It has been more than a year since the European Commission proposed the next milestone in the European Union’s transition toward climate neutrality: reducing greenhouse gas ( GHG ) emissions by 90% by 2040. But we are still waiting for the proposal to become law, raising concerns that the bloc is focused on more urgent priorities – namely, rebuilding defences and reviving competitiveness.

In fact, building a clean economy would help address the EU’s productivity, innovation and security gaps. That is why, despite our varied backgrounds in industry, politics and think-tanks, we collectively urge European policymakers to commit to the ambitious domestic 2040 emissions-reduction target, and to support strategic climate investments and initiatives that will boost Europe’s energy security and competitiveness.

As the EU’s Clean Industrial Deal has highlighted, climate action is a powerful economic driver that should be harnessed to strengthen Europe’s competitiveness now and in the future. Without improved energy security, mobility options and industrial resilience, the EU cannot hope to gain ground on the United States and China in the decades ahead.

The EU has already committed significant funds to secure energy supplies and modernize industry, but major obstacles remain – which Mario Draghi warned about in his 2024 report on the future of European competitiveness. To overcome these challenges, the bloc must refine its investment priorities, provide a predictable legislative framework, and send clear signals to private investors, reinforcing trust in its low-carbon path. The first step is to implement existing climate legislation, such as the Fit for 55 package.

Relying on homegrown clean-energy sources rather than expensive and volatile fossil-fuel imports will enhance the EU’s security, energy independence, and economic stability, with governments, businesses, and households benefiting from lower costs. According to the commission’s 2040 impact assessment, the bloc can save €160 billion ( US$179 billion ) per year by electrifying its economy and halving its energy imports by 2040. To put this in perspective, the EU’s annual investment in grid upgrades and renewables would increase by around €40 billion and €30 billion, respectively.

A new report from the OECD and the United Nations Development Programme emphasizes that in addition to being an environmental necessity, ambitious climate action offers economic gains. Recent research supports the argument, concluding that previous economic models have underestimated the impact of global warming. A four degrees Celsius temperature rise would leave the average person 40% poorer, significantly higher than previous estimates. Even a two degrees Celsius increase would mean a 16% drop in global GDP per capita. These findings highlight the urgent need for climate action to avoid severe economic fallout.

The huge risks from global warming will only increase, while our ability to contain them will diminish with every year of inaction. Of course, policymakers have made similar calls to arms before, with sceptics blaming lofty decarbonization targets for the challenges currently facing the bloc, and imploring policymakers to lower their ambitions in the name of competitiveness. But the EU’s strategic vulnerabilities stem from its failure to pursue sufficiently ambitious goals.

Achieving the 2040 target is necessary because it is a crucial milestone defining the trajectory of Europe’s climate efforts until mid-century. It will also help clarify our commitments under the 2015 Paris climate agreement. The EU has yet to submit an updated Nationally Determined Contribution, including a 2035 emissions-reduction target, even though the formal deadline for doing so has passed. The bloc’s NDC should follow a linear trajectory from 2030 to 2040, ensuring that Europe remains a global leader in combating climate change.

At a time when other major economies, including the US, have wavered in their climate commitments, Europe should remain dedicated to the green transition and work toward a successful outcome at this year’s United Nations Climate Change Conference ( COP30 ) in Belém, Brazil. Amid today’s geopolitical turmoil, the stakes are high for the EU, which can show its support for the rules-based international system through climate action – an approach that serves its own and others’ interests.

By committing to bold climate policies and, most importantly, effective implementation, the EU can address its economic challenges and risky dependencies, while also securing its position as a global leader in sustainable development. If Europe does not set global benchmarks, it is far from clear who will take up the mantle – certainly not the US under its current leadership. The proposed 2040 target thus offers an opportunity that Europe must seize to ensure its future competitiveness, prosperity, and security.

Connie Hedegaard served as the European commissioner for climate action ( 2010-14 ) and Denmark’s minister for the environment ( 2004-07 ) and minister for climate and energy ( 2007-09 ); Anne Højer Simonsen is a senior director and the head of climate policy at Danish Industry; and Christian Ibsen is CEO of green think-tank Concito.

Copyright: Project Syndicate