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Blog: A competitive Europe means moving towards climate neutrality

Sarah Jackson • Lena Stüdeli

On 6-9 June, EU citizens are going to the polls to elect who will represent them in the next European Parliament. What will be their top priorities? Where will climate action fit in, next to concerns about the rising cost of living and social inequality, security, or competitiveness? In light of such pressing issues, some fear the further changes on the way to a climate neutral future. But the transition holds promise for economic opportunity and social progress.

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The EU has embarked on a journey in which European citizens benefit from the transformation to a climate neutral future – one that promises a multitude of positive changes for our daily lives and the world around us. Although there will be challenges on the way, the transition offers a pathway to a more sustainable, affordable, and resilient Europe.

The European Climate Neutrality Observatory (ECNO) aims to help ensure the EU reaches its climate goals by providing science-backed progress checks of on-the-ground shifts and the enablers behind the changes. Our analyses show that the EU is putting many of the right policies in place and is moving in the direction to achieve the vision laid out in the European Green Deal. This is, however, still happening too slowly. The next European Parliament will have to help speed up action to deliver on the benefits the transition could bring.

Most Europeans are up for the challenge. While vested interests may have you believe otherwise, it is important to set the record straight: the public's support for the transition to climate neutrality is high – 84% in 2021, two years after the presentation of the Green Deal as a political project – and remains relatively high according to a more recent study. While opinions on what measures should be taken to progress may diverge, it is simply wrong to claim that citizens don't support the transition. The loudest voices do not necessarily reflect the majority's opinion.

The following two examples show the benefits that the timely and just implementation of policies for climate neutrality can have - and already have - for Europe, specifically tackling some of the most pressing issues of Europeans at this time.

Lower electricity bills and enhanced energy security

One of the most tangible benefits of transitioning to renewable energy and upgrading to more energy efficient homes can be lower electricity bills. Decarbonising the power sector by 2035 can help lower electricity prices by 12%, leading to a reduction in household energy bills by two-thirds. By implementing energy efficiency renovations in homes, households can significantly reduce energy consumption and costs. Installing smart electricity metres, energy-efficient electrical appliances, and better insulation are just some examples of easy actions that can reduce demand and lead to energy savings for households.

Moreover, investing in renewable energy and energy efficiency measures enhances energy security. By diversifying energy sources and reducing dependence on fossil fuels from other countries, especially in the context of the Russian invasion of Ukraine, Europe becomes less vulnerable to supply disruptions and price fluctuations in the global energy market, as renewable energy is not impacted by fuel price shocks. This means a more stable and reliable energy supply for all EU citizens with renewable energy helping to reduce electricity prices. 

ECNO finds that, while the EU is heading in the right direction on decarbonising the electricity sector and increasing energy efficiency efforts, there’s still more to be done. Subsidies for efficiency upgrades and clean energy will be needed for a certain transitionary period, but once implemented, all households will benefit. Since 2015, energy subsidies for households and energy efficiency have ramped up, but delivery of subsidies is still too slow and insufficient. The Social Climate Fund will provide more sources of financial support for households starting in 2026; in the meantime, Member States can increase their existing measures to support vulnerable households. 

Green jobs, economic competitiveness and just transition

Creating well-paying, high-quality green jobs and contributing to economic growth and the EU’s competitiveness in the clean energy sector can be the backbone of the transition. From retrofitting buildings with energy efficient upgrades to manufacturing and installing clean technologies like heat pumps and solar panels, green jobs can generate long-term economic growth, and help regions impacted by the transition away from fossil fuels. Furthermore, investing in clean energy technologies and manufacturing strengthens the EU’s competitiveness on the global stage. By leading the way in renewable energy innovation, Europe will position itself as a strong leader in the transition to a greener future, attracting investment and driving economic growth. 

The EU aims to ensure social, climate and energy justice in the transition toward a climate neutral economy with just transition policies as the cornerstone of the European Green Deal. The Just Transition Mechanism focuses on local and regional economies in fossil-dependent regions, while the Social Climate Fund will protect vulnerable households experiencing energy and mobility poverty, as well as contribute to the creation of green jobs. The ECNO analysis finds that with the Social Climate Fund and Just Transition Fund resources, it is essential for the EU to move from planning to implementation, in coordination with Member States’ regional authorities and stakeholders to improve capacity building to achieve a just and inclusive transition.

Furthermore, ECNO finds that while green jobs are on the rise and headed in the right direction, the EU is still too slow in developing these jobs, especially in light of the speed of change required for a just transition. Both direct and indirect employment in the renewable energy sector are experiencing a gradual shift, with the heat pump industry employing the most workers: 26% of all EU renewable energy employment. More can be done to accelerate this trend; the EU can build on policy frameworks to scale up cleantech and invest in skills development to help the EU realise the potential of the green jobs market and enhance the EU’s competitive edge. More signs are pointing to progress through the Net Zero Industry Act and potentially a European Competitiveness Deal

Sticking to the transition for a stronger Europe 

This transformation of our society presents a vision for a brighter future. By designing our communities with walkable neighbourhoods with access to affordable housing, green jobs, and commerce, we can enhance the overall quality of life of European citizens. From lower electricity bills to cleaner air, the benefits are clear and achievable. ECNO’s assessment of EU policies has found that the EU is heading in the right direction, but at too slow a pace. More can be done to accelerate the transformation to become the first climate-neutral continent. As President von der Leyen said in her election campaign launch: 

Our European Green Deal turned the fight against climate change into a plan for growth, clean industry and social fairness

Now is the time for its continued implementation.

In our upcoming annual flagship report launch, expected for publication in July 2024, ECNO will provide an update on EU-wide progress to climate neutrality, highlight the crucial progress made and point to priority areas of action for EU policy-makers. Through the continuation of the European Green Deal and the implementation of its policies, we can build a more prosperous, resilient, just, and equitable future for all Europeans. 

Register for the launch of our 2nd annual progress report!
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