Strasbourg, 6.2.2024

SWD(2024) 63 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Part 3

Accompanying the document

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

Securing our future







Europe's 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society

{COM(2024) 63 final} - {SEC(2024) 64 final} - {SWD(2024) 64 final}


Table of contents

Annex 8: Detailed quantitative analysis of GHG pathways    

1    Key transformations to climate neutrality by 2050    

1.1.    GHG emissions    

1.1.1.    GHG budgets and net GHG emissions    

1.1.2.    GHG emissions and role of removals    

1.1.3.    Energy and Industry CO2 emissions    

1.1.4.    Non-CO2 GHG emissions    

1.2.    Energy sector transformation    

1.2.1.    Energy supply    

1.2.2.    Power generation sector    

1.2.3.    Gaseous fuels    

1.2.4.    Final Energy Consumption    

1.2.5.    Energy related CO2 emissions    

1.2.6.    Raw materials’ needs    

1.3.    Buildings    

1.3.1.    Buildings activity    

1.3.2.    Energy efficiency in buildings    

1.3.3.    Fuel mix in buildings    

1.3.4.    Appliances    

1.3.5.    CO2 emissions from buildings    

1.4.    Industry    

1.4.1.    Introduction    

1.4.2.    Activity    

1.4.3.    Final Energy Consumption    

1.4.4.    Final Non-Energy Consumption    

1.4.5.    CO2 emissions from industry    

1.4.6.    Complementary analysis    

1.5.    Transport    

1.5.1.    Introduction    

1.5.2.    Activity    

1.5.3.    Energy consumption and fuel mix    

1.5.4.    Technology developments per transport mode    

1.5.5.    CO2 emissions from transport    

1.6.    Non-CO2 GHG emissions in non-land-related sectors    

1.6.1.    Evolution of emissions without additional mitigation    

1.6.2.    Additional mitigation potential    

1.6.3.    Emissions projections    

1.7.    Agriculture    

1.7.1.    Introduction    

1.7.2.    Activity    

1.7.3.    Evolution of emissions without additional mitigation measures    

1.7.4.    Mitigation potential for non-CO2 GHG emissions    

1.7.5.    GHG emissions projections    

1.8.    LULUCF    

1.8.1.    Introduction    

1.8.2.    Activity    

1.8.3.    Options to increase the net LULUCF net removal    

1.8.4.    The LULUCF net removal    

1.8.5.    Analysis of climate change impacts and CO2 fertilisation    

1.8.6.    Impacts from simulated extreme events on the LULUCF net removal    

1.9.    Environmental and health impacts    

1.9.1.    Air quality    

1.9.2.    Biodiversity and ecosystems    

1.9.3.    Food security, animal welfare and health    

1.9.4.    Raw materials    

2.    Socio-economic impacts    

2.1.    Macro-economic impacts ()    

2.1.1.    GDP and employment    

2.1.2.    The impact of frictions in the economic transition    

2.2.    The investment agenda ()    

2.2.1.    Aggregate investment needs    

2.2.2.    Supply-side investment needs    

2.2.3.    Demand-side investment needs, industry,services and agriculture    

2.2.4.    Demand-side investment needs, households    

2.2.5.    Demand-side investment needs, transport    

2.2.6.    Sensitivity of investment needs to technology costs assumptions    

2.2.7.    Investment needs for net-zero technology manufacturing capacity    

2.2.8.    Technical feasibility    

2.2.9.    Other related investment needs    

2.2.10.    The role of the public sector and carbon pricing revenues    

2.3.    Competitiveness    

2.3.1.    Total energy system costs    

2.3.2.    Energy system costs and prices for industry    

2.3.3.    Energy system costs and prices for services    

2.3.4.    Energy system costs and prices for transport    

2.3.5.    Costs related to mitigation of GHG emissions in the LULUCF sector and non-CO2 GHG emissions    

2.3.6.    Sectoral output and international trade    

2.4.    Social impacts and just transition    

2.4.1.    Fuel expenses, energy and transport poverty, distributional impacts    

2.4.2.    Electricity prices    

2.4.3.    Sectoral employment, skills and occupation groups    

2.4.4.    Changes in relative prices and distributional impacts    

2.4.5.    The equity dimension    

2.5.    Regional impacts    

2.5.1.    Regional exposure to climate change    

2.5.2.    Regional exposure to the transition    

2.6.    Energy security    

2.6.1.    Strategic independence and fuel imports – energy security ()    

2.6.2.    Vulnerability to external shocks    

Table of Figures    

Table of Tables    



Annex 8: Detailed quantitative analysis of GHG pathways

1Key transformations to climate neutrality by 2050

The impact assessment explores different GHG emission pathways in the 2030-2050 period, building on the Fit-for-55 and REPowerEU policy package for 2030 and beyond, and achieving climate neutrality by 2050. The first section below describes the evolution of GHG emissions in the various pathways explored, looking at their reduction and the contribution of carbon removals. The following sections provide details on the associated transformation in various sectors: the energy system, with dedicated analysis on the energy supply, buildings, industry, transport, as well as non-CO2 emissions, agriculture and LULUCF emissions.

