Back in 2018 the European Union announced its special leadership role on climate, committing to reach climate neutrality by 2050. Yet if emissions are to fall far enough for climate neutrality to become a realistic goal, rules and dedicated regulation are needed. Renewable energy is the single most important factor in the European Union reaching climate neutrality. Even so, much remains to be done for the transition to take hold across every sector, including agriculture, which matters greatly because land-use sectors in Europe are highly important in both economic and social terms.

The European Union's goal of reaching climate neutrality by 2050 is enshrined in the Climate Law. This means that by the middle of the century greenhouse gas emissions must be cut to net zero by limiting and removing them. A historic body of policies, rules and legislation brought together in the European Green Deal is designed to align the European Union's actions with the path towards climate neutrality, reducing and eliminating emissions in every polluting sector while preserving economic growth and social cohesion. By 2030 emissions must be cut by 55% compared with 1990 levels. To meet this target, new rules have been introduced covering clean energy, energy efficiency and transport as well. If these rules are implemented successfully, current policy measures will cut emissions by roughly 57%.

An assessment by the European association of non-governmental organisations Climate Action Network (CAN) Europe concluded that the national energy and climate plans submitted by European Union member states contain considerable shortcomings and lack information in many areas. The NGO association stresses that this casts doubt on the EU's ability to meet its 2030 climate targets. It should be noted that the European Commission, in assessing the member states' plans, has found that EU countries are broadly "on the right track" to achieve a 54% emissions reduction by 2030, which is admittedly slightly below the European Union's target of cutting net emissions by 55%.

In July this year the European Commission formally proposed limiting greenhouse gas emissions by 90% by 2040 through an amendment to the European Climate Law. It indicated that the use of international carbon credits would be partly permitted, forming the basis of Europe's post-2030 climate policy architecture.

Climate regulation is a shared competence of the European Union and its member states. Brussels, for its part, sets binding targets in areas where progress is required to meet Europe's common objectives. Member state governments, meanwhile, may set legally binding targets in areas where the EU has not decided to exercise its powers. At European Union level the legislative process begins with a European Commission proposal, which is then amended and negotiated by the European Parliament and by member state representatives in the European Council.

Some surveys suggest that most EU citizens support climate policy measures. People regard climate change as a serious threat and want efforts to be stepped up. Attitudes do, of course, shift with the state of the world. Compared with the 2019 elections, climate issues mattered less to voters in the 2024 European Union elections. 28% of Europeans said climate change had been an important factor shaping their choice, compared with 37% of voters in 2019.

Globally, Europe is a very significant player in climate diplomacy and finance. In 2024 the 27 member states mobilised €28.6 billion from public sources to support developing countries in tackling climate change. In 2023 a further €7.2 billion of private funding was raised. Europe is an important driver of climate finance and climate action, strengthening and pooling the individual efforts of member states and partners.

What have been the most significant milestones in the transition?

The European Union elections took place in June 2024. Although they were strongly dominated by national issues, they were a kind of test for Brussels policy, which came under increasing fire as so-called populist parties strengthened their positions in EU member states. The results shifted the political balance in the European Parliament, where right-wing forces gained a majority and the far right came first in France and Germany.

For the 2024–2028 term a new college of commissioners was appointed to the EU executive, taking office at the start of December 2024. Teresa Ribera, a centre-left Spanish representative, is responsible for energy and climate. Her deputies are the centre-right Dutchman Wopke Hoekstra, responsible for climate, while the centre-left Danish representative Dan Jørgensen has been entrusted with the energy sector, and the centre-right Swedish member Jessika Roswall is responsible for the environment and the circular economy.

The European Union has adopted a great deal of legislation to limit emissions and promote sustainable development by 2030 and beyond, including the so-called "Fit for 55" package. What matters most is that the governments of the 27 EU member states implement it properly. Equally important is how Europe's regions manage the transition to a sustainable economy, since differences persist both between EU member states and within them. The Just Transition Fund and other financial instruments, such as the Cohesion Fund, are intended to narrow those gaps. How the regions use these funds matters.

Europe's place in the global energy transition is being tested continuously, and will continue to be, amid rising global competition, particularly from the United States and China. The EU has voiced its ambition to become a global rule-setter and leader in important sectors such as environmentally friendly new technologies. The question is whether Brussels can rely on its regulatory clout to compete with its rivals' financial firepower. The Clean Industrial Deal (CID), unveiled in February 2025, provides for €100 billion in public funding and sets an additional goal of attracting €400 billion in private finance to decarbonise heavy industry, ease permitting and reform public procurement and state aid rules.

As is by now familiar, climate activists worry that the European Union is retreating from its earlier targets by revising and weakening legislation adopted during the previous term. We have written before that, at the same time as the European Commission presented the Clean Industrial Deal, it also tabled an omnibus package of regulations that waters down four already adopted pieces of legislation: the Taxonomy Regulation, the Carbon Border Adjustment Mechanism (CBAM), the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This followed considerable political pressure from France and Germany. Other legislation is expected to be reviewed in the coming months as well.

