EUROPEAN COMMISSION

Brussels, 24.10.2023

COM(2023) 653 final

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

EU Climate Action Progress Report 2023

{SWD(2023) 338 final} - {SWD(2023) 339 final}

1EMISSION TRENDS AND PROGRESS IN CLIMATE ACTION

Greenhouse gas emissions and the EU’s international commitments

In March 2023 the Intergovernmental Panel on Climate Change (IPCC) confirmed that global warming, induced by anthropogenic greenhouse gas (GHG) emissions is increasing the frequency and severity of climate and weather extremes, leading to widespread and adverse impacts on people and nature across the globe. Every increment of warming will intensify the impacts, and urgent global climate action is needed to limit global warming and to adapt to its impacts. Global GHG emissions need to fall by 43% by 2030 and by 84% by 2050 below 2019 levels, while global net zero CO2 emissions must be reached in the early 2050s if we are to limit temperature increase to 1.5oC with no or limited overshoot. Reducing GHG emissions has many co-benefits, including for air quality, health, biodiversity and energy security. 1  

Europe has been warming twice as much as the global average since the 1980s, with far-reaching impacts on the region’s socio-economic fabric and ecosystems. 2  The year 2022 saw further devastating impacts associated with a warming climate, with extreme weather events becoming more and more common. The late spring and summer heatwaves, with record-breaking temperatures in many locations, resulted in a record number of days with very strong heat stress, leading to over 61 000 excess deaths across Europe. 3 Hot and dry spring and summer conditions, which triggered drought across most of Europe, and fuelled numerous large wildfires, were followed by heavy precipitation and intense flooding in the autumn, causing dozens of fatalities. 4 Overall, summer 2022 was Europe’s warmest ever recorded. 5 Temperature records continued to be broken in 2023, confirming the extra-ordinary pace of climate change. July was the hottest month on record with global temperatures 1.5oC warmer than the pre-industrial average. The rising temperatures and increasing frequency of extreme events contributed to numerous wildfires, and by the end of July 2023, they had affected more than 182 000 hectares across the EU, 40% above the 2003-2022 average, 6  while unprecedented floods hit parts of Europe. 7

In 2022, global emissions were back to their pre-pandemic increasing trend, reaching 53.8 billion tonnes of CO2 equivalent (CO2-eq), well above 2019 emissions. Preliminary JRC data 8 show that global GHG emissions rose by 1.4% in 2022 compared to 2021 levels, against a 3.4% growth of global GDP over the same period, as the global economy continued rebounding from the pandemic. Transport was the main driver of increased GHG emissions (+4.7%, or 361 MtCO2-eq), although still below the pre-pandemic level, followed by fuel production 9 (+2.6%, or 157 MtCO2-eq) and power (+0.9%, or 136 MtCO2-eq). Among the larger emitters, the most significant increases were in Indonesia (+10%, or 113 MtCO2-eq) and India (+5%, or 189 MtCO2-eq), while China showed a limited increase (+0.3%, or 52 MtCO2-eq).

In the EU, provisional data 10  for 2022 show that total GHG emissions (excluding land use, land-use change, and forestry, and international aviation) decreased by 2.4% compared to 2021, continuing the 30-years descending trend, whilst EU GDP grew by 3.5% in the year 2022 (Figure 1.a). Emissions covered by the EU Emissions Trading System (EU ETS) fell by 0.2% and non-ETS emissions decreased by 2.9%.

Figure 1: EU GHG emissions (excluding land use, land-use change and forestry) and by sector 11  

Exceptional events over the last 3 to 4 years have made the assessment of GHG emission trends more complex and continue to have an impact on 2022 emissions. For more clarity, this report therefore assesses the year-on-year change in emissions and compares to the pre-pandemic level. The COVID-19 lockdowns and restrictions led to an unprecedented but temporary drop in GHG emissions of 8% in 2020. In 2021, the economic recovery affected regions and sectors differently. Some sectors, such as the transport sector and travel-related emissions, recovered fully only in 2022. The energy crisis that started in 2021 continued in 2022, exacerbated by Russia’s unprovoked and unjustified invasion of Ukraine, which drove energy prices to record highs, particularly gas prices. In addition, decreased level of nuclear 12  and low hydro power production 13 have led to an increase in the use of coal and lignite for power generation, above the level recorded in 2021. The high energy prices also triggered action to reduce demand for both industrial and household energy.