The model-based analysis is a technical exercise based on a number of assumptions that are shared across scenarios. Its results do not prejudge the future design of the post-2030 policy framework.

1.1.GHG emissions

1.1.1.GHG budgets and net GHG emissions 

1.1.1.1.GHG budgets

The target options provide different remaining GHG budgets for the period 2030-2050: 21 GtCO2-eq for the linear option, 18 GtCO2-eq for option 2 (at least 85% up to 90%) and 16 GtCO2-eq for option 3 (at least 90% up to 95%) (see section 5.2 in the main document).

The ESABCC analyses a (intra-EU) range of 11-16 GtCO2-eq for the EU to contribute to limiting global warming to 1.5°C with no or limited overshoot ( 1 ). The ESABCC report highlights that scaling-up of energy technologies beyond challenging levels is required to achieve the more ambitious end of this range: not overcoming such technological deployment challenge moves the range to 13-16 GtCO2-eq. ESABCC also recommends a range of 11-14 GtCO2-eq (9).

1.1.1.1.Net GHG emissions

The scenarios achieve net GHG reductions in line with the budgets associated to each target option.

Table 1  shows the 2040 and 2050 net GHG emissions in S1, S2, S3, and LIFE (see Annex 6 for their description), as well as the corresponding reductions compared to 1990. The values are provided for Union-wide GHG emissions and removals regulated in Union law, in accordance with the climate neutrality target scope ( 2 ). With the fit-for-55 package ( 3 ), this covers all domestic net emissions (in the sense of the UNFCCC inventories), international intra-EU aviation, international intra-EU maritime, and 50% of international extra-EU maritime from the Monitoring Reporting and Verification (MRV) scope ( 4 ). The table also provides a range to illustrate the uncertainties on the future evolution of LULUCF net removals, considering a lower level and an upper level depending on the effect of policies or other factors (See 1.8 of this Annex for more details).

Table 1: Net GHG emissions and reductions compared to 1990

 

2040

2050

 

S1

S2

S3

LIFE

S3

LIFE

Total Net GHG - MtCO2-eq

1051 [1051 to 893]

578 [681 to 520]

356 [458 to 298]

353 [469 to 302]

-38 [90 to
-100]

-70 [85 to ‑117]

Reduction vs 1990 - %

-78% [-78% to -81%]

-88% [-86% to -89%]

-92% [-90% to -94%]

-93% [-90% to -94%]

-101% [-98% to -102%]

-101% [-98% to -102%]

Note: Main values reported correspond to the LULUCF net removals considered in the scenarios, with net GHG emissions with lower and upper level of LULUCF net removals are in brackets. S1 and S2 values for 2050 are similar to S3.

Source: PRIMES, GLOBIOM, GAINS.

While all scenarios achieve climate neutrality in 2050, in 2040, the net GHG emissions are clearly different across scenarios.

5 S1 leads to total net GHG emissions reaching about 1050 MtCO2-eq (ranging down to 890 MtCO2-eq depending on the behaviour of the LULUCF net removals), representing a reduction of 78% compared to 1990. This scenario focuses on strengthening the existing trends with limited contribution of more advanced mitigation options supported by novel technologies () by 2040 and fits a linear trajectory of net GHG emissions between 2030 and climate neutrality in 2050.

The S2 scenario deploys the full potential of existing decarbonisation solution, such as electrification and renewable and relies upon novel technologies such as carbon capture and a higher uptake of e-fuels using fossil free carbon (see sections  1.1.3 and 1.2 in this Annex), as well as further abatement in the agriculture sector (see 1.1.4 and 1.7 ). It reaches about 580 MtCO2-eq in 2040, or 88% reduction compared to 1990 (ranging between 86% and 89%).

The S3 scenario foresees early implementation of novel technologies to attain net GHG emissions levels of around 360 MtCO2-eq in 2040, and a reduction level of -92%, with a range between -90% and -94%.

