be effectively and equitably preserved. In addition, in its 
climate  adaptation  progress  assessments  for  the  individual  Member  States  the  Commission 
recommended  ensuring  greater  promotion  of,  and  more  investment  in,  nature-based 
solutions 102. 
Recent key EU policy initiatives include legislative proposals on forest monitoring 103, forest 
reproductive material 104, and soil monitoring and resilience 105. The EU’s Nature Restoration 
Law came into force in August 2024 106. Its legally binding obligations for nature restoration 
will  help  the  EU  climate  adaptation  objectives  be  achieved.  It  requires  Member  States  to 
develop national restoration plans that take climate scenarios into consideration and work in 
synergy with national adaptation strategies and plans. 

b)  Water 

Water resources are under pressure in many parts of the EU. Climate change is exacerbating 
those pressures and increasing water-related risks in the form of more frequent and prolonged 
droughts or extreme precipitation. These are set to worsen in the future with more of the EU 
affected  by  water  stress,  a  growing  risk  of  mega-drought,  wildfires,  increasing  floods,  and 
rising sea levels that heighten the risk of coastal floods and storm surges, coastal erosion, and 
salt-water  intrusion.  Water  stress  and  scarcity  are  challenges  to  the  provision  of  critical 
resources, like food or energy. 

The EUCRA report emphasised that water-related risks cut across all major sectors and that 
severe  floods,  droughts  and  wildfires  are  becoming  a  health  threat  and  a  recurrent  cause  of 
social, environmental, and economic losses. 
In  2023  the  European  Drought  Risk  Atlas107  was  published.  It  provides  a  comprehensive 
assessment  and  mapping  of  present  and  future  drought  risks  and  impacts  in  the  EU  for 
different systems, such as agriculture, water supply, energy, river transport, and ecosystems. 

In June 2024, the Water Directors of the Member States and the Commission working on the 
Common Implementation Strategy, adopted the updated Guidance on Water Management in a 
Changing  Climate,  to  help  water  managers  incorporate  climate  mitigation  and  adaptation  in 
their activities. 

100 IPCC: Summary for Policymakers. In: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth 
Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, 
Switzerland, 2003. 
101  Pörtner,  H.O.  et.  al.,  Scientific  outcome  of  the  IPBES-IPCC  co-sponsored  workshop  on  biodiversity  and  climate  change;  IPBES 
secretariat, Bonn, Germany, 2021.  
102 SWD(2023) 932 final 
103 COM(2023) 728 final 
104 COM(2023) 415 final 
105 COM(2023) 416 final 
106 https://www.consilium.europa.eu/en/press/press-releases/2024/06/17/nature-restoration-law-council-gives-final-green-light/  
107 https://publications.jrc.ec.europa.eu/repository/handle/JRC135215 

31 

 
 
 
c)  Public health 

The climate crisis is a major public health threat. It affects the health of individuals and the 
functioning of health systems. For instance, the summer heatwave of 2022 killed more than 
60 000 people. Locally acquired tropical infectious diseases (e.g. dengue fever and West Nile 
virus) are on the rise. In Portugal, heat waves were shown to have caused a 19% increase in 
hospitalisations across all age groups and major disease diagnostic categories 108. 
The EU not only supported the Budapest Declaration in 2023 109,  but  also  joined the United 
Arab  Emirates  Declaration  on  Climate  and  Health 110 in  December  2023,  which  breaks  new 
ground in international policymaking on climate and health. 

At  EU  level,  the  Commission  is  working  to  protect  people  and  health  systems  against  the 
growing effects and risks of climate change by, for instance: 

•  boosting the remit and resources of the European Climate and Health Observatory 111;  

•  enhancing  surveillance  and  medical  countermeasures  against  climate-sensitive 

infectious diseases; 

•  publishing a Communication on a comprehensive approach to mental health 112; and  

•  planning  the  publication  in  early  2025  of  a  new  strategic  research  and  innovation 

agenda on climate and health. 

d)  Agriculture and food  

The  agricultural  sector  is  one  of  the  sectors  most  vulnerable  to  climate  change.  It  is 
endangered by a lack of precipitation leading to droughts, by too much precipitation resulting 
in erosion, landslides and floods, and by hail and frost. The food sector  and the whole food 
value chain are vulnerable. Future climatic conditions need to be considered in sectors such as 
agroforestry. 

The  new  2023  EU  CAP  has  three  main  objectives  (climate  change,  environment  and 
landscapes),  reinforced  conditionality  (good  agricultural  environmental  conditions),  eco-
schemes (e.g. organic farming or carbon farming), and other instruments to increase the use of 
measures related, inter alia, to climate change adaptation. All Member States have recognised 
the  need  to  address  climate  adaptation  and  have  programmed  support  based  on  their  needs 
assessment113.  Their  uptake  nevertheless  depends  on  how  Member  States  prioritise  them  in 
their CAP strategic plans. 
The Strategic Dialogue on the Future of EU Agriculture 114 recognises that a fundamental step 
to  make  the  European  agrifood  sector  more  resilient  consists  in  proactively  preventing  and 
reducing risks, in particular those arising from climate change and environmental degradation. 
The report touches upon topics under the theme of adaptation, specifically water resilience in 
agriculture  and  innovative  plant  breeding  approaches.  As  explained  in  Section  4,  it  also 
recommends that the European Commission and the Members States work on a coherent mix 

108 https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(24)00046-9/fulltext 
109 https://www.who.int/europe/publications/i/item/EURO-Budapest2023-6  
110 https://www.cop28.com/en/cop28-uae-declaration-on-climate-and-health  
111 https://climate-adapt.eea.europa.eu/en/observatory 
112 https://health.ec.europa.eu/publications/comprehensive-approach-mental-health_en 
113 Report from the Commission to the European Parliament and the Council, Summary of CAP Strategic Plans for 2023-2027: joint effort 
and collective ambition. COM(2023)707 final  
114 https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/main-initiatives-strategic-dialogue-future-eu-agriculture_en 

32 

 
 
of  policies  combining  incentives  and  regulatory  measures,  including  rewarding  and 
incentivizing  farmers  to  establish  and  to  continue  providing  ecosystem  services.  In  light  of 
growing  environmental,  climate,  geopolitical  and  economic  risks,  the  report  recommends 
strengthening risk management tools and crisis management. Along with the other elements 
of the report, this will be further looked at in the Vision for Agriculture and Food planned for 
early 2025. 

e)  Infrastructure and the built environment 

Climate change poses significant risks to infrastructure and the built environment, including 
threats to cultural heritage 115. Assets need to be designed today to withstand the climate and 
weather of tomorrow. Risks are manageable if they are properly addressed, and it is essential 
to  work  on  several  aspects  in  parallel.  Spatial  planning  for  land  and  water  needs  to  include 
resilience considerations for infrastructure and the built environment. Further efforts to green 
the  infrastructure  will  help,  because  green  elements  (e.g.  green  roofs,  rain  gardens  and 
permeable pavements) can help to manage storm waters and reduce the impact of floods. 

