European Climate Neutrality Observatory’s latest analysis shows promising developments across 13 building blocks of a climate neutral society but warns speed of progress to climate neutrality still needs to accelerate.

The group says that an “urgent U-turn” is needed in finance and carbon dioxide removals, as the 2022-23 energy crisis response channelled public money toward short-term relief rather than long-term resilience, driving up fossil fuel subsidies. The carbon dioxide removal rate declined due to a slowdown in efforts to restore and plant new forests.

Despite overall progress to climate neutrality, the ECNO believes that targets remain too slow, and heading in the wrong direction on transition finance and carbon sinks.

The latest data does show an increase in annual public funding for environmental and energy Research and Development into cleantech, putting innovation in technologies critical for decarbonisation on track.

Ciarán Humphreys, research fellow at the Institute for Climate Economics and ECNO expert said: “Strong policy signals from the passage of the net-zero Industry and Critical Raw Materials Acts have given investors confidence that the EU is committed to building a resilient supply chain for its cleantech ecosystem, and should spur private investment which had plateaued in the latest data. Meanwhile, annual public funding for environmental and energy research and development is now moving at a sufficient pace.”

The report also notes that there are also signs of small but important improvements in the just transition, particularly in terms of reducing poverty in coal and heavy-industry regions and creating job opportunities.

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