EPICO, in collaboration with FfE (Forschungsstelle für Energiewirtschaft), has published a new study presenting the first comprehensive 2050 Marginal Abatement Cost Curve (MACC) for the EU-27.
Analysing 128 decarbonisation measures across the energy supply, buildings, transport and industrial sectors, the study provides a data-driven assessment of where carbon pricing can deliver emissions reductions, where it reaches its limits, and where complementary policy instruments are needed to achieve climate neutrality.
The findings show that carbon pricing remains the backbone of Europe's climate policy and can unlock a substantial share of the emissions reductions required to reach net zero.
However, price signals alone will not be sufficient to complete the transition. Instead, Europe will require a smart policy mix that combines a strong EU Emissions Trading System with targeted support where it delivers the greatest economic and climate impact.
Key findings
- Carbon pricing is indispensable but not sufficient. A carbon price of around €200/tCO₂ could unlock approximately 75% of the emissions reductions needed, yet additional policy instruments will be required to achieve climate neutrality.
- Infrastructure is the key enabler for hydrogen and carbon management. Accelerating the rollout of hydrogen networks and CO₂ transport and storage infrastructure is essential to unlock investment in hydrogen and Carbon Capture and Storage (CCS).
- Targeted investment support can accelerate household decarbonisation. Heat pumps and electric vehicles are often cost-effective over their lifetime, but high upfront investment costs remain a major barrier. Targeted investment support can help mobilise private capital and speed up deployment.
- Strategic industries require complementary support. Green hydrogen, primary steel and basic chemicals will require targeted transitional support alongside robust carbon pricing to become commercially viable and remain competitive.
- A smart policy mix is essential. A strong EU ETS should be complemented by effective carbon leakage protection, investment in hydrogen and CO₂ infrastructure, lead markets for climate-friendly products, targeted operating support where necessary, and stronger circular economy policies.
Together, these findings provide a roadmap for designing a cost-effective policy mix that can deliver climate neutrality while strengthening Europe's industrial competitiveness and resilience.