26 October 2021, EU: Together with the annual State of the Energy Union Report, the Commission today adopted three reports on the progress of EU climate policies in 2020: the EU Climate Action Progress Report, the Carbon Market Report and the Fuel Quality Report. The EU Climate Action Progress Report shows that compared to 2019, EU27 greenhouse gas emissions in 2020 fell by almost 10%, an unprecedented drop in emissions due to the COVID-19 pandemic, which brought overall emission reductions to 31% compared to 1990, which is the reference for the EU’s long-term climate goals. This means that the EU has substantially exceeded its target under the UNFCCC Kyoto Protocol of reducing emissions by 20% by 2020 compared to 1990. The data for this year is clearly unique due to the global economic slowdown, and a better analysis of the long-term trajectory will be possible next year.
Compared to 2019, emissions in sectors covered by the EU Emission Trading System (EU ETS) fell sharply in 2020, by 11.4% from power generation and the bulk of industrial production, and by 63.5% from aviation. Non-ETS emissions, such as those from non-ETS industry, transport, buildings, agriculture and waste, fell by 6%. Since the introduction of the EU ETS in 2005, emissions have been cut by around 43%, exceeding the contribution of 21% set in the EU ETS legislation. In sectors not currently covered by the EU ETS, emissions were 16% lower than in 2005, surpassing the target set by the Effort Sharing Decision. However, transport and agriculture emissions are not likely to fall substantially without additional measures, as they have remained largely unchanged since 2005, except for the fall in transport emissions in 2020 due to the COVID-19 pandemic. Furthermore, net removals from land use, land use change and forestry have been on a worrying downward trend over the last decade, driven by the situation in forest ecosystems, including an increasing share of forests reaching maturity, increase in natural disturbances, an increase in wood demand, and a decrease of afforestation rates.
According to the Fuel Quality Report, further action is needed to meet the target of reducing the greenhouse gas (GHG) intensity of transport fuels by a minimum of 6% by 2020 compared to 2010, which is set by the Fuel Quality Directive. The Report finds that the average GHG intensity of fuels in 2019 had fallen by 4.3% compared to 2010. The year-on-year progress achieved compared to 2018 was limited to a 0.6 percentage point decrease. Progress varies greatly across Member States, and almost all need to act swiftly to meet the 2020 target.
The Carbon Market Report shows that the EU ETS remains robust, withstanding the economic downturn caused by the pandemic. After an initial drop, carbon prices rebounded, and compliance in the 2020 cycle remained consistently high. Financial market rules are an important safeguard of the integrity and transparency of the EU carbon market and the established framework has worked well. Since 2018, the allowance price of the EU ETS has increased, leading to a rise in auctioning revenues from €3.2 billion in 2013 to €14.4 billion in 2020, which all go to the Member States. In 2020, 76% of these revenues were used, or planned to be used, for climate and energy purposes. In addition, a growing number of EU-funded climate projects are financed through the monetisation of emission allowances via the NER 300 programme, the Innovation Fund and the Modernisation Fund.
Greater efforts will be required to reach the 2030 goal of cutting net emissions by at least 55% and achieving climate neutrality by 2050. Both targets are now legally binding under the European Climate Law. To ensure that the EU policy framework is fit for its new 2030 climate target, the Commission proposed in July 2021 the most comprehensive package of climate and energy legislation ever. To adapt to the unavoidable impacts of climate change and become a climate-resilient society by 2050, the EU has also adopted a new strategy on adaptation to climate change and submitted its Adaptation Communication to the UNFCCC. Moreover, NextGenerationEU, the EU’s €800 billion recovery plan, will provide significant support to Member States’ climate projects.
These three reports are published alongside the State of the Energy Union Report, information on energy subsidies and the report on competitiveness of clean energy technologies:
The Climate Action Progress Report “Speeding up European climate action towards a green, fair and prosperous future” describes progress made by the EU and its Member States in attaining their greenhouse gas emission reduction targets, and reports recent developments in EU climate policy. The report is based on data submitted by Member States under EU Regulation on the Governance of the Energy Union and Climate Action.
The Carbon Market Report describes developments in the functioning of the European carbon market, including on the implementation of auctions, free allocation, verified emissions, balancing supply and demand, market oversight and EU ETS infrastructure and compliance.
The Fuel Quality Report provides information on the progress made with regard to the greenhouse gas intensity reduction of road transport fuels and the quality and composition of fuels supplied in the EU. The report summarises the situation reported by Member States under Articles 7a and 8(3) of the Fuel Quality Directive.