Rimini, Italy – Released yesterday at the Ecomondo 2024 Green Economy conference in Rimini, the 2024 State of the Green Economy Report provides a comprehensive analysis of Europe’s progress under the European Green Deal, alongside a roadmap for tackling the challenges facing the continent’s green transition. As policymakers, industry leaders, and environmental advocates gather at Ecomondo, the report underscores the urgency and complexity of Europe’s sustainability goals, addressing the impacts of climate change, resource depletion, and economic resilience.
The report arrives as Europe embarks on its 10th legislature with a renewed commitment to the European Green Deal. A core initiative of the European Union, the Green Deal has sought to transform Europe’s economy by cutting greenhouse gas emissions, advancing a circular economy, and protecting biodiversity. Since its introduction, the Green Deal has helped Europe navigate significant crises—including the COVID-19 pandemic and the energy fallout from Russia’s invasion of Ukraine. These crises have underscored the urgency of a transition to sustainable energy and resources, positioning Europe as a potential model for green resilience in a time of global instability.
The report documents concrete progress in Europe’s climate efforts. By 2023, the EU had reduced greenhouse gas emissions by 31% from 1990 levels, with a further 5% drop last year alone. This decline marks the lowest emissions level in the EU since 1990, excluding the pandemic year. With nearly 200 million tons of greenhouse gases cut in 2023, the EU is on track to meet its 2030 target of a 55% reduction, a goal formalized under the European Climate Law and reinforced by the Fit for 55 package, which aims to achieve a 62% reduction in emissions by 2030.
Energy transition has been central to the Green Deal, and the report highlights substantial gains in renewable energy. Renewable energy sources now account for 38.8% of Europe’s electricity production, up from 22% in 2010, with a projected target of 66.8% by 2030. Germany led the EU in renewable installations, adding nearly 18 GW of capacity in 2023, but the report notes that Italy and other nations need to double their efforts to meet the collective EU goals. With the recent Renewable Energy Directive (RED III) mandating a 42.5% share of renewables by 2030, Europe’s energy sector has transformed, shifting away from fossil fuel dependence and signaling a new path for energy self-sufficiency.
A strong push toward circularity amid resource challenges
Resource consumption has risen sharply over the past 70 years, posing a significant obstacle to sustainable development. Europe has responded with a robust circular economy strategy as part of the Green Deal, which prioritizes reducing material consumption and waste production. The report highlights that in 2023, Italy’s resource productivity—measured by GDP per kilogram of material used—was the highest in Europe, at €3.6, compared to an EU average of €2.2. Italy also leads Europe in recycling, with a waste recycling rate of 72%, well above the EU average of 58%.
As one of the Green Deal’s critical initiatives, the Circular Economy Action Plan calls for improved product design, repairability, and recyclability standards. Recent reforms include “right to repair” legislation, ensuring that manufacturers provide affordable repair options even beyond warranty periods. Despite these gains, the report notes the continuing reliance on virgin resources for packaging, with 40% of EU plastics and 50% of paper used solely for packaging materials.
Challenges in decarbonizing transport
The transport sector, responsible for about 25% of EU emissions, represents one of the most challenging areas for decarbonization. Under the European Commission’s “Sustainable and Smart Mobility Strategy,” the EU has pledged to reduce transport emissions by 90% by 2050. Yet, high EV costs, limited charging infrastructure, and competition from global markets—particularly China—pose significant obstacles. While European car manufacturers have made strides, the report points out a stark contrast in pricing: while Europe has just one electric vehicle model under €20,000, China offers more than 75 models within this range.
The Green Deal’s plan to phase out internal combustion engine vehicles by 2035 is proceeding slowly amid these challenges. However, experts argue that accelerating EV infrastructure and reducing costs is essential to ensure the EU remains competitive in the global automotive market. In countries like Norway, electric vehicles represent 90% of new car sales, underscoring the potential for widespread adoption if barriers can be addressed.
The report also points to lagging progress in protecting Europe’s natural capital, a key objective of the Green Deal. With only 15% of Europe’s natural habitats in good condition, the EU recently adopted the Nature Restoration Law, aiming to restore degraded ecosystems and protect 30% of land and sea areas by 2030. However, threats to biodiversity persist, exacerbated by unsustainable land use and pollution. Italy, for example, continues to experience high rates of land consumption, particularly in urban and industrial zones, affecting the availability of green spaces and agricultural areas.
Water conservation remains another critical issue, with climate change impacting Europe’s water resources. The report notes that Italy’s renewable water resources have declined by 20% over the past 30 years, with national water losses exceeding 42%, particularly in the south and on islands. Addressing these challenges will require innovative water management strategies, particularly in heavily urbanized regions.
Calls for sustained investment
The report underscores the importance of sustained funding to achieve the Green Deal’s ambitious targets, particularly as Europe faces heightened competition from other economic powers like the United States and China. Following the pandemic, Europe mobilized €723 billion through NextGenerationEU and the REPowerEU initiative, which sought to reduce reliance on Russian fossil fuels. Yet, further investment is needed to sustain momentum. According to estimates from the Draghi Report, Europe will need between €750 billion and €800 billion annually through 2050 to meet its green and digital transition goals.
President von der Leyen has called for increased private sector involvement, particularly given Europe’s untapped €33 trillion in private savings, most of which remains in low-yield bank deposits. The report argues that strengthening Europe’s financial markets to channel these resources into green investments is essential. With the EU Green Bond Standard now in place, Europe aims to raise €250 billion in green bonds, addressing approximately 30% of NextGenerationEU funding needs.
Europe’s environmental progress stands out on the global stage, but the report notes that achieving climate goals will require collaboration among major emitters, including the United States, China, and India. While China has increased its renewable energy share to 39% as of May 2024, it remains heavily reliant on coal, which supplies 53% of its power. In contrast, the U.S. has committed unprecedented funds for clean energy through initiatives like the Inflation Reduction Act, though challenges remain in reducing emissions from a high baseline. India, while making strides in renewable investments, continues to face severe climate impacts, underscoring the need for a rapid transition.
The report stresses that Europe’s Green Deal, although ambitious, could serve as a global benchmark if accompanied by similar commitments from other regions. Edo Ronchi, President of the Sustainable Development Foundation, noted that “the Green Deal is not merely a climate policy; it represents an economic transformation that positions Europe as a leader in sustainable development.”
As Europe’s leaders convene at Ecomondo, the report serves as a reminder of the transformative potential of the Green Deal—and the considerable challenges that remain. The path to a climate-neutral, resilient Europe will require not only legislative action but also unprecedented levels of cooperation, innovation, and investment to meet the demands of the coming decades.