At  EU  level,  the  Commission  is  progressing  with  the  climate  proofing  of  the  European 
standards  that  are  most  relevant  to  infrastructure.  International  and  European  standards 
provide guidance on the design of infrastructure and buildings. Having standards that require 
future  climatic  conditions  to  be  taken  into  consideration  is  a  powerful  lever.  In  December 
2023  the  Commission  presented  a  draft  standardisation  request  to  integrate  climate  change 
into  infrastructure  and  buildings  standards,  which  is  expected  to  be  adopted  by  the  end  of 
2024. 

The  exposure  of  infrastructure  and  the  built  environment  needs  to  be  considered  when 
planning for and implementing the energy transition. The EUCRA report highlights the risk of 
energy  disruptions,  due  to  climate  hazards  such  as  heat  and  drought,  especially  in  Southern 
Europe.  Even  so,  limited  progress  has  been  made  at  EU  level  on  the  resilience  of  energy 
systems. The  Commission has in its assessments of  the draft updated  NECPs recommended 
that  Member  States  need  to  better  plan  for  resilient  energy  systems  and  promote  the 
mainstreaming of adaptation. Significant further work remains. 

f)  The economy 

Each  climate  change-related  disaster  puts  a  strain  on  the  economy,  due  to  loss  of  life  and 
productivity, direct damage, reduced growth potential and greater pressure on public budgets. 
Redirecting  investment  towards  rebuilding  after  damage  reduces  the  funds  available  for 
productive  investments.  Climate  risks  can  push  existing  vulnerabilities  in  the  financial 
systems  over  critical  thresholds.  Government  budgets  are  the  main  source  of  coverage  for 
risks, but they are strained. 

The insurance coverage  of  climate  exposed  assets and property is  low  in the EU and varies 
significantly between Member States and different climate hazards. This coverage is expected 
to  shrink  even  further  due  to  increases  in  premiums  as  climate-related  events  occur  more 
often. The Climate Resilience Dialogue brought together insurers, businesses, consumers, and 
other stakeholders to exchange views on how to address the low proportion of insured losses 
incurred because of climate disasters. It published its final report in July 2024116. 

115 https://op.europa.eu/en/publication-detail/-/publication/4bfcf605-2741-11ed-8fa0-01aa75ed71a1/language-en 
116 https://climate.ec.europa.eu/eu-action/adaptation-climate-change/climate-resilience-dialogue_en#final-report 

33 

 
 
 
The  Commission  has  announced  the  establishment  of  the  temporary  Reflection  Group  on 
mobilising Climate Resilience Financing to address the climate resilience investment gap and 
help  facilitate  climate  resilience  financing  by  sharing  knowledge  and  tools,  mapping  best 
practices  and  identifying  obstacles  and  enabling  conditions  for  EU  climate  resilience 
financing. The Group will conclude its work in December 2025. 

5.4  THE EU MISSION ON ADAPTATION TO CLIMATE CHANGE 

The EU Mission on Adaptation to Climate Change supports European regions, cities and local 
authorities  in  building  resilience  against  climate  change  impacts.  It  is  fully  operational  and 
has a continuously expanding portfolio of supporting and enabling tools. 

Currently, 311 signatory regions and local authorities have committed to working within the 
Mission  framework.  Local  and  regional  decision-makers  in  Europe  are  supported  with 
knowledge and tools brought to them through the Mission Portal. 

The  Mission  Implementation  Platform  provides  support  and  technical  assistance  to  local 
actors in their  resilience  building efforts  and  facilitates  exchanges  of  best  practices between 
those involved in climate adaptation.  

Thanks  to  the  Mission’s  support,  about  100  regions  and  local  authorities  are  receiving 
technical support to develop plans to address their local climate vulnerabilities and to secure 
funding for the measures identified.  In addition, more than 40 Mission-funded projects, that 
carry  out  research  and  develop  innovative  climate  adaptation  and  resilience  approaches,  are 
underway with the direct involvement of regional and local actors. They go beyond theory by 
delivering  practical  and  tangible  outcomes  through  guidance,  tailor-made  tools,  context-
specific  data,  on-the-ground  testing,  and  piloting  the  most  promising  solutions  identified  in 
the  Mission  case  studies  (See  separate  accompanying  staff  working  document  for  more 
information). 

34 

 
 
 
6  ALIGNING INVESTMENTS WITH CLIMATE 

NEUTRALITY 

6.1  INVESTMENT TRENDS IN THE EU 

Becoming  climate  neutral  by  2050  calls  for  substantial  amounts  of  public  and  private 
investments. Energy system investment needs 117 are estimated at around EUR 565 billion per 
annum  (equivalent  to  3.3%  of  GDP)  in  2021-2030  and  EUR  660  billion  per  annum 
(equivalent to 3.2% of GDP) on average over 2031-2050 (against EUR 250 billion over 2011-
2020, or 1.7% of GDP, a decade with relatively low investments in the energy system), and 
yearly spending for transport 118 to about EUR 785 billion in 2021-2030 and EUR 870 billion 
in 2031-2050 (equivalent to 4.2% of GDP, a similar proportion of GDP as in 2011-2020) 119. 
These figures do not include investments on nature preservation and restoration, also key to 
reach  climate  neutrality.  This  highlights  the  importance  of  further  aligning  climate  finance 
with the climate neutrality and resilience objective of the EU, as also called for in the Paris 
Agreement. 

Given the scale of investment needed, the involvement of the private sector in financing the 
climate transition will be substantial. This is why the EU has over the last 5 years, in addition 
to  the  economic  incentives  for  private  investment  provided  by  ETS  carbon  pricing,  put 
together a framework aimed at facilitating private investments in sustainable activities. This 
Sustainable Finance Framework provides investors with robust definitions of green activities 
(EU Green Taxonomy 120) as well as requiring companies and banks to disclose their impact 
on the environment and climate (Corporate Sustainability Reporting Directive 121, Sustainable 
Finance Disclosure Regulation 122). 

