EU Falling Short on Emissions Reduction Target, WoodMac Says
(Bloomberg) -- Europe will need to accelerate the pace of its energy transition and expand the region’s carbon market to reach an ambitious emissions reduction goal by 2030.
The European Union is currently on track to deliver emissions cuts of 46% on 1990 levels by the end of the decade, short of its 55% target, according to energy consultant Wood Mackenzie Ltd.
Accelerating the EU’s energy transition in line with the Paris climate deal goals will help, and would require increased wind and solar capacity, retiring more coal-fired plants and electric transport making up almost all passenger vehicle sales by 2030. However this scenario would only reach a 53% emissions cut and take a further two years to reach the bloc’s target.
“To hit the 2030 target, Europe will have to do everything we have assumed, but quicker,” said Murray Douglas, a research director at Wood Mackenzie.
Crucial to meeting the EU’s carbon reduction goal is reforming and broadening its Emissions Trading System, a key plank in the bloc’s strategy of putting a price on pollution and spurring investment in green technology.
“The fact that ETS sectors will only deliver a third of the targeted reductions by 2030 underscores the need for reform,” Douglas said.
Prices for carbon permits have climbed to record highs in recent weeks. This may accelerate coal phase-out plans, make renewable generation more competitive and bolster the development of carbon capture technology.
Private investments in low-carbon opportunities will be key to meeting the emissions targets. The increase of wind, solar and storage capacity as well as the expansion of grid infrastructure is estimated to require $585 billion of investment by 2030.
Natural gas will be a key part of the European energy mix as coal is phased out and renewable generation grows. Wood Mackenzie expects gas to remain resilient as an energy source to 2030.
Beyond the emissions reduction target, large scale carbon capture and storage “must become a reality for gas-fired power and hard-to-abate industries,” Douglas said.
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