EU emissions by sector show these changes (Figure 1.b). Emissions in energy and transport are expected to increase in 2022, although remaining below 2019 pre-pandemic levels, while significant cuts in emissions are expected in buildings and industry, mainly because of the continued increase of energy prices. Despite the slight decline in 2022, emissions in agriculture remain broadly at the same level as ten years ago.

Provisional 2022 data for GHG net removals from the Land Use, Land-use Change and Forestry (LULUCF) sector appear to suggest a break in their recent declining trend, with an expected increase in carbon sinks of 6% compared to 2021, although approximated emissions remain subject to large revisions. Consequently, in 2022 total net GHG emissions (including LULUCF) decreased by 3.0% on a yearly basis, a reduction of 32.5% compared to 1990 level.

In the EU, verified emissions from aircraft operators increased significantly, by 75% compared to 2021 as the industry recovers from the very low levels of activity during the COVID-19 pandemic.

Towards the climate-neutrality objective

In addition to assessing the progress made in climate policy under the Governance Regulation, 14 for the first time this year this report assesses progress under the European Climate Law, 15 including the collective progress made by Member States towards the EU’s goal to achieve climate-neutrality by 2050. 16  It looks at progress on several aspects and from several sources and takes account of the complexity inherent in the many possible paths to achieve a net-zero and resilient economy.

Overall, provisional 2022 data show that the EU’s domestic GHG net emissions (i.e. including LULUCF and excluding international transport) are falling steadily, in line with the linear path to achieve the EU’s 2030 GHG reduction target (i.e. -55%) and the EU’s 2050 climate neutrality objective. 17 However, the pace of emission reduction needs to pick up, to almost triple the average annual reduction achieved over the last decade (see Figure 2.a). Relative to past mitigation efforts, the most significant cuts in emissions are needed in buildings and transport, where the pace of decarbonisation is sluggish or even moving in the opposite direction. At the same time, action in the LULUCF sector is essential to achieve a significant boost in carbon removals. Although reaching the emissions cuts required from agriculture looks achievable when looking at progress over the past three decades, the lack of substantial progress in recent years is a concern, calling for a gear change (Figure 3.b).

Although sizeable, such emission reductions are not unprecedented. In the two years before the pandemic, emissions were down by an annual average of 120 million tonnes of CO2 equivalent, due to progress in energy efficiency and the fast deployment of renewables. In 2022, all actors in the EU, including energy intensive industry, decreased their demand for energy compared to pre-pandemic levels, with savings of more than 18% of gas compared to the five years before. 18

Figure 4: Number of single policies and measures (decarbonisation dimension) by affected sector and aggregated reported expected emission savings and increase net removals 28  

The sectors with the most measures are transport (23%), energy consumption (22%), and energy supply (21%), partly reflecting the sectoral challenges and priorities (Figure 4.a). Information on the expected (ex-ante) emissions savings from these measures is important to assess expected progress from the planned and implemented measures. Unfortunately, in 2023, only 18 Member States reported quantitative ex ante savings for at least one year and one measure. This is lower than in 2021, making the aggregate assessment particularly difficult (Figure 4.b). It again highlights the need for Member States to step up action to assess the effects of implemented policies more systematically, both ex ante and ex post.

In conclusion, although GHG emissions continue to fall, as shown by the most recent data, and there are encouraging signs of action on the ground, progress towards the EU's climate objectives appears insufficient. Action is most needed in areas where:

·emission reductions still required are significant (buildings, transport), 

·recent progress made is too slow (agriculture),

·figures have not evolved in the right direction (land use, land-use change, and forestry). 