The latest two additions to this framework are the regulation establishing the European Green 
Bond  Standard 123 (October  2023)  and  the  regulation  on  sustainability  ratings  (April  2024). 
The latter is going to require agencies that rate companies against sustainability criteria, to be 
more transparent about their methodologies and eliminate potential conflicts of interests. The 
former  requires  bond  issuers  to  demonstrate  that  proceeds  from  their  ‘green’  bonds 
predominantly go to Taxonomy-aligned activities. 

The impact of the Sustainable Finance Framework in mobilising green investments in the EU 
is  significant  and  gaining  momentum.  For  instance,  the  share  of  green  bonds  in  total  bond 
issuance  rose  sharply  from  12%  in  2021  to  its  2022  peak  at  16%.  Even  though  this  share 

117 It should be noted that the term ‘investment’ is in this context more broadly defined than gross fixed capital formation in national accounts 
and includes elements of final consumption expenditure. Investment in the energy system includes capital expenditure by firms on the energy 
supply  side  (power  generation  and  the  grid,  as  well  as  hydrogen  or  e-fuel  production)  and  capital  expenditure  for  decarbonisation  in 
industrial  sectors.  On  the  energy  demand  side,  it  includes  investment  in  the  energy  efficiency  of  buildings  (gross  capital  formation)  and 
expenditure  to  decarbonise  heating  and  cooling  or  improve  the  energy  efficiency  of  appliances  (consumption  of  durables  goods  by 
households). 
118 Investments in the transport sector reflect the expenditures on vehicles, rolling stock, aircraft and vessels plus recharging and refueling 
infrastructure. They do not cover investments in infrastructure to support multimodal mobility and sustainable urban transport. In particular, 
the acquisition costs of private vehicles represent about 60% of the total. 
119 For more details, see COM(2024) 63 final and associated SWD(2024) 63 final. 
120 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R0852 
121 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022L2464  
122 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R2088 
123 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202302631  

35 

 
 
retreated  in  2023  (11%),  as  of  30  June  2024,  green  bonds  are  on  an  upward  trend  towards 
13% of total bond issuance (see Figure 6.1). 

Figure 6.1: Issued volumes – All bond types 124  

In the second quarter of 2024,  green financial assets represented 58.6% of total assets under 
management  by  financial  actors.  Figure  6.2  presents  the  value  and  proportion  of  financial 
assets as categorised by the Sustainable Finance Disclosure Regulation. 

Figure 6.2: Assets under management by SFDR classification 125 

The  number  of  companies  reporting  how  green  they  are  in  accordance  with  the  EU  Green 
Taxonomy  is  still  limited,  amounting  to  1 769  in  2023  according  to  Bloomberg  data.  This 

124 Data as of 30 June 2024. 
125 Light green assets: assets that promote environmental or social characteristics (Art. 8 of the Sustainable Finance Disclosure Regulation); 
Dark green assets: assets that have sustainable investment as their objective (Art. 9 of the Sustainable Finance Disclosure Regulation); Light 
blue  assets:  assets  without  environmental or  social  features  (Art. 6 of  the  Sustainable  Finance  Disclosure Regulation).  Data  as  of  30  June 
2024.   

36 

 
 
 
 
number is set to increase over the coming years as more entities progressively fall within the 
scope of the Taxonomy Regulation. 

Figure 6.3 ranks economic sectors following two metrics: Taxonomy-eligibility, which is the 
average  proportion  of  capital  expenditure  by  reporting  firms  in  each  sector  on  activities 
covered  by  the  Taxonomy  (regardless  of  their  compliance);  and  Taxonomy-alignment,  the 
average proportion of capital expenditure by reporting firms in each sector on activities that 
(actually) comply with  relevant  Taxonomy  criteria. The below  figures are however affected 
by the fact that the Taxonomy does not incorporate all economic activities yet. 

Figure 6.3: Taxonomy – Average share of eligible and aligned CAPEX in 2023 126 

6.2  EU FUNDING FROM THE EU EMISSION TRADING SYSTEM 

The  revenue  from  the  auctioning  of  allowances  in  the  EU  ETS  accrues  mostly  to  Member 
States’  budgets.  Member  States  are  obligated  to  use  all  ETS  revenue  (or  an  equivalent 
financial  value)  to  fund  climate  action  and  energy  transformation.  ETS  revenue  is  also 
distributed through financial instruments – the Innovation Fund and the Modernisation Fund. 
In  2023,  the  total  ETS  revenue  amounted  to  EUR  43.6  billion.  Of  this  revenue,  EUR  7.4 
billion was raised for these funds. 

The Innovation Fund is the EU fund for innovative climate actions, with a focus on energy 
and industry.  It  aims to  bring  to the market solutions  to  decarbonise European  industry  and 
support its transition to climate neutrality while fostering its competitiveness. With EUR 40 
billion estimated budget available (based on a carbon price of EUR 75/tCO2), the Innovation 
Fund  has  launched  eight  calls  for  proposals,  including  one  for  auctions  under  the  European 
Hydrogen Bank. 

The  Innovation  Fund portfolio of  ongoing  projects counts  around  120 large and small-scale 
projects under implementation, with grants amounting to around EUR 7.2 billion. The results 
of  the  2023  Innovation  Fund  Call  were  published  in  the  second  half  of  October  2024.  This 
Call  had  a  record  budget  of  EUR  4  billion  and  received  337  applications.  The  first-ever 
Innovation  Fund  Auction  in  2023  attracted  132  bids  from  17  countries  across  Europe, 
requesting funds that 15 times greater than the available budget. The results of the evaluation 

126 Data as of 30 June 2024.   

37 

 
 
 
 
were published at the end of April 2024, with 7 bids selected for grant agreement preparation 
requesting EUR 720 million of EU contribution. The selected projects submitted bids between 
EUR  0.37  and  EUR  0.48  per  kilogram  of  renewable  hydrogen  produced  and,  based  on  the 
pay-as-bid design of the pilot auction, they will receive Innovation Fund grants ranging from 
EUR 8 million to EUR 245 million. Payments will only be provided upon presenting certified 
and verified volumes  of  renewable hydrogen. The grant  agreements were signed in  October 
2024. 

