The last emissions cuts better be the deepest

EU annual greenhouse-gas emissions vs. their 2030 target

* Projected rates displayed dashed

Source: Global Carbon Budget (2023), European Commission (2024), DWS Investment GmbH as of 7/2/24

This implies either more effective implementation of existing legislation and better leveraging of private investment or a more forceful agenda of European climate legislation ahead. If not, Europe’s emission reduction target may be relaxed with potential implications for European carbon prices.

June’s European parliamentary elections saw a shift in seat shares towards the right. Losses suffered by the Greens may also skew the balance of risks in terms of possible setbacks to the Green Deal agenda. For example, this more fragmented parliamentary landscape could eventually threaten efforts to strengthen the EU carbon market or even trigger a rethinking of the 2035 phase-out of combustion vehicles.

However, recent wrangling in the European parliament and the re-nomination of incumbent European Commission President Ursula von der Leyen suggest green ideas retain plenty of sway. This is underlined by results from the most recent round of EU attitudes surveys, which show that 78% of Europeans believe that environmental issues have a direct effect on their daily life with 84% agreeing that environmental legislation is necessary.^[1] In addition, climate and the environment were identified as the second most important priority for Europe (24%); at the top of citizens' priority list was economic development, to which climate-related investments can contribute.^[2]