2040 Climate Target: a discussion with the industry

Tsvetelina Penkova, EEF Director, and chair of the meeting opened the discussion by underlying the need for strategic autonomy and reliance on European expertise, paramount to face the challenges of the last few years. Looking at the EC impact assessment for the 2040 climate target, she explained how EU’s climate goals can only be achieved if the existing and future legislation is implemented. Ms Penkova considered that it is imperative to identify the strengths of individual member states and to focus on a fair transition in order to ensure the competitiveness of European industry. She concluded that the creation of a level playing field and a clear understanding of interdependencies are the foundations for fair competition with international partners.

Robert Jeszke, CEO, Centre for the Climate and Energy Analysis/KOBiZE discussed various scenarios proposed for achieving the 2040 climate target. The detailed analysis aimed to understand how the European Union can achieve net zero emissions by 2050. It highlighted uncertainties about future climate policies after-2030, especially concerning the EU Emissions Trading System (ETS). Mr. Jeszke argued the fundamental role of removal technologies for a reduction in emissions by 2040, even though they are not operational yet. Finally, he pointed out that such ambitious targets, without clear implementing mechanisms in place, underscore the need for a more nuanced approach to climate policy discussions in Europe.

Jędrzej Maśnicki, Director for International Affairs, PGE analysed some key elements that can help deliver the climate targets. He focused on electrification and the importance of investments in storage facilities. He also highlighted the challenges related to grid connectivity. Mr. Maśnicki underlined that electrification can be enhanced by investing in diverse generation sources like nuclear, which could also guarantee competitive energy prices. He argued that substantial investments are annually required until 2050 and questioned the decline in nuclear capacity projected in certain models. In his concluding remarks, he pointed out the fundamental role of financial mechanisms to secure investments.

The floor was given to four energy intensive industries to give a broad perspective to the question.

Emmanuel Brutin, Public Affairs Director, CEMBUREAU discussed the pressing requirement to increase investments in energy-intensive sectors, stressed the pivotal role of carbon capture technologies, particularly in industries like cement, and explained how the industrial decline in Europe can be avoided by mitigating carbon leakage and implementing CBAM. Some of his recommendations included maximizing ETS revenues for industrial decarbonization, advocating for supportive regulations for CCS initiatives, and suggesting the integration of an indicative target for imported CO2 alongside the 2040 goal.

Adolfo Aiello, Deputy Director General, Climate and Energy, EUROFER explained that reaching EU’s climate goals means fully decarbonising the steel sector, which can be achieved with two technologies: carbon capture and hydrogen-based steel production, both energy-intensive. He also underlined the need to maintain the competitiveness of the sector. To this end, he emphasised that the implementation of CBAM is key to avoiding unfair trading practices.

Anna-Maria Karjalainen, Director for Clean Transition, International Copper Association Europe highlighted the strategic importance of copper in the decarbonisation of EU economy and as an enabler for electrification. She explained that the production of copper also needs to be decarbonised, this is why substantial investments and regulatory support are needed. She stressed the importance of affordable decarbonized electricity and carbon pricing mechanisms. She concluded urging policymakers to guarantee the resilience of European raw material value chains.

Jasmine Barahman, Climate Policy and EU Affairs Senior Manager, Fertilizers Europe recognised the importance of giving companies sufficient flexibility in the choice of decarbonization technologies, according to the Member States’ situation. Depending on the availability of renewables, industries should be able to produce green ammonia and green hydrogen or rely on CCS/CCU. Finally, she underlined that targeted measures are essential to boost the creation of a market for low-carbon food and also for low-carbon fertilizers.

Miguel Gil Tertre, Chief Economist, Energy policy: Strategy and Coordination, DG ENER completed the interventions by highlighting the importance of cost-efficient strategies to reduce greenhouse gas emissions. He explained that the European Commission has considered a full implementation of the Fit for 55 Package while working on the 2040 climate target. To achieve it, massive investments, both public and private, will be required. Mr Gil Tertre emphasized that all available technologies will be necessary, including nuclear and CCUS. He also pointed out the need to ensure affordable energy prices to maintain competitiveness with global competitors, particularly the US and China. This requires investments in renewable energy sources, grid infrastructure and interconnections. He concluded that energy-intensive industries require customized measures to manage energy costs and retain industrial capacity.

The Q&A session with the participants was an opportunity to exchange on a wide variety of topics including the need for a regulatory framework supporting the decarbonisation of industries, gas infrastructure resilience, the role of biomethane in the decarbonization of the European economy, but also energy taxation discrepancies and the need for private investments to achieve ambitious climate targets.