EU  Member  States  (as  well  as  EEA  countries)  also  have  the  possibility  to  participate  in 
Innovation Fund auctions  with  their own budget, benefitting from  faster  state aid clearance. 
This  allows  countries  to  use  the  auction  to  allocate  additional  national  funds  to  national 
projects that could not be supported from the Innovation Fund auction budget. Germany has 
contributed EUR 350 million to a national funding window in the pilot auction. Similarly, the 
Commission is working to set up a similar  feature for the regular  calls for proposals, called 
‘Grants-as-a-Service’. Both features allow Member States to make use of the well-established 
Innovation  Fund  evaluation  procedures  and  avoid  unnecessary  administrative  burdens  to 
develop and run new support schemes for the same technologies. 

The  Modernisation  Fund  supports  lower-income  Member  States  with  financial  assistance, 
generated through the ETS, to modernise their energy systems and improve energy efficiency. 
Up to 2030, over 750 million allowances will be auctioned to support these Member States, an 
increase  by  110  million  allowances  (representing  around  EUR  60  billion),  thanks  to  the 
revision  of  the  ETS  Directive.  Three  more  Member  States,  Slovenia,  Portugal  and  Greece 
became eligible for the Fund following the revision of the ETS Directive 127, bringing the total 
number of beneficiaries to 13. 

The total disbursements from the Modernisation Fund since January 2021 amount to around 
EUR 12.7 billion. In June 2024, the Commission adopted the seventh disbursement decision 
under  the  Fund.  On  this  basis,  the  EIB  made  payments  for  a  total  of  EUR 3 billion  to  ten 
beneficiary Member States (see Table 6.1). 

Table 6.1: Payments from Modernisation fund in June 2024 

Member State 

Payments (EUR million) 

Romania 

Czechia 

Poland 

  Hungary 
Bulgaria 

Lithuania 

Croatia 

Slovakia 

Latvia 

Estonia 

127 By Directive (EU) 2023/959. 

1 095.0 

835.2 

697.5 

76.8 

65.2 

59.0 

52.0 

35.0 

26.8 

24.1 

38 

 
 
 
 
 
 
 
 
 
 
 
As a next step, the beneficiaries will have to transfer the money from the Modernisation Fund 
to  the  project  proponents  or  the  schemes’  managing  authorities.  The  next  deadline  for 
beneficiary  Member  States  to  submit  investment  proposals  for  potential  support  by  the 
Modernisation  Fund  was  13  August  2024 for non-priority  proposals,  and  10  September 
2024 for priority proposals. 

6.3  MAINSTREAMING CLIMATE POLICIES IN THE EU BUDGET 

The  EU  budget  2021-2027  –  both  the  ‘multiannual  financial  framework’  and  the 
NextGenerationEU instrument – is an important enabler of the green transition. It is currently 
projected that  in  the period up to 2027 it  will contribute  EUR 658 billion to climate  action. 
This  represents  34.3%  of  the  EU’s  total  budget 128 and  exceeds  its  30%  climate  spending 
target. This target is underpinned by programme-specific spending targets, for instance in the 
European  Regional  Development  Fund  (30%),  the  Neighbourhood,  Development  and 
International  Cooperation  Instrument  (30%),  Horizon  Europe  (35%),  the  Cohesion  Fund 
(37%),  the  Common  Agricultural  Policy  (40%),  the  Connecting  Europe  Facility  (60%),  and 
the LIFE programme (61%). 

The EU’s Recovery and Resilience Facility – the centrepiece of NextGenerationEU, the EU’s 
recovery instrument – has a value of up to EUR 648 billion 129 and enables Member States to 
significantly  increase  climate  investments.  To  qualify  for  the  Facility’s  grants  (EUR  357 
billion)  and  loans  (EUR  291  billion),  Member  States  have  prepared  recovery  and  resilience 
plans  setting  out  investments  and  policy  reforms  that  contribute  to  the  Facility’s  six  policy 
objectives including the green transition. Each national plan must spend a minimum of 37% 
of  its  total  allocation  on  measures  contributing  to  climate  objectives  (such  as  initiatives 
promote energy efficiency, sustainable mobility, and renewable energy). Every measure must 
also  comply  with  the  ‘do-no-significant-harm’  principle  130 .  All  27  Member  State  plans 
exceed the 37% benchmark, with some  Member  States projected  to spend well over half  of 
their allocation to fund climate policy. Collectively Member States are projected to dedicate 
43% of their allocations to climate objectives (EUR 275 billion) 131. 

In  addition,  in  2023  and  2024,  Member  States  were  complementing  their  recovery  and 
resilience plans with new chapters on REPowerEU in response to the energy crisis caused by 
Russia’s invasion of Ukraine. New or scaled-up reforms and investments in Members States 
to help phase out the EU’s dependence on Russian fossil fuels and accelerate the clean energy 
transition are supported by additional financial power (EUR 20 billion of new grants, transfers 
from other funds and use of remaining NGEU loans). 

At  the  same  time,  the  2021-2027  EU  budget  is  enhancing  its  focus  on  the  results  of  the 
measures that it finances. For example: 

•  Annual energy consumption so far have been reduced by more than 34 terawatt thanks 

to the Recovery and Resilience Facility; 

•  According  to  Cohesion  Policy  programmes  30 157 211  square  metres  of  public 

buildings will see their energy performance improve; 

128 Climate mainstreaming - European Commission (europa.eu). 
129 In 2022 prices. 
130 Commission  Notice  –  Technical  guidance  on  the  application  of  do  no  significant  harm  under  the  Recovery  and  Resilience  Facility 
Regulation (europa.eu) 
131 Climate mainstreaming - European Commission (europa.eu).. 

39 

 
 
•  Similarly,  9 504  gigawatts  of  additional  renewable  energy  will  be  financed  by  the 

Cohesion Policy funds. 

Strategic Technologies for Europe Platform 

The Strategic Technologies for Europe Platform  (STEP) is a new EU initiative launched on 
1 March  2024  132 .  It  aims  to  strengthen  the  EU’s  industrial  competitiveness  and  reduce 
external dependencies by funding the development and manufacturing of critical technologies 
in the EU, reinforcing their value chains, and reducing shortages of essential labour and skills. 
The STEP supports investments in three key technology fields: 

•  clean and resource-efficient technologies, which are of key importance to the climate 

transition, 

•  digital and deep tech innovation, and 
•  biotechnologies. 

