The 27-member European Union has long been a leader in the global energy transition, thanks to strong support for clean technologies and an ambitious decarbonization agenda. That agenda includes policy initiatives, such as the European Green Deal (in 2020) and the Fit for 55 plan (in 2021), which aim for a 55 percent cut in CO 2 emissions by 2030 (from 1990 levels) and for net- zero emissions by 2050. Since 2021, however, those goals have encountered headwinds. The Russian invasion of Ukraine, the lingering effects of the pandemic, supply chain disruptions, inflationary pressures, and turmoil in the global economy have threatened energy security and affordability in EU countries. Many of them are net importers of oil and gas and thus particularly exposed to energy reliability and market volatility risks. Although Russia’s natural-gas exports declined after the sanctions against it, the European Union has avoided mandated gas curtailments. One reason was the diversification of gas supply—in particular, liquefied-natural-gas (LNG) imports, which increased by more than 60 percent in 2022 from the previous year. 1 In addition, the European Union reduced gas consumption in industry and buildings by about 15 to 20 percent in 2022 (compared with 2021), thanks to a relatively mild winter and the adoption of behavioral and energy efficiency measures. Several European nations sought to maintain a steady energy supply by taking steps such as delaying the decommissioning of coal-fired power plants and increasing their utilization, which helped to partially offset reduced generation from nuclear and hydro plants. But by highlighting the European Union’s exposure to Russian energy, the crisis gave a fresh impetus to the push for a more orderly energy transition that combines rapid decarbonization with energy security and economic growth (see sidebar “What is a more orderly transition?”). In early 2022, the European
Commission announced the REPowerEU plan, 2 which introduced measures “to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition.” This sent a signal that the European Union aims to come out of the current crisis with a renewed commitment to climate action (see sidebar “Five interlocking proposals”).
What is a more orderly transition?
The debate on net zero often seems to oppose an “orderly” transition to a “disorderly” one in a binary fashion. But orderliness is a relative notion. At one end of the spectrum, instantaneous and abrupt action could jolt economies and societies, impair growth, and lead to public resentment and political backlash. At the other end, delayed or limited action could lead to runaway climate change, threaten the lives and livelihoods of billions of people, bring about massive population displacements, exacerbate political strife and contention, and result in a severe contraction of the world economy. Between these two undesirable extremes lies a range of measured and decisive actions that would enable a rapid ramp-down of high-carbon economic activities in tandem with a corresponding ramp-up of low-carbon ones. 1 For the purpose of this article, a more orderly transition pathway is a scenario in which the European Union achieves its stated commitments of a 55 percent cut in CO 2 emissions by 2030 and net-zero emissions by 2050 while balancing affordability, reliability, resilience, and security.
1 Mekala Krishnan, Tomas Nauclér, Daniel Pacthod, Dickon Pinner, Hamid Samandari, Sven Smit, and Humayun Tai, “Solving the net-zero equation: Nine requirements for a more orderly transition,” McKinsey, October 27, 2021.
1 Baseline European Union gas demand and supply in 2023 , International Energy Agency, accessed July 10, 2023. 2 REPowerEU: A plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition , European Commission, May 18, 2022.
Accelerating the journey to net zero
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