Eight countries take steps to erase fossil fuels from EU’s power system as ‘ground-breaking’ new law comes to light

Eight countries – Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Switzerland, and Lithuania – have made commitments that put them en route to fossil-free power by 2035. These countries account for almost half of the European Union’s power sector, but more action is still required. These emission reduction efforts follow a compromise reached on a new law that strengthens the provisions regarding the obligation of large companies to leave no stone unturned in a bid to mitigate the effects of climate change.

Moving beyond fossil fuels is not an easy task, which is why the European Commission (EC) called on the European Union (EU) countries to enhance their efforts on greenhouse gas (GHG) emissions cuts and set out clearer plans on how they intend to adapt to climate change. All countries were also urged to prepare for an increased uptake of renewables and enhance energy efficiency measures.

Following its assessment of EU Member States’ draft National Energy and Climate Plans (NECPs), the European Commission issued recommendations to assist the countries in raising their ambitions in line with EU targets for 2030. This was done in the wake of the COP28 outcome and the global call to accelerate action this decade.

Furthermore, the European Commission’s assessment outlined that draft NECPs were not yet sufficient to reduce greenhouse gas emissions by at least 55% by 2030 as current measures would lead to a reduction of 51%. Further action is also needed to close a gap of 6.2% in the effort-sharing sectors compared to the 40% target.

In addition, there is a gap of around -40 to -50 MtCO₂eq compared to the -310 MtCO2eq target under the LULUCF Regulation, showing an enhancement of the carbon sink is necessary. When it comes to renewable energy, the current drafts would lead to a share of 38.6-39.3% of renewables in the energy mix by 2030, compared to the 42.5% target. These drafts would also lead to 5.8% energy efficiency improvements, compared to the target of 11.7%.

Moreover, the European Commission highlighted the importance and urgency of phasing out the use of fossil fuels in energy generation, notably solid fossil fuels while identifying the persistence of fossil fuel subsidies in all Member States, including in transport, as another obstacle to the EU’s pathway towards climate neutrality.

“Subsidies which do not address energy poverty or the just transition need to be phased out as soon as possible and be directed instead to innovation and supporting vulnerable groups with the transition,” explained the European Commission.

Wopke Hoekstra, European Commissioner for Climate Action, noted: “The EU is a leader in the fight against climate change. What we do at home is the foundation of our climate diplomacy abroad, as COP28 demonstrated. We adopted the European Climate Law in record time, to deliver on our 2030 ambition. Key legislation to make the EU reach 55% emissions reductions is already in force.

“The evaluation of Member States’ draft updated NECPs is now proof that we have taken yet another step in the right direction to implement our ambitious objectives. However, it is clear we need stronger commitments in the final plans to put us firmly on the right track to climate neutrality, build resilience to climate impacts and to capitalize on the gains that come from the climate and energy transition.”

While urging countries to give more attention to energy security and stressing the need to boost the competitiveness of European clean energy value chains, the EC also emphasized: “More attention should also be paid to reskilling and upskilling as well as employment and social impacts and measures to ensure a green transition that is just, inclusive and leaves no one behind.”

A recent decarbonization agreement, formed under the umbrella of the Pentalateral Energy Forum, made by Austria, Belgium, France, Germany, Luxembourg, the Netherlands, and Switzerland on December 18 shows that the EU countries have taken the European Commission’s recommendations and individual assessments to heart and are working on the alignment with the energy and climate goals, the climate neutrality objective, and adaptation goals.

Rob Jetten, Climate and Energy the Netherlands, commented: “The electricity production of the pentalateral countries count for almost half of the production in the EU. So it is clear that decarbonizing our electricity systems swiftly will significantly decrease carbon emissions in Europe.

“The countries have a strongly interconnected electricity system, and can benefit from offshore potential in some areas and storage in other areas. I am confident in our collective capabilities, we are well on our way with extensive offshore wind energy plans, solar power, hydropower, hydrogen and other energy sources to power our region.”

As the European electricity system is expected to be nearly decarbonized by 2040, these seven countries are aiming to make their electricity sectors carbon-free five years earlier, ensuring a smoother transition. These EU states claim that close collaboration and proceeding simultaneously mitigate potential carbon leakage across the region.

Kadri Simson, European Commissioner for Energy, remarked: “A decarbonized electricity system will also increase energy security, and help reduce emissions in transport, industry and buildings through electrification and increased energy efficiency.

“Close collaboration between the members of the Pentalateral Energy Forum will also be crucial to develop energy storage and integrate the rapid expansion of renewables across the region, including through the production of renewable hydrogen.”

Beyond Fossil Fuels, an expansion of the Europe Beyond Coal campaign, believes that the collective commitments announced by Austria, Belgium, France, Germany, Luxembourg, the Netherlands, and Switzerland to decarbonize their electricity systems by 2035 mark “a momentous stride,” bolstered by Lithuania’s recent law, which commits the country to 100% renewable electricity by 2030.

This coalition of civil society organizations striving for a just transition to a fossil-free, fully renewables-based European power sector by 2035 sees the agreement forged under the umbrella of the Pentalateral Energy Forum as a way to solidify the convergence around 2035 as the “critical” date for achieving fossil-free power in Europe.

Tara Connolly, Beyond Fossil Fuels Campaigner, commented: “These commitments show consensus is building for a fossil-free European power sector by 2035 – as strongly emphasized by the International Energy Agency’s 1.5 degree Celsius-compatible global energy scenario.

“All other European countries should follow suit and commit to phasing out coal and gas from their power sectors by 2035. Enhancing grids and expanding wind and solar deployment are crucial to ensure the energy transition is as sustainable, fair and smooth as possible.”

The recent decarbonization moves come shortly after the European Council and Parliament reached a provisional agreement on a new law that is expected to help prevent large companies from damaging the environment and threatening human rights after negotiators concluded the Corporate Sustainability Due Diligence Directive (CSDDD). The text is expected to be rubber-stamped by the European Council and Parliament in early 2024, after which Member States will have two years to transpose the directive into national legislation.

The agreement sets the scope of the directive to apply to large companies with more than 500 employees and a global net turnover of over €150 million. Non-EU companies are affected if they have a net turnover of over €150 million in the EU three years after the directive comes into force. The EC’s task will be to publish a list of non-EU companies that fall within the scope of the directive.

The new law, which will require companies to engage with people affected by their project before it begins and throughout its life cycle, will also reduce the obstacles that communities face when taking legal action against firms. Courts could ask companies to disclose greater evidence if claimants bring forward a solid case, and affected communities will have at least five years to bring their cases before courts.

Global Witness, an international NGO, underlines that this is a comprehensive legal framework for communities anywhere in the world to sue companies responsible for human rights abuses and environmental harms in European courts. In addition, the NGO elaborates that companies will need to write and put into effect climate transition plans, which will put Europe’s biggest corporate players, along with oil and gas giants, on a pathway towards reducing their emissions in line with the Paris Agreement and the EU’s climate targets.

Arianne Griffith, Corporate Accountability Lead at Global Witness, stated:  “The EU has agreed a ground-breaking new law that could finally curb the unchecked power big companies have enjoyed for so long. It will mean Europe’s biggest polluters – including fossil fuel majors – will need to reduce their climate emissions and gives people who are at risk from dangerous business practices a chance to fight back. However, it’s shocking that Member States have sunk plans to ensure that banks stop investing in environmental and human rights abuses.”

While banks and insurers will have to implement climate transition plans, which are steps that will bring them closer to climate-friendly investments, the financial sector secured a broader carve-out and will not be obliged to ensure that their loans or investments are not tied to human rights abuses.