Clean  and  resource-efficient  technologies  include  net-zero  technologies  defined  in  the  Net-
Zero industry Act 133 such as technologies based on solar energy, battery and energy storage, 
hydrogen,  carbon  capture  and  storage,  nuclear-related  technologies,  including  nuclear  fuel 
cycle technologies, renewable fuels  of non-biological  origin. STEP  also addresses shortages 
of labour and skills critical to jobs connected to these technologies. 

STEP is not a new funding instrument, but it leverages and synergises resources from various 
EU  funding  programmes  such  as  Innovation  fund,  Horizon  Europe,  and  Cohesion  Policy 
funds. 

In the Cohesion Policy, STEP introduced new possibilities and flexibilities such as 100% co-
financing rate or one-off 30% prefinancing of STEP dedicated priorities, and thus it can boost 
investments  in  clean  and  resource-efficient  technologies.  29  programmes  have  formally 
submitted STEP related amendments or are in the stage of informal discussion. 

InvestEU 

At  least  30%  of  the  InvestEU  programme’s  target  of  EUR  372  billion  for  mobilising 
additional  investment  over  the  period  2021-27  should  contribute  to  meet  the  EU  climate 
objectives. Under the Sustainable Infrastructure Window, 60% of the funding must be spent 
on climate and environment. Investments above EUR 10 million are subject to sustainability 
proofing  (identify,  assess  and  mitigate  climate,  environment  or  social  risks).  All  InvestEU 
supported  investment  will  be  climate  and  environmentally  tracked  against  the  methodology 
issued by the Commission. Implementing partners have been so far selected through two calls 
for  expressions  of  interest  and  respective  signing  of  guarantee  agreements  (in  2022  and  in 
2023) 134. Financial products foreseen will help address market failures in providing access to 
finance  projects  in  a  broad  area  of  policy  priorities  from  transport,  smart  mobility,  clean 
energy,  digital  connectivity,  as  well  as  energy  efficiency,  decarbonisation  of  industry, 
renewable  energy,  circular  economy  and  other  fields.  By  mid-2024,  the  Investment 

132 Regulation (EU) 2024/795 of the European Parliament and of the Council of 29 February 2024 establishing the Strategic Technologies for 
Europe Platform (STEP), and amending Directive 2003/87/EC and Regulations (EU) 2021/1058, (EU) 2021/1056, (EU) 2021/1057, (EU) No 
1303/2013, (EU) No 223/2014, (EU) 2021/1060, (EU) 2021/523, (EU) 2021/695, (EU) 2021/697 and (EU) 2021/241 
133 Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for 
strengthening Europe’s net-zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724 
134 Besides the EIB (which covers 75% of the EU guarantee), 16 institutions have signed guarantee agreements, including the European Bank 
for Reconstruction and Development (EBRD), Council of Europe Development Bank (CEB), Nordic Investment Bank (NIB), CDP Equity 
(CDPE), Caisse des Dépôts (CDC) in 2022. 

40 

 
 
Committee  had  approved  216  InvestEU  operations  for  EUR  21.9  billion  in  guarantees 
(including Member State Compartment). As  of end 2023, InvestEU reported to  have helped 
mobilise EUR 217.5 billion in investments (58.4% of the target). Both climate/environmental 
targets  have  been  overachieved,  the  climate  contribution  amounted  to  53%  (as  compared  to 
the  expected  30%)  and  the  climate  and  environmental  contribution  of  the  Sustainable 
Infrastructure Window amounted to 86% (as compared to the expected 60%). 

Horizon Europe 
Horizon Europe135 is the EU’s key funding programme for research and innovation. Research 
and innovation enable the green transition by testing and demonstrating solutions, developing 
breakthrough innovations and knowledge for policies based on the latest scientific evidence. 
Horizon Europe will devote in the 2021-2027 timeframe at least 35% of its EUR 95.5 billion 
budget to support climate action objectives. Horizon Europe invested over EUR 14.7 billion 
in  climate  action  by  the  end  of  2023.  This  covers  projects  in  the  thematic  areas  of  climate 
science,  energy  supply,  storage  and  systems,  clean  transportation,  industry  decarbonisation, 
climate  adaptation,  carbon  removals,  and  agriculture.  The  June  2023  report  ‘Scaling  up 
innovative  technologies  for  climate  neutrality’  provides  a  view  of  more  than  180 
demonstrators of technologies funded mostly by Horizon Europe and the Innovation Fund that 
enable climate neutrality136. 

LIFE programme 

The LIFE Programme is the EU’s funding instrument for the environment, energy and climate 
action.  Its  general  objective  is  to  facilitate  the  transition  towards  a  sustainable,  circular, 
energy-efficient, renewable energy-driven, climate-neutral, and resilient economy. Within its 
four subprogrammes, the LIFE subprogramme on Climate Change Mitigation and Adaptation 
supports the implementation of the  Green Deal by contributing to the objectives and targets 
set out in the EU Climate Law. 

In  2023,  the  LIFE  Programme  approved  34  projects  under  the  LIFE  Climate  Change 
Mitigation  and  Adaptation  subprogramme,  with  an  estimated  funding  of  EUR  65  million. 
These  projects  focus  on  key  areas  of  the  climate  transition,  such  as  carbon  removals  in 
agricultural  and  forest  lands,  climate  adaptation  in  urban  and  rural  areas  and  greater 
preparedness  for  extreme  weather  events.  Additionally,  in  2023,  the  Programme  financed 
three strategic projects aimed at implementing EU climate legislation in Member States, with 
a contribution of EUR 33.5 million. 

Technical Support Instrument 

In  2023,  the  Commission  supported  Member  States  through  the  Technical  Support 
Instrument 137,  providing  tailor  made  technical  expertise  to  design  and  implement  reforms. 
This included several projects on climate change adaptation, the implementation of the do-no-
significant-harm principle, faster permitting, industrial eco-systems  and skills,  renovation  of 
buildings  and  capacity  building.  In  particular,  the  Commission  helped  Member  States  to 
identify reforms and investments to phase out fossil fuel imports from Russia in preparation 
for  the  REPowerEU  chapters.  In  2024,  the  Commission  is  supporting  Member  States  to 

135 And its predecessor Horizon 2020 in the 2014-2020 period. 
136 https://op.europa.eu/en/web/eu-law-and-publications/publication-detail/-/publication/2f1ec1d2-1173-11ee-b12e-01aa75ed71a1 
137 The  Technical  Support  Instrument  (TSI)  is  the  EU  programme  that  provides  tailor-made  technical  expertise  to  EU  Member  States  to 
design  and  implement  reforms.  Additional  information  is  available  here:  https://commission.europa.eu/funding-tenders/find-funding/eu-
funding-programmes/technical-support-instrument/technical-support-instrument-tsi_en 

41 

 
 
enhance  the  greening  of  public  administrations,  make  energy  systems  fit  for  the  green  and 
digital  transition,  and  support  the  resilience  of  natural  resources.  The  Commission  is  also 
helping Member States implement the revised EU Emissions Trading System and the Carbon 
Border  Adjustment  Mechanism,  as  well  as  prepare  national  Social  Climate  Plans  under  the 
Social Climate Fund. 