The assessment shows that to get on a safer – more certain – path towards climate neutrality by 2050, the EU and its Member States need to significantly increase the pace of change. The Fit-for-55 legislative package must be adopted fully, and all parts rapidly implemented. More detailed monitoring is needed to assess progress on enabling factors that drive emissions in the different sectors to better highlight areas where progress is lacking or more action is needed.

Progress on climate action in the EU

The “Fit for 55” package sets the EU on a path to reach its climate targets in a fair, cost-effective and competitive way. Most of the key proposals in the package have been adopted by co-legislators 29  and EU policies are now aligned with the updated 2030 target set in the European Climate Law. Implementing the new legislation under the Fit for 55 package 30 will enable the EU and its Member States to reduce net GHG emissions by at least 55% compared to 1990 levels by 2030 31 (see Ch. 1 of the staff working document – ‘Technical information’).

The revised EU ETS Directive increases the level of ambition in the existing system from 43% to 62% emissions reductions by 2030, compared to 2005 levels and extend the system to also apply to international maritime transport. A separate carbon pricing system will apply to fuel combustion in road transport and buildings and small-emitting sectors 32 (ETS2) with a 42% emission reduction target compared to 2005 across the sectors covered. The amended Effort Sharing Regulation (ESR) increased, for the sectors that it covers, the EU-level GHG emission reduction target from 29% to 40% by 2030, compared to 2005, which translates in updated 2030 targets for each Member State. The new LULUCF Regulation sets an overall EU-level objective of 310 Mt CO2 equivalent of net removals in the LULUCF sector in 2030.

To ensure a just transition towards climate-neutrality, the EU created a new fund, the Social Climate Fund, to accompany the new ETS2, which will address the impacts of carbon pricing in new sectors and provide support for vulnerable households, micro-enterprises and transport users. Together with the Just Transition Fund supporting the territories most affected by the transition (see chapter 6), they will ensure that no-one is left behind. Empowerment of energy consumers is also enhanced by the latest legislative initiatives related to the electricity market. Under the Net Zero Industry Act (NZIA), the Commission will support the setting up of specialised academies for up-skilling and re-skilling.

In 2022 and 2023, the Commission made additional proposals to speed up the transition to climate neutrality. For example, the legislators reached a provisional agreement on the revised Fluorinated greenhouse gases (F-gases) Regulation which will further reduce the emissions from those highly potent GHGs. The Commission proposed more ambitious emissions reductions targets for heavy-duty vehicles. The Commission also put forward the REPowerEU plan with specific measures to reduce the EU’s energy dependence on Russian fossil fuels, and to speed up implementation of the European Green Deal with new actions, while building on the Fit for 55 package. To enhance the competitiveness of Europe's net-zero industry and to boost innovation, in particular in green technologies, the Commission put forward a Green Deal Industrial Plan. Chapter 2 of the staff working document – ‘Technical information’ presents an overview of recently adopted policy contributing to the alignment of EU level policies with climate objectives.

In November 2021, the Commission updated its Better Regulation instruments to ensure that new EU policies are consistent with climate goals. All proposed EU measures should now be assessed for their consistency with climate objectives- the climate neutrality objective and the objective to ensure progress on adaptation- as part of the impact assessment process, in line with the European Climate Law (the climate-consistency check). Good progress has been made in implementing this check. Since the beginning of 2022, out of the 27 impact assessments deemed relevant for this assessment (out of 57 impact assessments scrutinised by the Regulatory Scrutiny Board 33 ), 20 were found to have sufficiently assessed consistency of the initiative with climate objectives, while 7 impact assessments did not sufficiently assess climate aspects. This represents almost 75% of relevant cases and reflects the fact that it is a new requirement. With more experience in implementing the climate consistency check, compliance with this new impact assessment requirement could be further improved.

While good progress has been made to ensure that EU policies put the EU on a path towards a net zero economy, the recent emissions trends in the transport sector and the very slow pace of emissions reductions in agriculture, along with a decline of the carbon sink, raise concerns (see Chapters 3 and 4). Despite progress on green finance from private sources, significant additional investment is needed to finance the green transition. This needs action, in particular to redirect finance to enable the transition of ‘brown’ sectors (see Chapter 6).

