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Building blocks overview

Building blocks of a climate neutral economy and society

ECNO uses an indicator-based framework that tracks progress across traditional economic sectors (electricity, industry, etc.) as well as the cross-cutting areas that have an impact on the emitting sectors, like finance, governance, and lifestyles. Together these form the ‘building blocks’ of a climate neutral future.

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Sectoral
Electricity

Electricity supply plays a central role in decarbonising energy supply and its importance will only increase over time through sector coupling, i.e., the electrification of demand sectors. Emission reductions are mainly realised through the phase-out of fossil fuels and the build-up of renewables.

Mobility

Mobility is essential for connecting people and sustaining economies. For a transformative shift in the transport sector, reducing motorised transportation, promoting clean modes, and decarbonising remaining transport are key.

Industry

Industry is an indispensable element of the EU’s economy. However, the sector is facing complex decarbonisation challenges requiring a shift in the mix of energy and applied feedstocks, partly deep modifications to technological processes and efforts in terms of circular economy.

Buildings

Buildings covers the main stages of the buildings cycle, from materials production to energy demand for various end-uses: heating, cooling, cooking, lighting, ventilation, and appliances. The decarbonisation depends on reducing the demand for heating and cooling services, improving energy performance, and shifting the remaining energy demand to renewable heating or cooling systems.

Agrifood

The agrifood building block refers to all stages of the agricultural supply chain from food production to consumption, including food processing, retail, and associated waste. It also considers aspects of land use and the production of agricultural inputs.

Carbon dioxide removal

Carbon dioxide removal (CDR) will be crucial to achieve climate neutrality by compensating for minimal residual emissions that cannot be avoided. Currently, CDR comprises only natural sinks but is anticipated to include technical solutions in the future.

Cross-cutting
Lifestyles

The transition of collective and individual lifestyles towards more sustainable behaviour patterns and social practices is a meaningful driver of decarbonisation. These depend on policies to promote options that are accessible, affordable, and desirable.

Clean technologies

Developing new and improving existing technologies while ensuring manufacturing capacity to deploy them at scale is critical to enable the transition to climate neutrality across the economy.

Finance

Redirecting financial flows towards clean products and services is essential to put the EU on track to achieve climate neutrality by 2050. It includes both public and private investment flows.

Just and inclusive transition

A just and inclusive transition means that the timely shift towards a climate neutral economy will not come at the cost of vulnerable regions and social groups.

Governance

Governance refers to the tools used by governments to align short-term actions with a climate neutral future, ensure a sound evidence-base for decisions, coordinate across sectors, enhance transparency and accountability, and foster public and political buy-in.

Adaptation

Adapting to climate impacts will require a wide range of adaptation responses across sectors, both at the European level, but also from individual Member States. To track progress, the element assesses the implementation of adaptation measures and actions, specifically nature-based solutions in the urban context, land use sectors, and the aquatic environment.

External action

To support global climate neutrality, the EU must consider the extraterritorial impacts of its actions, engage in climate diplomacy, and support other countries in decarbonisation.

Indicator framework

 

Assesment framework

Objectives

For each building block ECNO defines two overarching objectives. Objectives outline what the building block must achieve to support climate neutrality. For instance, all sectoral building blocks include the respective GHG emission reductions as one of the objectives.

Enablers

Enablers are the underlying real-world or structural conditions that support each building block in realising its objectives en route to climate neutrality. 

Indicators

The assessment of progress for each building block towards its objectives and enablers is based on eight underlying indicators. These eight indicators describe specific aspects of the objectives and enablers and offer a view on past changes in the context of the required future changes. 

What are examples of enablers?

Enablers are a core innovative part of ECNO's analytical approach. By looking at the underlying systems that support (or hinder) emission reductions, we can get an early sense of progress - or lack thereof - and where future bottlenecks might arise. 

Enablers tend to function in one of three ways: (1) removing climate-damaging activities such as excessive fertiliser use (agrifood); (2) shifting attitudes, consumption patterns, or business practices like the uptake of zero emission and low carbon transport (mobility); or (3) improving existing systems, such as adopting robust institutional arrangements to ensure coherent policy-making (governance).