Renewable energy

The European Union's 2030 renewable energy target requires renewables to account for 42.5% of final energy consumption, which means all 27 member states must make a sufficiently substantial contribution to meeting it. Each member state government must submit updated national energy and climate plans (NECPs) setting out precisely how it will meet the 2030 targets, including the renewables figure. All of the above had to be submitted to the European Commission by 30 June 2024. The Commission has already called on individual countries to raise their targets, which is a fairly unachievable task given the current geopolitical situation and political changes.

The energy sector in Europe

The energy sector produces roughly 25% of the European Union's greenhouse gas emissions, making it the most polluting sector of the EU economy. It must be acknowledged that emissions have fallen by more than 40% since 1990. In 2023 renewables reached a high of 44% of the EU electricity mix. In total electricity generation, first place still belongs to nuclear power at 22.9%, while wind overtook gas for the first time, reaching 17.6%. In 2022 wind and solar together overtook fossil gas for the first time as the main source of electricity in the European Union.

The original target set in 2018 was only 32%, but in 2021 a goal was put forward to raise it to 40%. In 2022, as part of a sector strategy to reduce the European Union's dependence on Russian energy imports, a 45% target was proposed. Governments and members of the European Parliament finally agreed a compromise of 42.5% in March 2023. In 2023 renewable energy sources made up 24.5% of the European Union's final consumption. That is one percentage point more than in 2022.

The share of non-renewable energy sources fell by 3%, mainly because of declining coal use, and the relative share of renewables in EU consumption rose accordingly.

European Union energy policy has changed since Russia's invasion of Ukraine in 2022. The main focus is now on reducing dependence on Russian resources. That meant refining existing policy under the REPowerEU strategy and introducing other measures such as joint gas purchasing and mandatory gas storage targets. At the beginning of 2023 energy imports from countries outside the EU were down by almost 10% compared with 2021.

The share of renewables in the energy mix varies widely across European Union member states. Europe's leaders are Sweden and Finland, while Belgium, Malta and Ireland lag furthest behind. Progress in this area, particularly in electricity generation, will depend on modernising and building out the electricity grid.

A lack of modern infrastructure is already limiting the amount of clean energy that can be distributed. Renewable energy associations have called on governments and the European Union to address the risk of curtailment, where clean energy generation is halted because of insufficient grid capacity, by improving grid resilience, developing scenarios for reaching 100% renewable energy and speeding up permitting and construction. The European Commission published an action plan to improve the situation in November 2023.

What is the situation in industry?

Industry accounts for roughly 20% of the EU's total emissions, and that share is gradually falling. Manufacturers are slowly introducing measures to cut pollution, such as electrification and switching to new feedstocks, for example hydrogen produced using clean energy.

The European Union Emissions Trading System (ETS) has been updated to cover more industrial sectors and to keep the carbon price high. Although pollution permits traded at around €100 in 2023, and the reforms are expected to push that price up gradually, in February 2024 the price hit a low of around €50 and currently stands at about €70. Free allowances, previously granted to industrial sectors exposed to the carbon price, will be phased out between 2026 and 2034.

To help industry and prevent carbon leakage (where companies relocate outside the regulated area to avoid costs), the European Union will apply a carbon border levy, known as the Carbon Border Adjustment Mechanism (CBAM), to products brought into Europe. Beginning with a transitional phase in October 2023, CBAM imposes charges on certain imported products that do not meet sustainability criteria. The initial list covers aluminium, cement, fertilisers, hydrogen, iron, steel and electricity. In February 2025 the European Commission reduced the number of companies to which the levy will apply.

The Net-Zero Industry Act was published in 2023 as a response to the US Inflation Reduction Act, a federal law providing tax breaks and other financial incentives for clean energy production across all sectors. The aim of the Net-Zero Industry Act is to support European industry's transition to a greener economy. It includes a target for the European Union to cover 40% of its energy needs from renewables by 2030. The European Commission has continued this work in the current term by adopting the Clean Industrial Deal, which sets out a roadmap for competitiveness and decarbonisation.

Carbon capture, use and storage (CCUS) is seen as a solution for hard-to-decarbonise industries such as cement production. In February 2024 the European Commission tabled an industrial carbon management plan examining how to develop this sector.

Under European Union law, countries must increase the share of renewables by 1.6% each year, and at least 42% of the hydrogen used in industrial processes such as steelmaking must come from clean energy sources. By 2035 that share must rise to 60%;

The new European climate policy framework

In February 2025 the European Commission introduced a new EU climate policy framework by adopting the Clean Industrial Deal, designed to boost the competitiveness of the European economy while continuing to decarbonise it. The key question is whether it will undo part of the Green Deal legislation adopted during von der Leyen's first term. The competitiveness of European industry has been a very important topic of late, and it will remain so as Europe competes with large markets such as the United States and China in clean technology manufacturing. In connection with accelerating industrial decarbonisation, the Commission plans to table a plan at the end of 2025 reviewing the legislation that would help strengthen industrial sectors.

