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- The last emissions cuts better be the deepest
Compared to other regions around the world, Europe can claim some success in its efforts to reduce greenhouse-gas (GHG) emissions. The 27 member states of the European Union (EU) have seen a reduction of 27% since 1990.[1] This compares to a 2% decline in the United States over the same period.[2]
While our Chart of the Week reveals that the EU has secured an almost uninterrupted decline in absolute emissions since 2005, the pace of decline amounts to just 1.8% per annum over the past 5 years. If this trajectory continues for the remainder of this decade, Europe will only be able to achieve a cumulative emission reduction of 37% compared to 1990.
This falls significantly short of the target to cut GHG emissions by 55% by 2030, approved in 2020 in a set of policy initiatives known as the European Green Deal. To have a chance of achieving this goal, the rate of emission reduction needs to run at an annual clip of around 6% between now and the end of the decade, or three times faster than what has occurred in recent history.
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.[3] 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.[4]
