Europe proceeds on the path to net zero carbon emissions, joined by post-Brexit UK. Not going to meet 2030 emission targets, the EU Commission doubles down, setting stricter targets for 2040. Post-Brexit UK intends to phase out all fossil fuel use by 2050. In both cases, the risk is that supplies will be curbed before alternatives are in place.
EU target failures. In 1997, the EU adopted its "20-20-20 targets" for climate policy. Based on 1990, CO2 emissions were to fall 20% by 2020, the share of renewable energy was to reach 20%, and energy efficiency—energy use in relation to production value—was supposed to improve 20%. In 2020-2021, the pandemic and the lockdown contributed to emissions slowing down, and the EU reached its goal. Encouraged, the EU revised the law mandating CO2 emissions to fall 55% by 2030, from 1990 levels, and to be zero by 2050.
In 2024, EU CO2 emissions were 2,518 MMmt, at 72% of the 1990 level. The 55% target for 2030 is 2,066 MMmt. Since 1990, the cut has been 1,039 MMmt. The same figure remains, in order to meet the 2030 target, but the EU is 34 years away from 1990, with only six years left before 2030. The requirement is a major increase in the pace of carbon cuts. To make up for the evident failure to reach the 2030 targets, the EU orders a 90% reduction target for 2040, to just a level of 376 MMmt, Fig. 1. The cut required in 16 years is 2,342 MMmt, more than twice the cuts made since 1990. The aim is not only to reduce carbon emissions, but energy use, as such. Realism is not evident.
The EU persists in blocking long-term energy supply deals. An agreement between the EU and Azerbaijan on an (almost) doubling of the latter's gas exports to reduce the need for Russian gas is futile, Fig. 2. EU rules block investment in extraction and pipelines, although resources are in place, and the market is waiting. The EU and the European Investment Bank cannot participate in the financing. Uncertain demand for gas in Europe scares private financial sources. European households and businesses are suffering from high electricity prices, but in the EU, ideology is winning. Azerbaijan is looking for new customers for the gas. In Algeria and Norway, EU hostility to long-term deals discourages gas investment.
The EU cannot achieve climate targets with available tools. The choice is between adapting the objectives in accordance with the policy instruments or adapting the policy instruments in accordance with the objectives. In recent years, the EU has chosen the last option, and at the same time to sharpen the goals that have not proven to be achievable, an ideologically motivated policy.
The EU has no targets for employment or income. The pandemic and economic downturn helped the EU achieve its 2020 climate and energy targets. Climate and energy policy take precedence over economic and social goals. The EU has shown that economic austerity is a way to curb CO2 emissions; more brutally, unemployment cuts emissions.
The United Kingdom in 2008 decided to reduce the 2050 share of fossil energy to 20% In 2019, the UK revised the target to 0%, Fig 3. Since 2008, the UK has experienced high electricity prices and economic stagnation. UK power supply is in the hands of six major companies. In 2020, their sales price for capricious solar and wind power was well above £100/MWh, for reliable coal and gas power under £50/MWh. Government subsidies to renewable power gave an average profit of £61/MWh. Thus, the policy is to phase out natural gas, the major energy source, replacing it with nuclear and wind.
Even in British waters, wind is not dependable. In 2022, for 262 days, 72% of the year, wind was insufficient to turn the windmills, Fig 4. Without access to natural gas, the UK would have had to impose comprehensive and long-lasting blackouts. Former Prime Ministers Teresa May and Boris Johnson were obviously unaware of the risk as they decided to discard a North Sea storage facility used for gas from neighboring Norway. The two conservative politicians damaged power supply security, discarding natural gas while thinking that “markets” would secure supplies. The new Labour government in July 2024 instantly banned all new petroleum activities, onshore and offshore, as the Energy Secretary stated that running (renewable) energy projects was part of his patriotic duty. Great British Energy is the new government-financed company, to develop and manage wind power and to secure public shares in current energy prospects and supply chains. A new public investment fund is to secure capital to projects enjoying political priority, also wind power.
A risky path forward. Recent experience, the cost overruns, and delays for nuclear power—and the 2022 lull—indicate that the new UK government is on a risky path, unless it has a novel concept for securing the wind input into power turbines. The UK already has high electricity costs and a fragile economy. The energy policies announced compromise the Labour government’s commitment to economic growth.
The outlook is dismal for EU and UK energy consumers but encouraging for overseas investors in LNG projects. Even if governments move head-on, discontinuing the use of oil and gas is unlikely to proceed as scheduled; substitutes are not available. Prospects are for a rising supply gap, especially for natural gas.
The EU democratic deficit, whereby the executive is not accountable to elected bodies, causes conflicts between the Commission and member states. France and Sweden oppose the free movement of electric power, to Germany’s detriment. The Commission has no policy for securing energy supplies to businesses and households, just legal power to restrict the use of fossil fuels. The replacement is up to energy companies and governments. By issuing even more directives, such as the 2040 targets, the Commission enhances its power over member states. For how long? WO
ONORENG@ONLINE.NO / Øystein Noreng is a professor emeritus at BI Norwegian Business School. He has been an advisor or consultant to the International Monetary Fund; The World Bank; the governments of Canada, Denmark, Norway, Sweden and the U.S.; and energy companies, including Equinor, PDVSA and Saudi Aramco.