This ambitious target will make it possible to achieve the EU's economic climate neutrality goal by 2050 and reduce the cost of importing fossil fuels from third countries. It will increase the energy independence of all EU Member States by protecting citizens from fluctuations in the price of electricity and other energy products and increase the international competitiveness of industry and agriculture.
It will also shift towards a circular economy, using fewer natural resources and creating new jobs through innovative technologies and new business models. The proposal will be discussed with all interested groups, and a final decision on the EU's 2040 climate target will be taken by the European Council on 6 November. The European Council will decide on the EU's 2040 climate change target in June, following the European Parliament elections later this year. The new EC will present proposals for new legislation to implement the target in June.
The Commission estimates that the new EU 2040 target is realistic, as the existing EU climate and energy "Fit for 55" legislative package will reduce the EU's GHG emissions by 88% by 2040.
An ambitious target will increase Europe's resilience to future energy crises. Aiming for further reductions in GHG emissions is an effective preventive measure and a means of building resilience to the adverse effects of climate change. It is essential to protect EU citizens and their assets, as climate-related economic damages in Europe have amounted to €170 billion over the last 5 years alone. The Commission's impact assessment found that, even on conservative estimates, accelerating climate change could reduce EU GDP by around 7% by the end of the century if no mitigation action is taken.
Forest fires, floods, droughts, and heatwaves are projected to increase in the future, and reducing GHG emissions and strengthening global action to adapt to climate change is the only way to avoid the consequences of extreme natural events and protect lives, health, economies, and ecosystems. The EC proposes to further reduce the dependence of industry on fossil fuels by electrifying all sectors of the economy, by using more indigenous energy sources such as wind, solar, and hydropower, and by expanding production capacity in batteries, electric vehicles, heat pumps, biogas, and biomethane production and the circular economy. A dedicated working group is to be set up to develop a comprehensive approach to carbon taxation.
Carbon taxation should continue to play an important role in the smooth transformation of all sectors of the economy, channeling the revenues into clean technology investments and socio-economic support for regions and populations with lower economic capacity. The EU's 2040 climate target was announced as part of the 2021 European Climate Regulation, which sets an interim EU target of a 55% reduction in emissions by 2030 and a longer-term target of climate neutrality by 2050.
The National Climate Change Management Agenda 2021, approved by the Seimas in 2021, sets Lithuania's target of an 85% reduction in GHG emissions by 2040 compared to 1990, with targets for individual economic sectors. It also sets out Lithuania's goal of a circular and climate-neutral economy by 2050. The EC's 2040 Communication is important for Lithuania as it will stimulate discussions on how to improve the uptake of innovative technologies in all sectors of the economy, what financial instruments are needed from the EU and the state budget for private sector investment, and what regulatory measures are needed.
