The European Union’s new pledge to cut carbon emissions 55% by 2030 is not a trivial step. Five years ago, the sort of reduction the European Commission has now advocated was seen as radical. Even at the time of the European Parliament elections last year, only two parties (the Greens and Renew) were asking for this level of ambition. And while a 55% cut is indeed doable, no one should underestimate the extent of the transformation and the investment it requires. This decision has implications for all sectors of our economy, but the production and use of energy will always remain central to the debate, as this is where most of the EU’s emissions are generated. Our analysis of what the ambition means for our energy system has five main outcomes. RENEWABLE ENERGY WILL BECOME EVEN MORE WIDESPREAD Europe is doing well here: we are global technological leaders, wind and solar prices in the EU are falling faster than anyone predicted, and we are overshooting our current targets. But to get to 55%, we will need to do even better. By 2030, up to 40% of our energy needs have to be covered by renewable sources, compared to the existing 32% target. This means investment in large wind parks, in grids that can handle more renewables, and in new solutions like green hydrogen. The commission has already come out with a hydrogen strategy, and we will follow it up with an offshore energy strategy this autumn. THE END OF COAL The move away from coal is already happening: most member states have either phased it out or set a date for when they will. By 2030, the use of coal will decrease by 70% compared to 2015 – and that is based on current plans to cut emissions by 40%, without the additional spur of the 55% climate target. It is becoming increasingly clear that there is little economic benefit in clinging to this massively polluting energy source, and the member states are taking action. WE NEED FRESH THINKING ON ENERGY EFFICIENCY Despite member states’ efforts, improving energy efficiency has proven tricky. We are lagging behind on our 2030 target and will need to look at all policy tools to achieve the savings needed for the 55% ambition. But in a context where we are also in dire need of more jobs and smaller energy bills, energy efficiency is suddenly more relevant than it has been for years. The commission’s upcoming Renovation Wave will be a major step, but we will need to look for other avenues as well. NEW FOCUS ON THE DEMAND SIDE Our power sector is already the most decarbonised in the world and will continue to become cleaner. What we need now is to repeat our success with electricity in sectors like buildings and transport. These are complex areas and for some, there are few alternatives available. Hence why hydrogen creates justified excitement, as it can help to green heavy-duty vehicles, shipping and aviation, where cutting emissions is notoriously difficult. Buildings have massive potential, as they create more than a third of our emissions, but significantly increasing the renovation rate requires a coordinated push from the EU, national and local levels. A LOT OF MONEY In a sector that involves grids, pipes and turbines, fundamental change was always going to require investment. As the sector has been underfunded for years, 55% by 2030 means spending an extra 350 billion euros per year, from both public and private sources, compared to what we spent in the previous decade. This covers the entire spectrum from electrification of transport to greening steel production. While the EU has made the green transition a clear priority of our 750 billion euro recovery package and long-term budget with 30% currently planned for climate spending, national and private investment is also absolutely crucial. These are just the most obvious impacts. There will be many others that go beyond the energy sector. Our geopolitical landscape will be redrawn as our dependence on fossil fuel decreases. Our air will be cleaner and nature under less pressure, thanks to less pollution. And while the investment and effort required can seem daunting, the payoff in terms of a more modern economy, better jobs and increased resilience is surely worth it.