6.3.1  Cohesion Policy 

European Regional Development Fund, Cohesion Fund, and Interreg 

Member States’ have allocated respectively 56.9% (EUR 22.2 billion) of their Cohesion Fund 
(CF) and 32.6% (EUR 69.9 billion) of their European Regional Development Fund (ERDF) 
allocations  to  climate  action.  In  addition,  about  24.4%  of  the  EUR  10.7  billion  of  Interreg 
funds 138 financed by the EU are expected to fund climate relevant measures. Figure 6.4 shows 
the  funding  allocated  to  climate  relevant  policy  areas  as  a  share  of  total  ERDF,  CF,  and 
Interreg climate expenditure. 

Figure 6.4: Distribution of cohesion policy funds climate allocation by thematic area 

Just Transition Fund 

The Just Transition Fund (JTF) programmes mobilises EUR 19.2 billion of EU investments to 
help  the  people  and  places  that  suffer  the  most  from  the  transition  to  climate  neutrality.  In 
addition to JTF, the other 2 pillars 139 of the Just Transition Mechanism will mobilise EUR 28 
billion from public and private investments to address the social and economic effects of the 
transition. The Commission has approved all 70 Territorial Just Transition Plans, covering a 
total  of  96  coal  regions  and  carbon  intensive  regions.  Where  just  transition  regions  need 

138 Programmes focused on European territorial cooperation. Additional information is available here: https://interreg.eu/. 
139 InvestEU "Just Transition" scheme and Public Sector Loan Facility. 

42 

 
 
 
 
support, the Commission provides technical and advisory support through the Just Transition 
Platform (JTP) launched in February 2023. 

Almost half of JTF investments will support diversification of the local economy, so that they 
do not depend on a single polluting sector, and help people acquire new skills. Moreover, the 
JTF  will  invest  EUR  8.2  billion  in  skills  and  economic  diversification.  Up  to  120  000 
unemployed people will benefit from the measure and almost 200 000 people will gain new 
skills. 

As  a  part  of  the  STEP  framework,  the  one-off  pre-financing  (30%)  was  applied  to  all  JTF 
resources  thus  providing  higher  liquidity  for  project  implementation.  As  a  result  the 
Commissionalready  paid  EUR  5.9  billion  in  JTF  pre-financing  to  accelerate  the  support  to 
regions most affected by the transition towards climate neutrality. 

JTF implementation has seen an upward trend as the EU-level selection rate reached 6.1% of 
the total allocation (compared to 3.2% as of December 2023). There are notable differences in 
progress  Malta  has  taken  lead  in  the  project  selection,  followed  by  Luxembourg  and 
Netherlands.  The  Netherlands  continue  to  be  the  best  performer  in  absolute  terms,  securing 
ca. half a billion euros for selected projects. 

European Social Fund (ESF+) 

For the period 2021-2027, Member States programmed almost EUR 6 billion or about 6% of 
total  ESF+  allocations  140 for  green  skills  and  green  jobs,  considerably  more  than  in  the 
previous programming period. Finland, Italy, Belgium, Luxembourg, and Denmark allocated 
the highest shares to green jobs and skills (between 12% and 31%) while in several individual 
programmes  from  Belgium,  Denmark,  Italy,  France,  Germany,  Portugal  and  Spanish 
programmes  this  share  is  20%  and  above.  In  terms  of  actual  investments,  three  individual 
programmes  from  Italy,  Portugal  and  Greece  alone  contribute  to  some  30%  of  total  EU 
climate expenditure for green jobs and skills. Overall, a third of climate expenditure has been 
allocated to access to employment and activation measures. 

140 Open Data Portal for the European Structural Investment Funds - European Commission | Data | European Structural and 
Investment Funds (europa.eu).  

43 

 
 
 
 
7  INTERNATIONAL CLIMATE ACTION 

7.1  OVERVIEW AND DEVELOPMENTS  

No significant changes in Nationally Determined Contributions (NDCs) of G20 members and 
other  major  emitters  were  presented  in  2023,  but  several  countries  have  made  progress  in 
implementing policies to achieve their greenhouse gas (GHG) emissions reduction target for 
2030.  About  half  of  the  countries  analysed  in  Figure  7.1  are  on  track  to  meet  their  targets. 
They  include  the  EU,  which  is  projected  to  meet  its  Paris-aligned  NDC  target  through  the 
implementation of policies adopted at the EU level, under the Fit for 55 legislative legislation 
and the REPowerEU plan. 

Figure  7.1:  Impact  of  current  policies  on  greenhouse  gas  emissions  in  major  emitting 
countries 141 

The  past  year  has  seen  productive,  high-level  international  exchanges  including  the 
Copenhagen Climate Ministerial, the Petersberg Climate Dialogue, the Ministerial on Climate 
Action, the 28th Conference of the Parties (COP28) in Dubai, United Arab Emirates and the 

141 Source: PBL FAIR/TIMER Model; New Climate Institute calculations; IIASA GLOBIOM/G4M Model (2003); published in Greenhouse 
gas mitigation scenarios for major emitters; L Nascimento, T Kuramochi, S Woollands, M Moisio, A Missirliu, J Wong, H Fekete…2023, 
pbl.nl.  Greenhouse  gas  emissions  intensity  per  capita  and  per  GDP  in  2030  under  current  policies  (adopted  up  until  July  2023),  NDC 
scenarios and historical 2015 levels. Targets are set by the respective country and are not necessarily aligned with the temperature goal of the 
Paris Agreement. The NDC target figures refer to unconditional target, except for Egypt.  The sectoral emissions coverage of  the scenarios 
values. 
for 
https://newclimate.org/sites/default/files/2023-11/NewClimate_PBL2023_CurrentPolicies.pdf 

the  NDC.  Figure 

aligned  with 

by  NDC 

country 

sorted 

capita 

scope 

each 

per 

the 

of 

is 

44 

 
 
 
 
 
intersessional  subsidiary  bodies  sessions  hosted  by  the  United  Nations  Framework 
Convention on Climate Change (UNFCCC) in Bonn (SB60). 

