After 5 years of the Green Deal, where is Europe on the road to decarbonisation?
Following the European elections on June 9, the EU is adapting to a new, more conservative, political reality. Yet despite changing political tides, a new EU leadership will still need to find a credible answer to how the continent is to reach climate neutrality by 2050. To understand how to get there, we need a clear understanding of the progress already made. This is where the European Climate Neutrality Observatory (ECNO) comes in.
ECNO, led by a consortium of five European think tanks, including I4CE, tracks the EU’s progress towards decarbonisation across a range of “building blocks” – from electricity to mobility, adaptation to the just transition. In this year’s flagship report (released this week), some of the strongest progress has been seen in the domain of cleantech, as Europe races to build up its domestic manufacturing of the technologies needed to decarbonise.
Private investment in cleantech has hit record highs, while the EU’s domestic manufacturing of batteries has seen average growth of 131% annually since 2021. Meanwhile, in another area of I4CE’s expertise, aligning the financial flows with climate goals, we see a different story. With fossil fuel subsidies growing in recent years and showing no sign of being phased out, and the climate investment deficit still significant, there is still much to do to redirect financial flows to decarbonise Europe.
With fossil fuel subsidies showing no sign of being phased out, and banks failing to make clear, transparent commitments to aligning their operations with climate action, there is still much to do to get this all-important sector to pull its weight when it comes to Europe’s decarbonisation.
ECNO, and I4CE, don’t only track progress. It is critical to look ahead to areas of action for the next five years. Whether it is aligning banking transition plans with climate goals, or targeting EU funds towards the competitiveness of our green industry and protecting citizens affected by the transition, there is much to be done to help close the EU’s Climate Investment Deficit. As we enter a critical phase for climate action, where policy must now translate into results, ECNO’s annual progress tracking and full suite of recommendations makes clear where we have a good foundation to build on – and where an ambitious change of direction is sorely needed.
