The European Union (EU) has made a commitment to reducing its carbon emissions in order to combat climate change. This commitment is reflected in the EU’s climate and energy policies, which have been put in place to promote the use of renewable energy sources and energy efficiency and reduce the EU’s dependence on fossil fuels.

With that in mind, it is somewhat surprising, that in parts of the EU, coal-burning plants have been switched back on by energy companies. Coal usage increased in such places as Germany as the temperatures dropped in December. Despite this, carbon emissions in the EU remain at a 30-year low. So how did the EU manage this?


1. The ETS

One of the main policies that have helped to drive down carbon emissions in the EU is the Emissions Trading System (ETS). The ETS is a market-based system that puts a cap on the amount of carbon that can be emitted by power plants and heavy industry in the EU. Companies that emit carbon are required to buy allowances, or permits, to cover their emissions. This creates an economic incentive for companies to reduce their emissions, as the cost of allowances can be quite high.

2. The RED

Another important policy that has helped to reduce carbon emissions in the EU is the Renewable Energy Directive (RED). The RED sets a target for the EU to source 20% of its energy from renewable sources by 2020. This scheme has created a significant increase in the amount of renewable energy being produced in the EU, which has helped to displace fossil fuels.

3. Other factors

In addition to these policies, many EU countries have implemented their own measures to reduce carbon emissions, such as implementing carbon taxes, providing subsidies for renewable energy, and promoting energy efficiency. The decrease is also due to the pandemic lockdowns in 2020 which resulted in a reduction of activity and therefore emissions compared to regular years. All of these efforts and policies helped the EU to decrease emissions but it’s still not enough to reach the ambitious goals set in the Paris Agreement, which aims to keep the global temperature rising well below 2°C above preindustrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C.

What does this mean for the future?

Businesses should consider the potential impact of carbon pricing on their operations and costs. The EU’s Emissions Trading System (ETS) is the main carbon pricing mechanism in the EU, but many EU countries are also introducing or considering introducing their own carbon pricing schemes. Businesses should be aware of these schemes and how they will be impacted. Additionally, improving energy efficiency is one of the most effective ways for businesses to reduce their carbon footprint. Businesses should conduct regular energy audits, and invest in energy-efficient equipment and technologies.

What should businesses do?

The sooner a company adopts carbon-neutral practices, the sooner it will benefit. The road to net zero emissions is bumpy and filled with pitfalls, however. The protect themselves, companies should research and learn from peers and industry experts on how to best 

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