At COP28, the Parties concluded the first Global Stocktake under the Paris Agreement, with 
decisions  on  accelerating  action  by  2030  and  beyond,  including  the  transition  away  from 
fossil  fuels,  tripling  renewable  energy  capacity  globally  and  doubling  the  global  average 
annual rate of energy efficiency improvements by 2030. 

On adaptation, the  Parties  agreed upon the UAE Framework for Global  Climate Resilience. 
They also made progress on the modalities to deliver on the UAE-Belém work programme on 
indicators relating to the adaptation policy cycle and a set of thematic targets (e.g. water, food 
and agriculture and health). 

For the mitigation work programme, the EU shared its own experience on energy transition, 
highlighting the role of renewable energy. It also emphasised its engagement to supporting the 
just energy transition outside of the EU. It was also active in the operationalisation of the just 
transition work programme, which includes a strong focus on the workforce and labour rights 
recognition. 

The United Arab Emirates (UAE) Framework for Global Climate Resilience, which was also 
adopted  at  COP28,  was  a  first  in  making  climate  adaptation  a  top  priority  for  all  nations. 
Stemming from the Global Goal on Adaptation established in the Paris Agreement in2015, it 
identifies global adaptation targets and launches the 2-year UAE-Belém work programme, to 
establish  indicators  for  measuring  progress  towards  these  targets.  The  targets  and  future 
indicators  will  drive  further  developments  in  EU  climate  adaptation  policy  and  action.  The 
EU  and  its  Member  States  are  actively  contributing  to  the  UAE  Framework  and  the  UAE-
Belém work programme on indicators. 

On  loss  and  damage,  COP28  achieved  a  successful  operationalisation  of  the  funding 
arrangements  including  a  Fund  for  assisting  developing  countries  particularly  vulnerable  to 
the adverse effects of climate change. The EU and its Member States contributed more than 
EUR 400 million, over two thirds of the initial funding pledges. 

The EU is engaged in the ad hoc work programme for the New Collective Quantified Goal on 
climate finance, that is expected to be decided at COP29. The goal is meant to support action 
to tackle the climate emergency and contribute to making all financial flows consistent with 
the Paris Agreement. 

In  October  2023,  the  EU  submitted  an  updated  NDC  to  the  UNFCCC  that  provides  more 
clarity,  transparency  and  understanding  on  the  policies  put  in  place  to  achieve  its  target  of 
reducing  emissions  by  at  least  55%  compared  with  1990  levels  by  2030,  as  submitted  in 
December 2020 142. 

Meanwhile, the EU is calling for all Parties to be as ambitious as possible in their new NDCs, 
which  they  will  submit  ahead  of  COP30.  The  EU  is  also  calling  for  submission  of  the  first 
Biennial Transparency Reports by the end of 2024. 
The EU launched and promoted the Global Renewables and Energy Efficiency Pledge 143. As 
a result, at COP28, Parties to the Paris Agreement agreed to contribute to tripling renewable 
energy  capacity  globally  and  doubling  the  global  average  annual  rate  of  energy  efficiency 
improvements  by  2030.  The  EU  has  also  endorsed  other  plurilateral  initiatives  such  as  the 

142 https://unfccc.int/sites/default/files/NDC/2023-10/ES-2023-10-17 EU submission NDC update.pdf 
143 https://energy.ec.europa.eu/system/files/2023-12/Global_Renewables_and_Energy_Efficiency_Pledge.pdf 

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COP28  UAE  Declaration  on  Sustainable  Agriculture,  Resilient  Food  Systems,  and  Climate 
Action 144, the Climate Recovery and Peace Declaration on Climate Finance 145, Getting ahead 
of  Disasters:  a  Charter  for  a  Better  Future  146 ,  the  COP28  Declaration  on  Climate  and 
Health 147 and the Climate Club 148 to speed up the decarbonisation of hard-to-abate industrial 
sectors. 
On  7  May  2024,  as  a  domestic  contribution  to  the  Global  Methane  Pledge 149 launched  in 
2022,  the  EU  adopted,  the  first  EU-wide  legislation  to  reduce  methane  emissions  in  the 
energy sector. Similarly, in the waste sector, the EU contributed to the launch of the Lowering 
Organic  Waste Methane (LOW-Methane) 150 initiative at  COP28, under the  Global  Methane 
Pledge umbrella. 

Lastly,  to  achieve  a  coordinated  approach  in  tackling  climate  change,  land  degradation, 
desertification  and  biodiversity  loss,  the  EU  is  working  on  enhanced  collaboration  between 
the different Conventions, including the Kunming-Montreal  Global Biodiversity  Framework 
adopted in 2023, to halt and reverse biodiversity loss. 

7.2  MULTILATERAL AND BILATERAL ENGAGEMENT 

Significant  progress  is  being  made  with  multilateral  and  bilateral  partners  to  convince  and 
support  other  countries,  in  particular  major  emitters,  to  increase  their  climate  ambition,  and 
accelerate their clean energy transition. 

The  EU  has  worked  with  multilateral  platforms,  such  as  the  United  Nations  (where  it 
participated in the UN General Assembly in September 2024), the G7/G20 and the OECD, as 
well  as  in  the  WTO,  to  generate  transparency  on  efforts,  mobilise  resources  and  share 
knowledge on climate action. In 2023, the EU worked with NATO and the Organisation for 
Security  and  Co-operation  in  Europe  to  increase  engagement  with  the  impact  of 
environmental degradation and climate change on peace, security and defence. 

Regular bilateral exchanges took place with international partners at both political (e.g. in the 
form of High-Level Dialogues) and technical level, in particular with major emitters, such as 
the  United  States,  China,  Japan  and  the  Association  of  Southeast  Asian  Nations  (ASEAN) 
countries. 

To intensify its carbon market diplomacy, the Commission set up a dedicated Task Force on 
carbon  markets,  to  amplify  efforts  to  replicate  the  success  of  the  EU  ETS  by  encouraging 
and  supporting  other  jurisdictions  to  introduce  or  improve  their  own  carbon  pricing 
mechanisms. The task force will also enable the EU’s engagement with stakeholders to ensure 
the  climate  integrity  of  international  carbon  markets  and  their  alignment  with  Paris 
Agreement objective. 