LIFE implements additional circular economy and sufficiency actions in industry, transport and agriculture, achieving similar reduction as per S3, but with a different sectoral distribution of emission (see 1.1.2 in this Annex). This setting illustrates the important role of demand-side policies and measures to reduce GHG emissions, and to enhance the environmental performance of mitigation actions by limiting the consumption of natural resources, including raw materials and land or further improving some direct environmental benefits of climate action (see sections  1.4 , 1.7.5  and 1.9.1 ).

6 7 8 9 The levels of emission reductions achieved in the different scenarios are in line with ranges found in the literature, spanning from 84% to 89% (), from 87% to 91% (), around 89% () and from 88 to 95% by the ESABCC ().

The distribution of emissions between CO2, non-CO2 gases and GHGs coming from LULUCF sector is reported in Table 2 . A more detailed analysis of the sectoral reduction for S1, S2, S3 and LIFE is described in the following sections.

Table 2: CO2, non-CO2 and emissions from LULUCF sector.

2040

2050

 

 

S1

S2

S3

LIFE

S3

LIFE

Total Net GHG - MtCO2-eq

1051

578

356

353

-38

-70

CO2 (excl. LULUCF) * – MtCO2

815

521

331

432

5

83

Non-CO2 (excl. LULUCF) ** – MtCO2-eq

454

373

342

281

291

236

LULUCF*** – MtCO2-eq

-218

-316

-317

-360

-333

-389

Note: *includes CO2 from fossil fuel combustion (category 1 in inventories), industrial processes and product use (category 2) and agriculture under category 3. **Includes non-CO2 emissions under categories 1, 2, 3 and 5 of the inventories. ***Only main values are reported.

1.1.2.GHG emissions and role of removals

According to the IPCC, reductions in gross GHG emissions, nature-based and industrial carbon removals are all needed to reach net zero ( 10 ). While gross GHG emissions need to decrease significantly, the deployment of carbon removals is unavoidable to counterbalance hard-to-abate residual emissions and replace residual fossil fuels. However, relying primarily on carbon removals without intervening in gross GHG emissions may be unrealistic since the potential for removals is limited by land constraints, feasibility, cost-efficiency, public acceptance and technological consideration ( 11 ).

The increasing role of carbon removals is also highlighted in the public consultation questionnaire, where majority of respondents (around 65%, including all categories) calls for 2040 carbon removal targets separate from net emission, and experts from the academic, economic and public sectors are in favour of an important role of the carbon removals. 61% of the papers analysed also comment on carbon removals, with most of them indicating removals instrumental to reach climate neutrality, if complementary to GHG emission reduction at source. There is no clear preferred pathway indicating the contribution of nature-based vs industrial removals. In position papers, the emphasis of forests as carbon sink is underlined, while carbon capture for industrial removals plays an important role for energy-intensive industries to reduce hard-to-abate emissions within the sector. The public consultation indicates a general slight inclination for relying on nature-based removals (around 30% of respondents) or a balanced approach between nature-based and industrial removals (around 27% of respondents). This preference is confirmed also when looking individually at the different stakeholder groups, except for large businesses and SMEs, who expressed by majority a preference for either a balance between nature-based and industrial removals or a stronger reliance on industrial removals.

1.1.2.1.Gross GHG Emissions

The “gross GHG” emissions are defined as the actual GHG emissions excluding the contribution of industrial removals and net LULUCF removals that are part of the computation of “net GHG” emissions meeting EU’s climate objectives for 2030 and 2050.

Figure 1 shows the evolution of EU gross GHG emissions over 1990-2050. In 2021, EU gross emissions achieved around 3570 MtCO2-eq, with a reduction of around 28% compared to 1990 ( 12 ). The trajectory until 2030 is consistent with the Fit-for-55 policy package, where emissions reach around 2300 MtCO2-eq. Post-2030, these emissions keep decreasing in all scenarios, albeit at difference pace by 2040 and beyond. They reach about 400 MtCO2-eq in 2050, when they are compensated by industrial and LULUCF net carbon removals to converge to climate neutrality.

Figure 1: Domestic Gross GHG emissions

Note: Gross GHG emissions represented here include only domestic emissions and excludes industrial carbon removals and the LULUCF net removals.

Source: PRIMES, GAINS.