Emissions from the housing sector

The European Union's leadership has signalled its intention to tackle emissions from buildings by creating a housing portfolio within the Commission and combining it with energy in Commissioner Dan Jørgensen's remit. 40% of the European Union's energy demand comes from the buildings sector, which generates roughly 13% of emissions, mainly through heating, cooling and lighting.

Poorly insulated buildings are the main reason for the sector's enormous impact on energy and the climate. It should be stressed that the annual renovation rate in the EU does not exceed 1%. The European Union's flagship Renovation Wave strategy aims to at least double that figure by 2030. The buildings sector in the European Union is governed by two main pieces of legislation: the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive (EED). Both have been revised in line with the Green Deal.

Under the EED, total energy savings must reach 11.7% by 2030 and, unlike in previous versions, this target is mandatory rather than voluntary. EU member states must save at least 1.5% each year.

The REPowerEU plan requires a further 10 million heat pumps to be installed by 2027 in order to cut the energy used for heating and cooling buildings. The European Commission acknowledges that by 2029 it will gradually withdraw "stand-alone" boilers (there could be around 30 million of them) that contain no hybrid components. Europe's heat pump manufacturing industry is, however, currently going through difficulties.

Buildings will be included in emissions trading for the first time as part of a separate carbon market, ETS II. To help households cope with the extra financial burden created by carbon pricing, a new instrument has been set up: the Social Climate Fund. It is due to be allocated more than €60 billion between 2026 and 2032.

Transport and personal mobility

Domestic transport emissions are forecast to fall below 1990 levels by 2029 only if current policy is implemented in full. The rise in emissions is driven mainly by growth in passenger travel and domestic freight transport.

The transport sector (excluding international aviation and shipping) produces 23% of the European Union's greenhouse gas emissions and, unlike other sectors, its emissions are not falling.

EU legislation governing engine standards, CO₂ reduction targets, the roll-out of charging infrastructure and the use of carbon-neutral fuels is intended to cut the transport sector's CO₂ emissions sharply. The largest share of transport emissions (77%) comes from road transport, and within that segment cars and motorcycles account for the most emissions (64%). The biggest increase since 1990 has been in the light commercial vehicle segment.

The share of renewable energy in transport has risen from under 2% in 2005 to more than 10% in 2021. European Union member states will be able to choose either to meet a 29% target by 2030 or to reduce the sector's greenhouse gas intensity by at least 14.5%. A separate carbon market for road transport and buildings will be set up in 2027 to put a price on pollution in these sectors.

Shipping will be included in the European Union Emissions Trading System (ETS) for the first time, and a separate piece of legislation on promoting the use of low-carbon fuels will apply to the maritime transport sector alone.

An action plan for the automotive industry

On 30 January 2025 the European Union's leadership launched a strategic dialogue on the future of the automotive industry. Modelled on the initiative for the agricultural sector, the dialogue aims to address the industry's problems, particularly in light of growing competition from Chinese electric vehicle manufacturers and a possible trade conflict with the United States. Work also continues on lowering vehicle emission limits.

At the beginning of March 2025 the Commission published its Automotive Industrial Action Plan, setting out measures to strengthen the competitiveness of Europe's car industry and speed up the uptake of electric vehicles. The plan followed a "strategic dialogue" between EU officials and carmakers. The proposed revision has drawn objections from members of the European Parliament, because it would give carmakers longer to meet their CO₂ limits.

The land-use sector

Agriculture is covered by the Land Use, Land Use Change and Forestry (LULUCF) Regulation, which sets out how land use in the European Union affects the achievement of climate targets. By 2030 net carbon dioxide removals in land ecosystems must reach 310 million tonnes, 15% more than at present.

Agricultural emissions account for roughly 11% of total GHG emissions in Europe

These greenhouse gases are mainly "made up" of methane and nitrogen. CO₂ and other polluting gases account for a relatively small share of the total. Under current policy, emissions from the agricultural sector have been comparatively stable in recent years and a 2% reduction against 2005 levels is projected by 2030. If governments' plans are implemented across the EU, that figure could rise to 6%.

Agricultural emissions are governed by the Effort Sharing Regulation, which aims to cut emissions in the sectors it covers by 30% by 2030 (compared with 2005). Given that little progress is expected in agriculture, deeper cuts will have to be made in other sectors, such as waste management, building energy efficiency and road transport.

In the most recent ETS review, policymakers decided not to bring this sector into the carbon market, which means that CO₂ emissions from agricultural machinery, mainly from diesel, will not be subject to a pollution charge.

Agriculture and food policy

Agriculture Commissioner Christophe Hansen presented the European Commission's vision for agriculture and food as early as 19 February; it can be regarded as a plan that will set the direction of European agriculture and food policy for the next five years and beyond. This vision will be crucial in determining how the Common Agricultural Policy (CAP), the European Union's farm subsidy programme, continues after 2027, when its current cycle ends. The CAP makes up a third of the European Union budget and is reviewed every seven years. Negotiations begin several years before the end of each cycle. At the end of the summer the European Commission plans to table proposals on the future of the CAP.