Progress  was  also  made  in  implementing existing  Green Alliances  (Japan and  Norway)  and 
Green  Partnerships (Morocco  and  the  Republic  of  South  Korea)  with  strengthened  dialogue 
and  cooperation  in  areas  of  relevance  to  the  green  transition. A  new  Green  Alliance  with 

144 https://www.cop28.com/en/food-and-agriculture 
145 https://www.cop28.com/en/cop28-declaration-on-climate-relief-recovery-and-peace 
146 https://www.early-action-reap.org/our-vision-getting-ahead-disasters-charter 
147 https://www.cop28.com/en/cop28-uae-declaration-on-climate-and-health  
148 https://climate-club.org/ 
149 https://www.globalmethanepledge.org/ 
150 https://energy.ec.europa.eu/news/2023-global-methane-pledge-ministerial-decisive-action-curb-emissions-2023-12-04_en 

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Canada was concluded in November 2023 and negotiations are ongoing on the establishment 
of a Green Partnership with Kenya. 

The EU together with other members of the International Partners Group continued to work 
on  the  Just  Energy  Transition  Investment  Partnerships  (JETP)  providing  EUR 2.5  billion  in 
new public and private financing. 

At  COP28  in  December  2023,  South  Africa  unveiled  the  Implementation  Plan  of  its  JETP 
(signed  in  2021),  which  includes  the  new  areas  of  renewable  energy  manufacturing  and 
energy efficiency, thereby expanding the range decarbonisation investments by JET Partners. 

The Comprehensive Investment and Policy Plan, which was launched in November 2023 with 
Indonesia,  sets  out  the  details  of  the  USD 20 billion  finance  package  of  public  and  private 
funds  and  outlines  policy  reforms  for  energy  sector  decarbonisation.  In  February  2024,  the 
EIB signed a memorandum of understanding with the goal of finalising a framework loan of 
up to EUR 500 million to support the JETP (signed 2022). 

At  COP28,  together  with  the  International  Partners  Group,  Vietnam  launched  its  Resources 
Mobilisation  Plan  for  the  JETP  (signed  2022).  The  plan  includes  an  assessment  of  priority 
investments  which  supports  progress  on  the  pathway  to  net-zero  emissions  and  the 
identification of a set of priority policy actions and regulatory reforms to develop an enabling 
environment. 

The  new  Political  Declaration  establishing  a  JETP  with  Senegal  includes  Senegal’s 
commitment  to  increase  the  share  of  renewable  energies  in  installed  capacity  to  40%  of  its 
electricity mix by 2030, and to develop a long-term low GHG emission development strategy 
(LTS). 

The EU is also engaging with the Contracting Parties of the Energy Community on the way 
forward with  carbon pricing  in  the Western Balkans,  Georgia, Moldova and  Ukraine 151.  An 
impact  assessment  was  launched  by  the  European  Commission  to  analyse  different  carbon 
pricing options. 

Policy dialogues and cooperation activities were supported inter alia, through the EU Climate 
Dialogues  programme,  which  fosters  exchanges  and  collaboration  among  national  and  sub-
national administrations, business communities, academia and civil society stakeholders with 
a view to making progress toward the Paris Agreement goals. 

7.3   CLIMATE FINANCE AND INTERNATIONAL COOPERATION 

Together with climate finance from private sources, international public climate finance plays 
an important role in helping developing countries to implement the Paris Agreement. 

The  Commission  continues  to  support  partner  countries  through  its  financing  instruments. 
Under the Neighbourhood, Development and International Cooperation Instrument (NDICI – 
Global Europe), with at least 35% dedicated to climate action. This includes actions in fragile 
and  conflict  affected  settings  in  recognition  of  the  complex  interdependencies  between 
climate change, environmental degradation, fragility and conflict. 

The  Instrument  for  Pre-Accession  Assistance  (IPA  III)  also  sets  a  climate  change  spending 
target of 18%, rising to 20% by 2027. The Commission has committed an additional EUR 4 

 151 21st Energy Community Ministerial Council focuses on Treaty Extension, TEN-E Regulation, and carbon pricing - Energy Community 
Homepage (energy-community.org) 

47 

 
 
billion  to  climate  finance  by  2027  on  top  of  these  climate  change  spending  targets,  which 
equates  to  a  35%  climate  finance  target.  This  is  an  unprecedented  investment  by  the  EU  in 
reducing  emissions  and  in  helping  developing  countries  build  resilience  to  the  effects  of 
climate change. 

The EU, its Member States and financial institutions, (collectively known as Team Europe), 
are the leading contributor of development assistance and the world’s biggest climate finance 
contributor, accounting for about a third of global public climate finance. Over 54% of Team 
Europe finance has been allocated either to climate adaptation or to measures involving both 
mitigation and adaptation. Almost half of the total funding has been allocated via grants. 

In 2022, the developed countries achieved the goal of providing USD 100 billion in climate 
finance goal to developing countries, which reflects the collective push for bold action. The 
EU and all its 27 Member States have moved the needle with a 24% year-on-year increase in 
public finance, which reached EUR 28.5 billion (roughly USD 30 billion) 152. 

Efforts are also underway to promote the involvement of the private sector in climate action 
through  the  European  Fund  for  Sustainable  Development  Plus  (EFSD+)  guarantees  and 
blending.  The  EFSD+  provides  a  comprehensive  set  of  tools,  including  guarantees,  grants, 
technical assistance, and other support, to mobilise private sector investments for sustainable 
development in partner countries. It contributes, among others, to climate change adaptation 
and environmental protection and management. Offering a variety of risk-sharing instruments 
of up to  EUR 40 billion, the EFSD+  aims to  mobilise up to  EUR 135 billion of public and 
private  financing  to  help  partner  countries  achieve  the  Sustainable  Development  Goals. 
Together with the private sector and the leverage effect, the EFSD+ is expected to mobilise 
more than half a trillion euros in investments for 2021-2027. 

152 The final amount of the EU and all its MS contributions in 2023 to the USD 100 billion climate finance goal will be published closer to 
COP29. https://www.consilium.europa.eu/en/press/press-releases/2024/10/08/climate-finance-council-approves-conclusions-ahead-of-cop29/ 

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