How are indicators chosen?

Indicators were chosen to provide a comprehensive picture of progress for each building block. The ECNO indicator set includes both commonly used indicators as well as ones that go beyond the standard approaches to produce new insights. This is particularly the case for the cross-cutting building blocks where quantitative analysis is limited and policy goals are either non-existent or qualitative in nature. 

For some indicators, data availability is a significant challenge. Although having a good data basis is crucial, this limitation did not restrict indicator selection, especially in those cases where there was no second-best indicator or proxy found. These cases point to areas where new data gathering and indicator creation activities, as well as new monitoring and reporting obligations, may be recommended to inform policy-making.

Assessing progress

Based on data over a past time period, indicators show the historical development of the objectives and enablers and allow for a comparison of a past trend with the required development. However, what is meant by ‘required development’ depends on a vision of each indicator’s contribution to climate neutrality. 

Benchmarks

Benchmarks are future reference points against which progress for each indicator is compared. ECNO derives benchmarks from official EU sources, such as directives, regulations, strategies, or action plans, including their related impact assessments. Benchmarks often come in the form of quantified policy goals or targets.

ECNO applies the EU’s own vision of climate neutrality 

Many of the indicator benchmarks were found in the impact assessments accompanying the EU 2030 Climate Target Plan and the EU long-term strategy (EU LTS). Importantly, not all indicators have benchmarks and for these a slightly different approach for assessing progress is taken.

Historical data

ECNO compiles data from official sources as well as a range of open-source databases and research conducted by members of the ECNO consortium. This includes, but is not limited to, statistics from Member States harmonised and provided by Eurostat or the European Environment Agency (EEA) as well as from international organisations such as the OECD, FAO or World Bank.

Data period

Indicator data is collected over the most recent past period of five years for which data is available, such as between 2016 and 2021. This approach focuses the assessment on the latest developments and attenuates the influence of outliers

Data availability and gaps

While data on headline indicators, such as GHG emissions or renewable energy shares, are readily accessible, limited and less regular or continuous information is collected for the structural changes that enable the transition. A significant challenge to an assessment of detailed progress is therefore the availability of data. Where this limits the interpretation of results, ECNO highlights critical information gaps. 

Indicators with a benchmark

The progress check for indicators with a benchmark compares the absolute annual change of the past development with the required annual change to meet the future benchmark starting with the last data point of the trendline and drawing a straight line to the benchmark. The ratio between these two values indicates the required change in the pace of development or the acceleration factor.

Required change

The change that would describe a pathway that meets the identified benchmark. Where benchmarks are missing, the required change indicates the desired direction and speed of change.

Trend

The development of an indicator based on historical data. ECNO’s trendline is a straight, best-fit line that smooths out the variation in historical development based on all data points, providing a sense of the general progress over time.

Acceleration factor

Or required change in speed is the ratio of the required change versus the past change, resulting in the example formulation: ‘We need to increase our annual emission reductions to at least 4.9 Mt CO2e per year – this is 2.6 times faster than the 1.9 MtCO2e per year achieved in the past’.

Indicators without a benchmark

If no quantified future benchmark can be derived from EU sources, the analysis relies on qualitative insights from official EU documents as well as on external scientific literature outlining the desired direction and speed of change. Therefore, the analysis also considers non-official EU benchmarks and expert judgement to put past development into perspective. 

Indicator bar

 

Classification

Progress for each indicator is classified as either: on track, too slow, far too slow, or headed in the wrong direction. Insufficient data indicates data availability limitations. 

For indicators with a defined benchmark the classification is based on the ratio of the required change to the past observed change. For indicators without a defined benchmark this is based on the desired direction and speed of change using predefined ranges. However, the assessment may deviate from the given ranges to reflect on the characteristics of an indicator.

The same system is used to describe overall progress in each building block. This assessment is based on the underlying indicators, but it does not follow a mathematical formula. Instead, it relies on expert judgement informed by a nuanced reflection on the indicator values, their respective importance, and recent developments in the policy area in the context of past trends.

For more detail on ECNO's analytical approach:

Download the Methodology Paper