This study by PBL investigates the possible economic consequences by 2030, as well as the impact on emissions of the new EU policy on air quality, climate and energy.
In 2016, agreements were made within the European Union about further reducing the emission of air pollutants. In addition, new, more stringent policy on climate and energy is currently being drafted for the 2021–2030 period.
EU greenhouse gas emissions down by 43%; costs around 0.4% of EU household income
Already implemented policies bring EU greenhouse gas emissions down by 33%, by 2030, compared to 1990 levels. With the implementation of the proposed EU policies on air quality, climate and energy, the greenhouse gas emission reduction level would further increase to 43%, compared to 1990 levels. This would ensure the European Union is able to comply with its reduction pledge for 2030 under the Paris Agreement (40%, compared to 1990 levels).
Implementation of the proposed EU policies on air quality, climate and energy would also involve costs. This study estimates EU household income losses of 0.4% by 2030. These losses are largely related to the climate and energy targets, as costs to achieve these more stringent targets are 10 times those of more stringent emission reduction targets for air pollutants.
Without policy targets for renewable energy and energy saving for 2030, EU greenhouse gas reduction will be below the agreed 40% reduction target for 2030
The greenhouse gas emission reductions that would be achieved by 2030 through EU climate and energy policies would mainly result from the targets proposed for renewable energy and energy saving, and much less from those for greenhouse gases. Model calculations show that the proposed greenhouse gas reduction targets for sectors under the EU Emissions Trading System (EU ETS) and for the remaining (non-ETS) sectors, by themselves, would result in a 36% reduction in greenhouse gas emissions by 2030, compared to 1990 levels. This appears to be below the agreed European 40% reduction target. However, because the emission reduction proposals for ETS and non-ETS sectors do not limit the emissions to the 2030 target year, but do so for the emission capacity within the entire budget period, emission amounts can be distributed over time. Due to the economic crisis, in the 2008–2013 period, emissions under the EU ETS were below the annual targets, resulting in a large oversupply of emission permits. These unused permits can be utilised in later years. For non-ETS sectors, emissions at the start of the budget period are also projected to be below the annual targets, and this emission capacity may also be used in later years. Therefore, for both ETS and non-ETS sectors, emissions in 2030 may be reduced by less than the reduction target for that particular year, resulting in a calculated overall reduction of 36%. If the targets for renewable energy and energy saving also would be implemented, the reduction level would increase to 43%, compared to 1990 levels.
Employment will move from polluting to less-polluting production
The proposed air quality, climate and energy policies would cause price increases, particularly, for the products from sectors that produce large amounts of emissions, such as the power, transport, industrial and agricultural sectors. The demand for those types of products, therefore, would decline, causing production from these sectors to decrease. In contrast, the services sector is expected to grow. Changes in production would cause jobs to shift from industry, transport and agriculture towards the services sector. Model calculations show that the proposed climate and energy targets, by themselves, would not lead to a large-scale electrification of the European transport sector, industry and the built environment up to 2030. Although the share of electricity in total energy consumption would increase due to the proposed policies, the target for energy saving would lead to an overall decrease in the demand for electricity. Nevertheless, the number of jobs in the power sector in the European Union would increase, because renewable energy generation is more labour intensive than power generated by coal- and natural-gas-fired power plants. This shift in employment is projected to amount to 0.1% to 0.2% of total employment.