EU 2040 climate targets must address economic challenges


On 6 February, the European Commission presented its communication regarding the EU's target of reducing emissions by 90% by 2040. Prior to this announcement, Eurochambres President, Vladimír Dlouhý, addressed a letter to the Commissioner for Climate Action, Wopke Hoekstra. This letter outlines the stance of the chamber network on the EU's 2040 climate target, underscoring the pivotal importance of industrial carbon management in meeting these ambitious goals. While generally supporting the EU's vision for climate neutrality by 2050, Eurochambres continues to raise strong concerns about the economic impact of stringent regulations on European businesses.

Regrettably, the Commission's strategy until now has proven to be imbalanced, leading to significant competitive disadvantages for the European economy. The EU Green Deal, introduced in 2019 as an international model for sustainability and prosperity, envisaged economic growth and climate mitigation progressing hand in hand. However, businesses now find themselves increasingly overburdened by excessive regulatory requirements, a situation that is weakening the economy and accelerating the deindustrialisation of Europe.

The threat of major European economies slipping into recession is becoming a reality and new IMF data provides stark evidence of that the Eurozone is set to fall further behind global competitors this year. The feedback from the European chamber network highlights growing concerns among businesses about the negative impact of new regulatory requirements such as the Corporate Sustainability Reporting Directive and the hasty ending of free allocations under the EU Emissions Trading System. The 2040 climate roadmap that the Commission should set an example to the world, but it must be an example that other economies can and will follow. Achieving this necessitates an EU strategy that fosters competitiveness, pivoting from burdensome regulation to promoting innovation and catalysing the extensive investment essential for a transition to a low-carbon economy.

Eurochambres underlines the importance of carbon capture, utilization, and storage (CCUS) technologies for the low-carbon economy transition, particularly in sectors where reducing emissions is challenging. The Sixth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) also predicates on CCS technology in most of its 1.5-2°C scenarios. It is therefore essential to boost climate protection innovations through technology-neutral, unbureaucratic and timely funding initiatives.

Policy makers need to demonstrate realism, taking into account the present state of technology, the economic fallout from swift transitions, and international competition. We cannot regulate our way to the EU’s ambitious climate targets. We  must tangibly and substantively support businesses in their transition endeavours.