The European Commission has set an ambitious goal for the European Union: to reduce greenhouse gas emissions by 90% by 2040, relative to 1990 levels. This proposed target represents a crucial market signal and a vital step in the EU’s unwavering commitment to achieving climate neutrality by 2050. While targets are essential for direction, their successful implementation demands a clear, actionable roadmap, particularly concerning the annual build-out of renewable energy sources.
This 2040 target provides a credible and necessary trajectory from the existing 2030 climate target, which mandates at least a 55% reduction in greenhouse gas emissions compared to 1990 levels. By establishing this intermediate objective, the EU aims to provide critical investment visibility, guiding capital away from fossil fuel-dependent industries and towards a sustainable, renewable future. Once formally adopted, this target will become a legally binding objective enshrined within the European Climate Law, reinforcing the EU’s dedication to its climate goals.
Translating Targets into Tangible Action: The Imperative of Renewable Deployment
Achieving the 2040 climate target is not merely about environmental stewardship; it’s intrinsically linked to Europe’s energy security and industrial competitiveness. In line with the Clean Industrial Deal, the proposed 2040 target unequivocally signals that Europe is committed to a renewable, electrified future. This necessitates a significant acceleration in the deployment of competitive, home-grown wind energy, among other renewables.
However, a concerning gap exists between current deployment rates and the requirements for meeting these targets. Last year, the EU installed only 13 GW of new wind energy capacity, a figure dwarfed by the more than 30 GW annually needed to reach the 2030 target. Closing this gap is paramount; otherwise, the ambitious 2040 target risks remaining an academic aspiration rather than a tangible reality. New targets alone will not deliver more wind farms; national governments must translate these goals into concrete volumes of wind energy delivered.
Four Pillars for Accelerated Renewable Energy Deployment
To bridge the deployment gap and ensure the success of the 2040 climate target, national governments must prioritize action in four key areas:
- Streamlining Permitting Processes: Unlocking Renewable Potential
Efficient and accelerated permitting is fundamental to rapid renewable energy deployment. National governments must rigorously implement the provisions of the excellent Renewable Energy Directive (REDIII), particularly those concerning overriding public interest and shortened permitting timelines. Germany serves as a prime example of successful implementation, having permitted over 14 GW of new onshore wind in 2024 alone – a seven-fold increase compared to five years ago. This demonstrates that delays are inexcusable and that effective policy implementation yields significant results.
- Optimizing and Expanding Electricity Grids: The Backbone of Electrification
A robust and interconnected electricity grid is a non-negotiable requirement for a decarbonized energy system. Optimizing and expanding Europe’s electricity grid offers multifaceted benefits, including enhanced supply security through increased interconnectors, reduced curtailment of renewable energy, and ultimately, lower long-term electricity costs. Grid infrastructure is undeniably the number one enabler for achieving the new 2040 target, as it facilitates the efficient transmission and distribution of renewable power.
- Accelerating Electrification: Driving Decarbonization and Competitiveness
Direct electrification represents the most cost-effective and efficient pathway to decarbonization. It is central to fostering Europe’s industrial competitiveness and bolstering its energy security. However, Europe is currently lagging in this crucial area, with electrification rates stagnating while competitors like China and the US are making rapid advancements. Governments must act decisively by increasing the production of decarbonized electricity and implementing smart taxation and targeted state aid to incentivize electricity demand, thereby accelerating the transition to an electrified economy.
- Enhancing Auction Design: De-risking Wind Energy Investments
Governments should actively de-risk wind energy investments by establishing a stable pipeline of two-sided Contract for Difference (CfD) auctions. CfDs are a proven mechanism to improve the cost of capital for renewable energy projects and provide crucial visibility on future revenues, offering excellent value for governments. The wind industry has already proposed a “New Offshore Wind Deal for Europe”: if governments commit to auctioning 100 GW of CfDs between 2031-2040 to create bankable offshore wind projects, the industry pledges to reduce the levelized cost of offshore wind (LCOE) by 30% by 2040. Importantly, CfDs are not exclusive to offshore wind; onshore wind projects can also greatly benefit from the high predictability and financial stability that CfDs offer.
By implementing these four critical actions, the EU can transform its ambitious 2040 climate target from a declaration of intent into a concrete reality, securing a sustainable, competitive, and energy-secure future for Europe.
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