Deal struck includes binding 27 per cent target for renewable energy and voluntary energy savings goal.

European leaders agreed a deal to cut carbon emissions by at least 40 per cent by 2030, in a move that looks likely to boost investment in the green economy and could pave the way for a global treaty on tackling climate change next year.

Following months of intense lobbying and complex negotiations between Europe’s 28 member states, the European Council today agreed to rachet up the EU's carbon reduction target from 20 per cent in 2020 to “at least" 40 per cent in 2030 compared to 1990 levels.

The wording means that the target could be raised to 50 per cent in the event an ambitious emissions reduction deal is agreed in Paris next year, in line with demands by the UK and Germany. However, it also includes a clause that would allow the bar to be dropped if a Paris deal does not match up to EU targets.

Alongside carbon cuts, leaders set a target of “at least” 27 per cent renewable energy in the mix by 2030, which will be binding only at an EU level and not shared between member states.
The UK was also successful in fighting off calls for a binding energy savings goal. Instead the “at least 27 per cent” energy efficiency target will be voluntary, although it could be raised to 30 per cent after a review in 2020. Portugal and Spain failed to secure a binding interconnector target and a 15 per cent goal will instead also be voluntary.

Outgoing Climate Action Commissioner Connie Hedegaard said she was “very proud” that EU leaders had managed to agree a deal given the economic, security and health issues currently facing the world. "A binding 40 per cent CO2 reduction effort domestically in Europe is not an easy task,” she said. "It can only be achieved through a major transformation in all parts of the society. That is why the EU leaders' decision to adopt the Commission's proposal is an ambitious and important step forward. Important not only to Europe and the Europeans, but also to the rest of the world."

Hedegaard particularly welcomed the binding renewable energy target proposed by the Commission, although she said she would have liked to see a stronger agreement on energy efficiency. “But now the direction towards 2030 has been set," she added. "States, regions, municipalities, businesses, investors and citizens now all know where we are heading. This is a very good day for Europe's climate politics."

Green investors offered a cautious welcome to the deal, noting that a number of vague clauses would make it difficult to “write the big cheques”.

Martin Schoenberg, head of policy at Climate Change Capital, said the 40% target was the “minimum needed to signal continued political commitment to decarbonisation. Taking into account the resistance even this modest target faced, to get an agreement is a major achievement,” he said. However, he predicted that the renewable energy target would not help businesses choose where and how to invest in Europe as it would provide no national accountability.

As a result, he said the stage was now set for “even more tortuous talks and arguments between EU states, not all of whom will be willing to pull their weight. It is essential that investors - who need long-term certainty before they write the big cheques to decarbonise our energy supplies - get enough signals of purpose and stability from national governments to take the plunge."

Graeme Sweeney, chairman of the Zero Emission's Platform, which is a coalition of businesses calling for the rollout of carbon capture and storage (CCS) technology, welcomed a proposal in the document to extend the NER300 clean energy funding scheme. "This is a significant breakthrough and a vital step towards achieving Europe's energy goals, from decarbonisation to security of supply," he said, adding that it would provide "crucial momentum" to the deployment of CCS.

Green groups were highly critical of the new deal, arguing it will fail to help put the world on a pathway to limit global warming to 2C by the end of the century. In particular they slammed a complicated compensation package for Poland that will enable it to continue financing the building of new coal-fired power plants that could allow coal to remain in Europe’s energy mix until the 2070s. Coal-dependent Poland and a number of other Eastern European countries had threatened to veto the deal without a series of concessions.

Jason Anderson, head of EU climate and energy policy at WWF European Policy Office, accused EU leaders of “sacrificing our futures on the altar of politics. Today’s result seems designed to keep vested interests from the old economy happy, at the cost of the wellbeing of citizens and forward-looking industries,” he said. “Big polluters will be pleased since they may escape a meaningful pollution price signal for at least another decade.

“These renewable energy and efficiency targets are near or even below business as usual trends," Anderson added. "The carbon market that will remain irrelevant for a decade and there’s nothing here to rein in coal power. Europe’s early efforts to combat climate change and advance clean energy have been set adrift by Council.”

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