In December 2020, European leaders agreed to increased climate ambition with a 2030 emissions reduction target of 55%.
Bloomberg Philanthropies and the European Climate Foundation recently hosted a digital discussion on the crucial implications, opportunities, and challenges of the new 2030 target, with a special focus on coal-reliant Central and Eastern Europe.
The panel of experts provided poignant insights into Europe’s energy transition and identified pathways that would provide the least resistance to a rapid coal-phase out and scale-up in the deployment of solar, wind and storage in the region.
Laurence Tubiana, CEO of the European Climate Foundation opened the discussion by highlighting the positive political shifts taking place in the lead up to COP26. She praised the US for entering the global race to net zero, and called for ambitious action across the whole economy, not just in the power sector, with emphasis on electrification and energy efficiency.
Tubiana stressed that in order to meet the 55% target, coal must be phased out by 2030, a heft task indeed and even though Europe has made great strides, there is no time to rest on our laurels. “We must avoid replacing coal with other high carbon power. In 2020 renewables generated more than fossils for the first time in Europe… but there is no time for complacency”.
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How will Europe tackle its coal conundrum?
Even though some renewable energy plans are what Tubiana refers to as “patchy”, demonstrating low ambition, it’s not all bad news. “In good news, wind and solar are getting cheaper and more countries are waking up to offshore wind. We must ensure complementary action to green the grid and ensure a Just Transition.” Tubiana emphasised a point agreed to by the entire panel, that an inclusive, people-centred solution, designed around the principle of energy democracy is the only way.
Antha Williams, Head of Environmental and Climate Programmes, Bloomberg Philanthropies, emphasized that rapid coal phase-out is one of the most vital strategies in meeting net zero goals. Williams explained that coal phase-out plans are gaining serious traction and making great progress.
According to Williams, 15 countries have already set dates for coal phase-out, and many countries are seeing enormous potential for clean energy investments, investments that will strengthen economies and provide green jobs. However, there is no time to waste. Williams stressed that the energy transition simply cannot happen if coal is being burned, hurting planet and people. Williams quoted the latest research from Harvard, which states that burning fossil fuels is also leading to premature deaths, with more than 8 million people dying in 2018 from fossil fuel pollution.
Williams said: “Policy efforts are underway to ensure no one is left behind. Lessons from the US and the EU Green Deal will be applied globally and there are new opportunities for international collaboration. Mike Bloomberg will also be working to mobilise commitment to more ambitious net zero strategies”.
Dario Traum, Head of Energy Transitions, BloombergNEF talked about numbers and presented economic scenarios in which reaching net zero targets made sense and could be achieved.
In order to meet Europe’s raised net zero targets, Traum applied Bloomberg New Energy Outlook methodology, which reflects the least-cost pathway and new policy developments.
Traum explained that with coal phase-out underway, renewable integration must technically double immediately, and policy is urgently needed to create the investment landscape encouraging all to commit to coal phase-out.
“Climate targets are increasingly challenging the economics for coal, creating a gap that will require unprecedented energy transition investments in Europe’s coal regions in this decade.
“Electrification can deliver very high levels of decarbonisation and take Europe towards its goals, but only if the right policy frameworks are in place,” said Traum.
Diederik Samsom, Head of Cabinet of the Executive Vice-President Frans Timmermans, European Commission, began his presentation with a positive message. Said Samsom: “We are witnessing a revolution, things are moving faster. The message, yes we have to do more, but it’s doable. It requires policy, investments and societal momentum, and all three are present.”
Samsom explained how the negative situation with COVID-19 has provided more public money for new investments, making building back greener a reality. Furthermore, Samsom highlighted that more now than ever, young people are demanding a clean future, a demand that is causing change.
According to Samsom, we should focus on the opportunities that lie in front of us that will facilitate a rapid coal phase-out. “Bigger opportunities exist in Eastern Europe now, as they can lead with the offshore wind potential, [for example] Poland.”
The issue at hand, however, is how to steer private money in the direction of the energy transition. According to Samsom, the answer is to set the rules in a different direction. He believes that issuing green bonds (as is the plan of the EU Green Deal to the value of 250 billion euros) will change the direction of investment and set the correct standards and criteria. “This will channel finance into green investments as defined by our taxonomy… Brown discounts will apply to those investments that don’t fit into the taxonomy [and] this will reshape the economy.”
Of course, Europe needs to be mindful of not over-investing in gas now, especially as gas is considered the bridge from coal to renewables. Samsom made it clear that the bridge is getting shorter and smaller and institutions such as European Investment bank are pulling back, recalibrating gas investments. Said Samsom: “The new equilibrium is in a very different place than it was a year ago”.
To conclude, the discussion heralded some interesting points highlighting the urgent need for the coal phase-out and the existence of investment opportunities ripe for the picking, even in Eastern Europe. Also, the global organisations directing the shift to clean energy appear committed to a just transition that leaves no one behind, including the slow-to-move finance sector. It seems we can look forward to seismic policy shifts this year that promises a new landscape for Europe’s economy.