As required by the European Climate Law, the Commission will publish a communication on the EU’s climate target for 2040 in early 2024, setting a path from the already-agreed intermediate 2030 target to net-zero emissions by 2050. This will provide the information needed to ensure that measures and investments to implement the EU’s 2030 targets are also well aligned with the pathways to climate neutrality by 2050. The 2040 target will provide predictability and keep progress on track to climate neutrality.

Climate change is already impacting nature and people more intensely, more frequently and over a wider geographical area than previously thought. 34 Progress is being made in the assessment of climate risks. In spring 2024, the Commission will respond to the evidence provided in a scientific European Climate Risk Assessment report on the evolution of climate risks and the need for further action in a communication on managing EU climate risks. In parallel, wide-ranging action is underway to implement the other aspects of the EU’s 2021 adaptation strategy (see Chapter 5). 

Progress on climate action in the EU Member States

The next chapters of the report will assess the progress made by the Member States in specific policy areas. This section gives a bird’s eye view of GHG emissions trends towards climate mitigation objectives, including the EU’s objective to achieve climate neutrality by 2050, and builds on the detailed analysis provided in Chapter 5 of the staff working document – ‘Technical information’.

Over the last three decades, the EU has substantially reduced its GHG emissions, overachieving its 2020 commitment under the UNFCCC 35  and its target under the Kyoto Protocol’s second commitment period in 2013-2020 (KP2). 36  Total GHG emissions under the UNFCCC (excluding LULUCF and including international aviation) fell by 34% in the EU-27 + UK compared to 1990. This is a reduction of 1.94 billion tonnes of CO2-eq by 2020. (For more details see Chapter 4 of the staff working document – ‘Technical information’). 

However, in the most recent years, progress across Member States has been mixed. Between 2015 and 2022, net GHG emissions have been rising in Latvia, Finland, and Lithuania, and, to a lesser extent, in Cyprus, Poland, Malta, Estonia, and Ireland. GHG emissions were reduced but only slowly in Czechia, Italy, Hungary, Croatia, France, and Denmark. The reasons vary by country. In Finland, Latvia and Estonia the upward emissions trend is mainly related to the sharp decline of the capacity of the land use, land-use change and forestry sector to act as a carbon sink, while for Lithuania, transport and building also contribute to the increase in emissions. Transport emissions increased in Hungary, Malta and Poland, while in Ireland emissions in agriculture continued to grow.

Since 2005, there has been a clear downward trend in GHG emissions per capita and in the GHG intensity of GDP in all EU Member States except Latvia (Figure 5). More rapid progress by countries with higher emitting ratios has led to significant convergence towards the EU average. However, between 2015 and 2022, the downward converging trend seems to have halted for most EU Member States.

Information on the expected impact of current and additional policies on GHG emissions submitted by Member States can be used to gain insights into the progress they are making, or are expecting to make, towards the EU’s climate objectives. By 2030, based on the GHG projections submitted by EU Member States in March 2023, six countries (Poland, Ireland, Estonia, Czechia, Luxembourg, and Latvia) expect emissions per capita to be significantly higher than 5 tonnes of CO2-eq, which is the average EU GHG per capita broadly consistent with the EU -55% target. 37 On the climate-neutrality objective, all Member States except Finland, Portugal, Slovenia and Sweden still project sizeable net GHG emissions in 2050 even taking into account current and additional policies (see Table 6, in Chapter 5 of the staff working document – ‘Technical information’), despite the fact that almost all have declared a climate-neutrality goal by 2050, or earlier.

Trajectories are also important. Figure 6 compares projected emissions 38 between 2022 and 2050 for each Member State with a benchmark trajectory, built as the median of the seven climate neutrality paths that form the basis of the advice of the European Scientific Advisory Board on Climate Change on the 2040 ambition. 39 The EU-level emissions of the median path were then distributed across Member States according to the country’s share of EU emissions in the core policy scenario used for the European Green Deal initiatives. 40