Table 3 summarises the gross GHG emission by sector. In S1 gross GHG emissions decrease following a linear profile over 2031-2050, reaching around 1270 MtCO2-eq in 2040, which correspond to a decrease of around 75% compared to 1990 levels. Most sectors undergo significant emissions reductions already over 2031-2040, with emissions ranging from around -70% in the domestic transport sectors to about -10% in agriculture. The S2 scenario achieves further reductions of gross GHG emissions by 2040, reaching around 940 MtCO2-eq or 80% reduction compared to 1990. Significant additional reductions with respect to S1 take place notably in power and heat, industry and agriculture. The S3 scenario achieves a reduction of around 85% in 2040, driven by extra reductions to S2 in all sectors, including the industry sector, where they are triggered by higher recourse to carbon capture and storage of fossil fuels (see section 1.1.3.2 ), the power system, buildings and transport. LIFE, which aims at the same overall reduction as S3, redistributes gross emissions across the different sectors. While energy and industry sectors reduce to a level intermediate between S2 and S3, mostly due to a lower use of e-fuels and DACC, agriculture emissions reduce more than in S3.

Table 3: Gross GHG emissions

 MtCO2-eq

2005

2015

2030

2040

2050

 

S1

S2

S3

LIFE

S1

S2

S3

LIFE

Total Gross GHG Emissions

4641

3914

2301

1273

943

748

740

416

413

411

360

Power and district heating

1300

1012

339

123

42

23

34

21

22

19

15

Other Energy sectors*

277

237

133

71

59

53

57

39

39

38

36

Industry (Energy)

469

360

232

126

94

75

86

6

6

9

11

Domestic Transport

822

772

583

190

143

120

134

10

8

7

9

Residential and Services**

648

514

221

119

92

75

92

20

19

19

29

Industry (Non-Energy)

343

233

157

139

88

14

13

7

7

7

7

Other Non-Energy sectors***

101

130

56

33

26

25

25

23

22

22

22

International transport (target scope)

Intra-EU aviation

35

38

43

31

29

28

14

14

12

11

10

Intra-EU navigation

31

27

25

7

6

4

0

0

0

0

0

50% extra-EU maritime MRV

50

42

44

14

11

9

0

0

0

0

0

Agriculture****

390

385

361

351

302

271

209

249

249

249

194

Waste

155

118

87

68

55

55

55

32

32

32

.32

CO2 calibration

15

43

24

3

-1

-1

-1

0

0

0

0

Non-CO2 calibration

5

2

-3

-3

-3

-3

-3

-3

-3

-3

-3

Memo Items

International aviation
(Intra-EU and Extra-EU)

96

103

117

83

80

78

73

38

34

31

27

International maritime
(Intra-EU and Extra EU)

152

129

134

41

33

25

33

0

0

0

0

Note: Calibration of total to inventory 2023. *Includes emissions from energy branch and other non-CO2 emissions from the energy sector; **Includes fossil fuel combustion in the agriculture/fishery/forestry sector; ***Includes CO2 fugitive emissions and non-CO2 emissions from direct use or specific products (e.g., aerosols, foams, etc). **** Excludes fossil fuel combustion in the sector, but includes “category 3” CO2 emissions, assumed constant at 10 MtCO2.

Source: PRIMES, GAINS.

Sectors that reduce little in 2031-2040 accelerate their decarbonisation in the 2041-2050 decade, while sectors that have already reached low emissions levels by 2040, maintain or slow down the reduction rate by 2050, leading to a balanced contribution to climate neutrality for all sectors across 2030-2050. Overall, gross GHG emissions in 2050 reduce to -92% vs 1990 across all scenarios.

1.1.2.2.Nature-based carbon removals

Table 4  shows the LULUCF net removals in the different scenarios. The central level for 2040 is close to -320 MtCO2-eq in all scenarios by 2040, slightly above the target for 2030 (-310 MtCO2-eq). The differences between S1, S2 and S3 are driven by the different bioenergy needs in the energy systems underpinning the scenarios (see section 1.8  in this Annex). LIFE is characterised by a different food system that frees up land for carbon farming activities such as afforestation.

The table also provides a range (from lower level to upper level) to illustrate the uncertainties on the future evolution of LULUCF net removals, depending on the effect of policies or other factors (see section 1.8 in this Annex). 

Table 4: LULUCF net removals by scenarios in 2040 and 2050

MtCO2-eq

2040

2050

S1

S2

S3

LIFE

S1

S2

S3

LIFE

Lower level

-218

-213

-215

-243

-213

-202

-206

-234

Central level

-319

-316

-317

-360

-341

-332

-333

-389

Upper level

-376

-374

-376

-410

-403

-394

-396

-436

Note: The ‘Central level’ is derived from applying in the modelling the same policy intensity as the one necessary to meet the 2030 target, except for S1 in 2040. The ‘Lower level’ is derived from assuming no additional cost as the lower boundary of the LULUCF net removals level. The ‘Upper level’ is derived from the maximum mitigation potential as the upper boundary of the LULUCF net removals level. The numbers in bold are used to compute the overall net GHGs for the different scenarios.

