The European Green Deal: a watershed moment for the energy sector

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Ursula von der Leyen, president of the EU Commission, today presented a plan to become the first carbon-neutral continent by 2050.

This political ambition will be written into the first European Climate Law within 100 days of the announcement.

Commenting, Valentina Kretzschmar, Wood Mackenzie Director - Corporate Research, said: "The deal covers all sectors of the economy, with details on what this new strategy means for each of them yet to be ironed out. The impact on the oil and gas industry will be significant, as the EU’s carbon emission reduction target jumps from 40% currently to at least 50% by 2030, compared to 1990 levels.

"Pressure on European fossil fuel producers to commit to net-zero carbon, including Scope 3 emissions, will continue to ramp up. Repsol was the first oil and gas company to align its portfolio with the Paris Climate Goals, resulting in a post-tax impairment of €4.8 billion (US$5.3 billion).

"Furthermore, border taxes on carbon could impact imports into Europe, as the Commission acts to ensure competitiveness of its domestically produced resources. Oil and gas exporters to Europe, including Russian gas and US LNG, will be eager to understand the potential impact of the EU’s momentous announcement – both in terms of the diminishing demand outlook and impact on their revenues through carbon taxes."