The new European Commission must set a bold EU emissions reduction target for 2040 to ensure climate neutrality by 2050, a 90% reduction target is essential to keep the EU on track for a fossil-free future, write researchers at the Stockholm Environment Institute (SEI).
Stockholm Environment Institute (SEI)is aninternational non-profit research institute that tackles environment and development challenges.
Achieving this, however, requires a strategy that integrates a just transition, a decisive exit from fossil fuels, and significant investment in low-carbon industrial technologies. Here are four critical steps to make this transition both fair and competitive for EU citizens and businesses.
Establish clear fossil fuel phase-out targets
The EU must set both immediate and long-term targets to eliminate fossil fuel use in alignment with its Just Transition Mechanism. This policy framework provides essential support to regions and households dependent on carbon-intensive industries. By applying it alongside clear reduction targets for fossil fuel consumption, production, and imports, the EU can prevent long-term dependency on fossil fuels and avoid locking in outdated and emissions-intensive infrastructure and assets.
These actions will send a strong market signal, lowering decarbonization costs and ensuring that renewable energy truly replaces fossil fuels rather than merely supplementing them.
Setting a phase-out target for oil and gas production by 2040 would show global leadership and encourage other regions to follow suit. Establishing a similar timeline for phasing out coal, paired with robust just transition measures, would demonstrate the EU’s commitment to minimizing impacts on coal-dependent communities.
Develop a fair and sustainable approach to fossil fuel sourcing
As the EU transitions to a fossil-free future, it will still need to rely on some fossil fuels during the transition period. To manage this effectively, the EU must develop a clear and fair strategy for sourcing and using the remaining fossil fuels, ensuring alignment with climate goals.
Currently, such a strategy does not exist. The EU and other high-income economies that can transition more quickly, must reduce their demand for fossil fuels and cut back on imports. At the same time, the EU should support countries with higher dependence and lower capacity to transition. This support could include financial assistance, technology transfer, and capacity building, helping to ensure a fair and managed transition in carbon-dependent economies.
Additionally, the EU must limit the development of new fossil fuel infrastructure such as pipelines and liquefied natural gas terminals, which could lock in carbon emissions for decades and jeopardize the EU’s climate goals.
Accelerate investment in industrial decarbonization
To meet the ambitious 2040 targets and avoid falling behind, the EU must immediately invest in low-carbon industrial technologies. The Clean Industrial Deal, highlighted in the European Commission President’s political guidelines, emphasizes the urgent need to decarbonize and industrialize the economy simultaneously. This is particularly critical for sectors like steel manufacturing, where all new investments by 2030 must be in low-carbon technologies.
Delaying investments in fossil-free technologies, such as green hydrogen, until the 2040s would be too late to achieve the necessary scale and avoid carbon lock-in, hindering the 2050 carbon neutrality goal.
The Swedish steel industry offers a model of leadership with its strategy to transition away from fossil fuels by building new low-carbon capacity based on green hydrogen within this decade. However, the EU lacks a clear plan to foster such rapid industrial transitions across all member states.
Support vulnerable populations through coordinated efforts
A fair transition to climate neutrality requires coordinated efforts across all policy sectors, with clear guidelines to support vulnerable populations. The EU’s existing mechanisms, including the EUR 65 billion Social Climate Fund, are important but insufficient. These funds will be quickly absorbed by populations at risk due to low incomes, high dependence on cars, limited access to public transport, and long distances to essential services.
The EU and member states must take into account the different needs and abilities to cope with change within various segments of the population. In the context of the ongoing cost of living crisis, many member states have relied on temporary measures such as one-off electricity rebates and fuel tax concessions These measures often disproportionately benefit high-income urban households and reduce resources available for welfare programs. To ensure that just transition support is effectively targeted, the Commission must provide member states with clear guidelines for implementing sustained and tailored measures that address the unique circ*mstances of their transition.
The European Commission President has set an ambitious agenda for EU decarbonisation and industrial competitiveness, hinged on the actions taken by incoming Commissioners. Ultimately, addressing the global challenge of climate change requires the EU to move beyond merely protecting its own competitiveness and toward creating a global level playing field. By establishing clear fossil fuel phase-out targets, coupled with robust just transition measures, both domestically and internationally, the EU can demonstrate its commitment to a fossil-free future.
Expanding its investment strategy and setting ambitious targets for key industrial technologies and support for vulnerable regions and populations will ensure a more equitable and effective pathway to climate neutrality by 2050.
The following people contributed to this article:Carly Evaeus, Fellow, Stockholm Environment Institute (SEI), Michael Lazarus, Senior Scientist, Stockholm Environment Institute (SEI),Aaron Maltais, Senior Research Fellow, Stockholm Environment Institute (SEI),Björn Nykvist, Senior Research Fellow, Stockholm Environment Institute (SEI),Claudia Strambo, Research Fellow, Stockholm Environment Institute (SEI),Timothy Suljada, Head of Division, Stockholm Environment Institute (SEI),Eileen Torres-Morales, Research Associate, Stockholm Environment Institute (SEI).
