Making the EU’s climate and energy policy fit for the 2030s

Europe is entering a new phase of its climate transition. The upcoming review of the EU’s climate and energy framework is set to shape the direction of the transition in the decade ahead, at a time when decarbonisation is increasingly linked to energy security and affordability, industrial competitiveness and geopolitical priorities. 

While the EU’s 2040 target of 90% was adopted, European governments are not aligned on how to get there – and increasingly focused on navigating geopolitical instability and a new energy crisis. Nevertheless, the opportunities are there for the EU to do what it has done before: find innovative ways to make decarbonisation a part of supporting other priorities. 

Key features to get right

This review builds on a policy framework that has evolved through successive packages in the past decades, each reflecting both the political priorities of the time and the needs of a different phase of the transition. At each stage, progress has been the result of both policy innovation and political compromise. 

This time, the revision will take place in a context of high energy costs, heightened international competition, geopolitical instability, calls for regulatory simplification and a growing investment gap. At the same time, the resulting framework for the 2030s will need to respond to a more demanding phase of the transition, where delivering emission cuts becomes more complex, costly and politically sensitive as it deepens across all sectors of the economy. 

This creates an opportunity for the framework to respond directly to these pressures, by ensuring that it: 

• Helps crowd in investment at scale and anchor the EU’s economic strategy, notably via an evolved Governance Regulation that facilitates implementation and investment clarity. 
• Provides a stable and long-term foundation for Europe’s industrial transformation as the basis for greater economic resilience, with the EU Emissions Trading System (ETS) as a guiding market signal and revenue stream. 
• Shields Europeans by accelerating the shift away from volatile fossil fuel dependence towards electrification and renewables, through revised Renewable Energy and Energy Efficiency Directives (RED and EED). 
• Is leveraged as part of the EU’s external relations, aligning with key partners committed to a competitive clean economy and climate ambition, through the Carbon Border Adjustment Mechanism (CBAM) and a limited use of international carbon credits. 

As decision makers work to reach the necessary compromises, to achieve a package fit for the 2030s they will need to build it on a foundation of predictability, coherence and credibility.