CLEW Guide – How the European Union is trying to legislate a path to net-zero

• The energy sector is responsible for around 25 percent of the EU’s greenhouse gas emissions, making it one of the bloc’s most polluting sectors. However, it was also responsible for most emissions reductions in 2023, with a 9 percent decline on the previous year. The electricity sector has led this decline;
• The EU needs to reach at least 42.5 percent of renewable energy in its energy mix by 2030. It also has technology-specific goals. For example, at least 42 percent of hydrogen used in industrial processes, like steel smelting, should be sourced from clean power in 2030, rising to 60 percent by 2035;
• In 2023, renewable energy sources represented 24.5 percent of the EU’s final energy use – an estimated one percentage point increase from 2022. Non-renewable energy sources saw a reduction of three percent, mainly linked to a drop in coal use. The share of renewables in each EU country differs greatly. Sweden and Finland lead, while Belgium, Malta and Ireland have the lowest shares;
• In 2024, renewables produced 47 percent of the EU’s electricity, up from 34 percent in 2019, largely due to growth in solar and wind energy. That year also saw solar generation surpass coal for the first time, and the fifth year in a row where electricity production from gas declined. Nuclear energy remains the largest power producer;
• High energy prices add to concerns about competitiveness and cost-of-living in the EU. The shift from volatile fossil fuel markets to clean energy sources is seen as a way to reduce bills, but also requires investments in grids, storage and other flexibility measures, as well as support for clean technologies. Other ways to cut prices include revising taxes. However, an attempt to reform EU tax law to address price disparities between electricity and gas has been stuck since 2021;
• The EU used to be heavily dependent on fossil fuel imports from Russia, but since the invasion of Ukraine, the bloc has been working to reduce its dependence on Russian energy imports. In 2025, the European Commission tabled plans to ditch Russian oil and gas by the beginning of 2028, with its 19th sanctions package banning imports of LNG a year earlier. Imports of Russian coal and seaborne oil are already banned. The EU also aims to stop importing Russian nuclear fuel, but does not have a specific date for this;
• Under a trade agreement made in July 2025, the European Union said it will buy 750 billion US dollars’ worth of energy from the United States up to 2028. However, critics have questioned how this is possible.

Next big thing:

A major implementation effort is required for the EU to reach its goal of 42.5 percent of renewables in its energy mix by 2030. Alongside this, the modernisation and build-out of Europe’s grid system is critical to avoid curtailing renewables and to make use of renewable production during times of low demand by storing it. Investments in Europe's distribution grids need to double to 67 billion euros per year by 2050, according to the industry. The European Commission is due to propose a European Grid Package in November and an electrification action plan early next year.

• Buildings are responsible for around 40 percent of the EU’s energy consumption, and around 13 percent of emissions, mostly due to heating and cooling, as well as lighting; 
• Around 85 percent of today’s buildings will still be standing in 2050. This means it is critical to address their emissions, and renovate them to improve their energy efficiency; 
• Badly insulated buildings are the root cause of the sector’s high energy and climate impact, but EU annual renovation rates barely scrape above 1 percent. The EU’s main strategy, the Renovation Wave, aims to at least double that by 2030;
• Two main pieces of legislation govern the EU buildings sector: the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive (EED). According to the updated EED, the EU must reach total combined energy savings of 11.7 percent by 2030, Unlike previous iterations, that target is mandatory. Under the new EPBD, the worst-performing 16 percent of buildings need to be renovated by 2030 and fossil fuel boilers will gradually be phased out;
• Under the EU’s plan to ditch Russian energy, it aimed to double the number of individual heat pumps, adding 10 million by 2027;
• Buildings will also be subject to emissions trading for the first time as part of ETS II, a separate carbon market due to launch in 2027 (see mobility section below). A new instrument, known as the Social Climate Fund, will help cushion the blow on vulnerable households, providing a maximum of 65 billion euros between 2026 and 2032. However, critics warn this will not be enough to drive change in the targeted sectors.

Next big thing:

The implementation of energy efficiency, buildings and renewable energy laws will be critical to decarbonising Europe’s building stock. Alongside this, the upcoming Citizens Energy Package, Heating and Cooling Strategy, and Electrification Action Plan are likely to be highly relevant to the sector.

• Agricultural emissions account for about 12 percent of the EU’s total greenhouse gases, and are mostly from methane and nitrogen. Non-CO2 emissions fell by only 5 percent between 2005 and 2022 and agriculture emissions are projected to drop by 7 percent by 2030 with the implementation of additional, currently planned measures;
• Agriculture emissions are governed by the Effort Sharing Regulation (ESR), which aims to reduce emissions in covered sectors by 40 percent by 2030 compared to 2005. Given that little progress is expected in agriculture, bigger cuts will have to be made in other sectors such as waste, buildings and road transport;
• Agriculture is also subject to the Land Use, Land Use Change and Forestry Regulation (LULUCF), which governs how this contributes to climate goals. By 2030, EU nature should store 310 million tons of CO2 equivalent. However, Europe’s land sink – the amount of carbon stored in nature – is decreasing due to a range of pressures;
• The latest European Environmental Agency’s state of the environment report shows significant progress in reducing greenhouse gas emissions and air pollution, but warns the overall state of Europe’s environment is not good and that nature faces degradation, overexploitation and biodiversity loss;
• The EU has agreed several laws to reduce its impact on nature, including the Nature Restoration Law and the EU Deforestation Regulation. However, the implementation of the ban on deforestation in supply chains was delayed, and the Nature Restoration Law was heavily watered down during negotiations;
• In July 2025, the European Commission proposed its plan for the post-2027 Common Agricultural Policy (CAP) – the main legislation covering agriculture and support for farmers. According to the Commission, the proposal is simpler, more targeted and future-oriented and will provide a fair income for farmers, safe and affordable food for consumers, and protection for the environment;
• The Green Claims Directive that aims to provide consumers with more information about the products they consume is currently stuck in negotiations, following the European Commission’s threat to scrap it. This has ramifications on other laws, such as the Carbon Removals Certification Framework, which will set out methodologies for different types of removals but was relying on it for use cases.

Next big thing:

Negotiations on the new Common Agricultural Policy and how much money will support it will be key. EU countries are also beginning to pushback on carbon sink targets, in part blaming climate impacts. It is worth following how this impacts the EU’s 2030 and 2040 climate goals.