Source: GLOBIOM

The expected contribution of LULUCF to the 2040 climate target stays within the boundaries of the ESABCC, which discusses an upper bound of 400 MtCO2-eq in 2040 ( 13 ) and describes three iconic scenarios that display a larger range from 323 MtCO2-eq to 601 MtCO2-eq in 2040 and from 312 MtCO2-eq to 669 MtCO2-eq in 2050 ( 14 ).

Section 1.8 in this Annex provides more details on the LULUCF sector and the related GHG emissions and removals.

1.1.2.3.Industrial carbon removals

15 16 Industrial carbon removals, together with nature-based removals, are projected to play an increasing role in the EU economy in the next decades (), in the view of balancing EU GHG emissions by 2050, and achieving negative emissions thereafter ().

17 18 Industrial removals can contribute to compensate residual GHG emissions from hard-to-abate sectors. They can also progressively replace fossil carbon feedstock in processes like the production of plastics or e-fuels (), () and become the main source of (fossil-free) carbon in sectors where carbon will still be needed in the long-term.

Figure 2 shows the industrial removals projected by PRIMES and differentiated by their source. The total amount of carbon removed until 2040, whether captured from the atmosphere, from biomass combustion or from biogas upgrading, varies across scenarios. Removals are projected to remain marginal in the S1 scenario by 2040, to reach 50 MtCO2 in S2 and up to 75 MtCO2 in S3. Removals deploy progressively from S1 to S3 and allow for higher reductions of net GHG emissions (see also Figure 7 ). LIFE models lower carbon removals: demand-side actions and enhanced LULUCF net removals can reduce the need for industrial removals, and, in this projection, eliminate the recourse to DACC in 2040. 

Figure 2: Carbon removals by source and use

Source: PRIMES.

The amount of carbon removed by industrial means in 2050 is similar across scenarios and reaches around 120 MtCO2/y, suggesting the need for significant carbon removals to achieve climate neutrality. While most of the storage takes place in underground sites, limited storage in permanent materials also appears in the last decade. The slightly higher values for S1 are required to compensate for delayed climate action in 2031-2040.

19 20 21 22 23 24 While the modelling shows a similar share of BECCS and DACCS by 2040 in S3 and beyond by 2050, their actual relative deployment will depend on a number of factors, e.g.: high costs and technological uncertainty (DACCS () ()), cost and competition on biomass resource and possible negative impact on LULUCF (BECCS ()()(), see section 1.8 in this Annex), creation of the transport and storage infrastructure, public acceptance and equitable and sustainable technology scale up ().

25 26 Both technologies add requirements on the ambitious and challenging industrial sectors’ decarbonisation plans, and these needs to be coupled effectively with feasibility analysis and supporting measures as appropriate. While the scenarios filtered by the ESABCC attribute a minor role to carbon captured from the atmosphere (), the IEA indicates that more efforts are needed to fully develop DACCS (). The demand side, with the amount of e-fuels required by other sectors and the need to compensate residual emissions, will also influence the deployment of each technology.

Given the lack of predictability for the uptake of one removal technology over another by 2040, a comparison between different deployment pathways is performed.

Figure 3 compares the industrial carbon removals obtained in 2040 with the PRIMES model, with deployment pathways projected by the POTEnCIA model. In PRIMES ( Figure 3 , left) BECCS tends to come first, and considerations of sustainable biomass availability limits its expansion. The remaining needs for removals are fulfilled by DACCS, which appears as complementary to BECCS. The POTEnCIA model ( Figure 3 , right), where the cap on the amount of sustainable biomass supply for bioenergy is relaxed (see also Annex 6), illustrates a stronger deployment of BECCS, reaching up to around 80 MtCO2 in 2040 in S3, complemented by storage of biogenic carbon from biogas upgrade and very limited development of DACCS. Higher recourse to BECCS leads to an increase of bioenergy demand, with a possible negative impact on the LULUCF net removals (see 1.8.2 ). 

27 28 29 30 31 Both pathways modelled provide an amount of total industrial removals in 2040 lower than the estimated maximum in the scenarios considered by the ESABCC, corresponding to 214 MtCO2 (), and consistent with ranges of 10-220 MtCO2 that can be found in the literature (), (), (), ().

Figure 3: Industrial carbon removals in PRIMES and POTEnCIA in 2040