Energy transition in the EU

Briefing 30-11-2023

Energy is central to the European Union's transition towards climate neutrality by 2050, in line with the European Green Deal. As the biggest source of greenhouse gas emissions in the European Union (EU), the energy sector is undergoing a profound transformation on the path to a net-zero economy. The shift to a more sustainable energy system entails switching from fossil fuels to low-carbon and renewable energy sources, improving energy efficiency in products, industry and buildings, and creating a more sustainable energy system based on clean technologies. The EU has developed a number of policies to support the energy transition. EU legislation sets targets for renewables in consumption, energy efficiency and building renovations. It also fosters sustainable transport, energy labelling of products, and clean technologies. The energy union and climate action governance framework includes long-term national energy and climate plans prepared by all EU countries to enhance their contribution to EU energy and climate objectives. According to the European Commission, energy investments in the EU will have to reach €396 billion per year from 2021 to 2030 and €520-575 billion per year in the subsequent decades until 2050. The EU budget sets a target of 30 % climate spending, a large part of which includes energy actions such as energy efficiency and deployment of renewables, energy infrastructure and smart energy systems. The bulk of EU energy spending is channelled through the Recovery and Resilience Facility, cohesion policy funds, the Modernisation Fund and several others. Specific instruments also exist to support a socially fair transition, notably the Just Transition Fund and the Social Climate Fund. While the EU energy transition has advanced despite the recent energy crisis, several challenges remain. These include technological aspects such as electrification, grid interconnections, storage systems, further roll-out of renewables and integrating other energy sources such as hydrogen and biomethane. However, the transformation of the EU energy system also involves taking into account the need to ensure energy security, boost energy independence and domestic manufacturing of clean technologies, and improve energy affordability.