Evaluation of the EU Proposed 2040 Climate Target

and Its Impact on Germany's Municipal Energy Companies and Industrial Mid-Tier Sector

This project provides an in-depth evaluation of the European Union’s proposed 2040 climate target, which aims for a 90% reduction in net greenhouse gas (GHG) emissions compared to 1990 levels. The primary focus of this report is on Germany's municipal energy companies and the industrial mid-tier sector. Commissioned by the German Chamber of Industry and Commerce (DIHK) and the German Association of Local Public Utilities (VKU), this project investigates the policy, infrastructure, and economic transformations required to achieve this ambitious goal.

Key activities include:

• Policy and Infrastructure Analysis: Evaluating the necessary legal and regulatory changes at both the EU and national levels to meet the 2040 GHG reduction target, with a particular emphasis on energy, transport, waste management, and industry.
• Scenario Analysis: Examining projected emissions trends and assessing the adequacy of current and planned policies (WEM and WAM) to meet the 2040 target, while highlighting the impact of missing interim targets.
• Economic Impact Assessment: Analyzing the investment requirements for the proposed transformations, with an estimated €3-4.5 trillion needed to realize the systemic changes in sectors such as energy and industry.
• Sector-Specific Adaptations: Identifying the specific adaptations needed for municipal energy companies and the industries they support, including the decarbonization of heating systems, transport electrification, and large-scale deployment of hydrogen and CCS technologies.
• Stakeholder Engagement: Collaborating with DIHK and VKU to ensure the interests of municipal energy suppliers and industrial SMEs are reflected in the policy design and regulatory frameworks.

This report provides actionable insights into how Germany can navigate the challenges of achieving the 2040 target, ensuring that municipal energy companies play a key role in the energy transition while safeguarding the competitiveness of the industrial mid-tier sector.