This paper aims at: i) providing a summary of the key elements of the European INDC as submitted for the Paris COP21 and ii) examining the energy, economic, climate and social implications of the implementation of the European INDC up to 2030 and the long-term objectives towards a low-carbon economy by 2050, for which no detailed policies are yet in place.

Results from quantitative model-based assessments show that the restructuring of the EU energy system towards a low-carbon economy implies significant changes in the energy mix away from Reference scenario trends and has impacts on the production and employment in all economic sectors.

KEY MESSAGES:

  • THE EU INDC TARGETS ARE IN LINE WITH GLOBAL OBJECTIVES
    The European INDC implies acceleration of current climate policy efforts especially in the period after 2020. The 40% GHG reduction target by 2030 (as proposed by the EU INDC) is found to be consistent with the global objective of limiting temperature increase to 2oC if comparable action is also taken around the world. Implementation of the INDC leads to a cost-efficient pathway to achieve the EU’s long-term objective of at least 80% reduction in domestic GHG emissions by 2050.
     
  • KEY GHG ABATMENT PATHWAYS
    Energy efficiency improvements in all sectors of the economy and high deployment of RES technologies are the key GHG abatement options for the period 2015-2030. After 2030, important low-carbon options, including electric vehicles, advanced biofuels and CCS technologies, will have to be developed at a large scale. Electrification of final energy demand complemented with decarbonized power supply plays a critical role in the transition to a low-carbon economy by 2050.
     
  • IMPORTANT INVESTMENT PATTERNS SHIFTS
    A rapid shift in investment patterns in all energy sectors occurs in the INDC context with reduced energy purchases following implementation of energy saving measures, while upfront investment expenditures increase by 10% from Reference levels in 2030. The implementation of the EU INDC leads to particularly high challenges for the buildings sector, as investment expenditure have to increase by about 2.5 times by 2050 due to extensive investments for improving thermal integrity and building retrofits.
     
  • IMPACTS OF THE RESTRUCTURING OF THE ENERGY MIX
    The restructuring of the EU energy system towards a low carbon economy implies significant changes in the energy mix away from current trends, leads to reduction of EU energy import bill and has impacts on the production and employment in all economic sectors. The CGE analysis shows that the INDC has relatively limited negative impacts on the EU economic activity with GDP losses amounting to 0.4% in 2030, due to higher production costs that compress domestic consumption.
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