As set out in European Green Pact, the European Union must become a modern, resource-efficient and competitive economy, whereby:
- No net greenhouse gas emissions by 2050
- Economic growth will be decoupled from resource use
- No person or region will be left behind

By 2030, the share of electricity generation from renewable sources in the EU is expected to at least double from the current share of 32% to around 65% and more. The entry of renewable electricity generation will open up wide opportunities to fully exploit Europe's existing sources of such energy, such as offshore wind. Renewable energy sources will lead to strong decentralisation, facilitating consumer involvement and enabling generating consumers to generate, use and supply energy, and local and in particular rural communities to encourage local investment in these types of sources. This will also contribute to local employment creation.

The deployment of renewable electricity generation provides an important opportunity to decarbonise other sectors, such as heating and cooling in buildings and for the industrial sector. The share of renewables in heating and cooling is expected to be around 40% in 2030. Aside from the direct use of renewable energy and electrification, hydrogen from renewable sources will in turn also have to displace fossil fuels in some carbon-intensive industrial processes, for example as feedstock for certain chemical processes and to provide high-temperature heat.

The construction sector, which currently accounts for 40% of final energy consumption and 36% of EU greenhouse gas emissions, has great potential to achieve cost efficiencies to reduce emissions. Currently 75% of the EU building stock is not energy efficient. Many homes are still heated with outdated systems using polluting fossil fuels such as coal and oil. To fully exploit this potential for improvement, the rate of renovation of buildings, which is currently around 1%, will need to double or more over the period to 2030. In particular, efforts for major renovation, which covers the building envelope, smart digitalisation and the integration of renewable energy, need to be multiplied together.

In 2015, the transport sector had the lowest share of energy from renewable sources - only 6%. By 2030, this share should increase to around 24% through the further development and deployment of electric vehicles, new generation biofuels and other renewable and low carbon fuels as part of a comprehensive and integrated approach. Ensuring access to rechargeable batteries will be crucial for the uptake of electric vehicles, and clean hydrogen will play a major role in decarbonising heavy transport and, through its derivatives, aviation and maritime transport.

The decarbonisation of the transport sector's fuel mix by 2050 will also be supported by greater use of rail or other sustainable transport modes, such as inland waterways and short sea shipping, in particular for freight.

To achieve climate neutrality and ensure that sectors whose emissions are more difficult to reduce have access to sufficient renewable and low-carbon fuels, conventional passenger cars will need to be gradually replaced by zero-emission vehicles and greater use made of sustainable collective transport services. According to the impact assessment, a reduction corresponding to a decrease of about 50% in CO2 emissions per km for passenger cars is projected in 2030 compared to the 2021 targets. Electric vehicle production and sales are already gaining momentum and hydrogen promises new means of propulsion, especially for heavy trucks, proving that the scenario is realistic.

In the industrial sector, emissions could fall by up to about 25% by 2030 compared to 2015. The introduction of best practices can contribute to further GHG emission reductions by using waste heat and enhancing electrification through continuous incremental improvements, thereby improving overall efficiency. However, for the industry to truly decarbonise beyond 2030, large-scale trials of zero- or very low-carbon technologies and business concepts will need to be developed and conducted during this decade, including systems integration, access to sustainable resources and increased circularity, medium- and high-temperature heat electrification, hydrogen and carbon capture, recovery and storage.

Nature is a vital ally in the fight against climate change and halting biodiversity loss. It regulates the climate, so environmentally friendly solutions will be essential for reducing emissions and adapting to climate change. Restoring and enhancing carbon sinks - the ability of our land to absorb CO2 through the natural environment, for example through trees - is fundamental to achieving our climate goals.

Land use, agricultural change and forestry in the EU is a sector that both emits greenhouse gases and absorbs CO2 through soils and biomass. In the past, the sector as a whole has been an important net carbon sink. In recent years, however, the EU's CO2 sequestration capacity has come under pressure due to the increasing use of land for economic purposes and the adverse effects of climate change. Although the sink increased from a net sink of around 250 million CO2-eq to over 300 million tonnes CO2-eq in the two decades from 1990 to 2010, it has experienced a significant decline in the last five years. As a result, in 2018 the sink decreased to 263 million tonnes CO2-eq. This highlights the risks in terms of the scale of the sink, which is critical to achieving net zero greenhouse gas emissions by 2050.

In the absence of changes in farming practices and with further increases in crop yields, partly driven by age classes in maturing managed forests, the sink could continue to shrink to 225 MtCO2-eq by 2030. Increasing negative impacts from natural hazards, such as fires and pests due to a changing climate, as well as increasing demand for forest biomass for the economy, pose significant risks to sinks and negatively impact biodiversity.

For the EU to achieve climate neutrality by 2050, a more powerful sink is needed. To reverse the current trend, many short-term actions are needed. This includes improved and more sustainable forest conservation and management, as well as sustainable restoration and afforestation and more effective soil management, including through restoration of wetlands, peatlands and degraded land, in line with the biodiversity strategy. The situation could be alleviated if arable land started to be used sustainably to produce additional woody biomass, including as feedstock for biogas and new generation biofuels. The impact assessment indicates that if such a transition were to take place in the coming years, it could reverse the current trend of declining land sink capacity in the EU by 2030, leading to an increase in levels to over 300 million tonnes CO2-eq.

Where will the funding for the transition to a low carbon economy come from?

According to the European Commission's 2030 Climate Target Plan, at least 30% of the total funding from the EU multiannual budget and Next GenerationEU (the temporary instrument to stimulate recovery from the Kovid-19) in the period 2021-2027 is foreseen to be allocated to climate spending, all of which will be spent in line with the objectives of the Paris Agreement and the principle of doing no harm.

National recovery and resilience plans and their associated costs must make a real contribution to the environmental and digital transition or to overcoming the resulting challenges. The targeted use of these funds can stimulate a strong inflow of private sector investment. Recovery spending needs to be matched by ambitious climate action to avoid wasting funds and stranding assets that would trigger the need for additional resources at a later stage.