Net zero watchdog launches to ensure European Green Deal delivers on climate neutrality

The flagship report, State of EU Progress to Climate Neutrality, looks at observed changes across a comprehensive set of over 100 economic and social indicators, and compares them against EU benchmarks to judge real-world progress towards climate neutrality, as well as assessing the factors that will enable future progress. This approach to tracking allows ECNO to inform EU policymakers on areas where further action is the most urgent.

ECNO identifies governance as an area where progress is on track in terms of setting up a framework for climate neutral planning, policymaking, and monitoring, but stresses it is now up to both the European Commission and Member States to implement these processes to their full potential as well as to evolve the framework over time.

Some of the areas highlighted as needing greater attention in the report include:

• Finance: Counterproductive economic incentives remain in place, with EU member states spending €46.2 billion on fossil fuel subsidies in 2020, a number which then rocketed in 2021 and 2022 in response to the energy market crisis triggered by Russia’s invasion of Ukraine. Meanwhile, the EU economy consistently invests too little public and private capital into climate investments. This endangers the entire transition as today’s climate investments enable tomorrow’s emissions reduction.
• Electricity: While progress in reducing the overall greenhouse gas emissions intensity of electricity generation is on track, progress in decreasing the share of fossil fuels and increasing the share of renewable energy is too slow. Fossil fuel power generation decreased by just 1.3% per year between 2016 and 2021, compared to a required decrease of 2.5% per year. Renewables grew at a rate of 1.5% between 2016 and 2021, and now needs to more than double to 3.2%. Electricity demand is set to increase due to electrification in other sectors, meaning this sector will play a critical role in driving the transition.
• Buildings: Building emissions cuts need to go 7.5 times faster, through doubling the pace of energy efficient renovations. The share of renewable energy in heating and cooling needs to increase by 6.8 times the current rate to realise a full phase-out of fossil fuels by 2040 as proposed by the Commission. This would contribute to reaching the target of at least 60% emission reductions by 2030 in the buildings sector in comparison to 2015 and achieve climate neutrality by 2050. This move by policymakers acknowledges the key role buildings should play in achieving EU climate goals.
• Just transition: 2020 saw a pause in the reduction of poverty and social exclusion rates. However, employment in the green sector is continuing to grow, with increases of 3.7% in the environmental goods and services sector between 2015 and 2020, and 1.3% in the renewable energy resources sector between 2016 and 2021. Moving forward, the EU must accelerate green investments to spur green jobs creation, which will help to compensate for those lost in the fossil-fuel industry, and enable opportunities and growth.

The report also points to large gaps in data collection and progress monitoring that are hindering the EU’s ability to make informed policy interventions.