Europe's 2050 Climate Target Looks Distant at the Company Level

Europe has a well-mapped plan for supplying clean energy: build wind turbines, expand grids, increase storage capacity. Statistics on all of these supply-side indicators are routinely collected and reported. What the EU does not have - and has never had - is a comparable picture of the demand side: how fast are individual companies actually switching from fossil fuels to electricity?

That data gap is not merely an inconvenience. Without it, policymakers cannot tell whether the industrial and commercial sectors are transitioning fast enough to meet the 2050 climate-neutrality target, or where precisely the delays are concentrated. A new study published in Nature Communications by researchers at the Complexity Science Hub (CSH) in Vienna fills that gap for one country - and the picture is sobering.

Building the First Company-Level Monitor

The research team, led by CSH President Stefan Thurner with study authors Johannes Stangl and Andrea Borsos, developed a monitoring framework that draws on the energy consumption data embedded in value-added tax records. Because Hungary requires electronic recording of VAT transactions, the researchers could reconstruct gas, electricity, and oil consumption for roughly 25,000 companies - representing 75% of all firms' gas consumption in Hungary, 70% of electricity consumption, and 50% of oil consumption. This coverage is wide enough to make the sample genuinely representative of the Hungarian private sector.

They tracked each company's energy mix from 2020 to 2024, calculating the share of total energy consumption accounted for by low-carbon electricity. A company moving toward electrification would show a rising share; one maintaining or increasing fossil fuel use would show a flat or declining share.

Half Moving Forward, Half Moving Backward

The results divide the Hungarian business sector almost evenly. Roughly half the companies increased their low-carbon electricity share over the four-year period. The other half showed a flat or negative trend, maintaining or increasing reliance on gas, oil, or coal.

The finding that a substantial fraction of firms are actively moving in the wrong direction surprised the researchers. Popular narratives about the energy transition often assume that progress is universal and that the question is only one of pace. The CSH data suggest the reality is more polarized: in most subsectors, some companies have already shifted substantially toward low-carbon electricity while others operating in the same industry have not moved at all.

That pattern has an important implication. The existence of firms with near-zero fossil fuel shares in nearly every subsector demonstrates there is no fundamental technical barrier preventing entire industries from electrifying. Companies already operating on mostly clean electricity in sectors such as manufacturing or logistics show it is feasible. The question becomes why similar companies in the same sector have not followed.

Lock-In: The Fossil Fuel Trap

The study found a clear statistical pattern among firms that had not transitioned: those spending a relatively large fraction of their revenue on fossil fuels were significantly less likely to switch to electricity. The more dependent a company's economics were on fossil fuel consumption, the more resistant it was to change.

The researchers describe this as a possible lock-in effect. Switching from gas-fired industrial processes to electrified alternatives requires capital investment, operational disruption, and confidence that the investment will pay off over the asset's lifetime. For companies heavily tied to fossil fuel infrastructure - whether through existing equipment, supply contracts, or embedded production processes - the combination of high switching costs and policy uncertainty makes inaction a rational short-term choice.

Conversely, companies that already spent a higher proportion of revenue on electricity were more likely to continue investing in electrification - a self-reinforcing dynamic where early movers keep improving their position while laggards fall further behind.

Company size also mattered. Smaller firms, measured by total energy consumption, were less likely to transition than larger ones. This is consistent with evidence from other technology adoption studies: larger organizations tend to have dedicated energy management staff, access to capital for long-term investments, and enough procurement scale to negotiate favorable contracts for renewable electricity.

What Happens If Nothing Changes

The researchers modeled two scenarios for 2050. In the baseline, companies continue on their current trajectories. The result: fossil fuels would still supply approximately 80% of business energy in Hungary in 2050 - a figure incompatible with EU climate-neutrality goals.

In an optimistic scenario, companies that currently show a negative trend instead adopt the strategies of the best performers in their own subsector. Under that assumption, the low-carbon share of business energy could reach 70%, leaving fossil fuels at 30 to 45%. That would represent genuine progress but still falls short of full neutrality.

The gap between the two scenarios illustrates the potential value of targeted policy intervention. The baseline failure to transition is not evenly distributed - it is concentrated in companies locked into fossil fuel structures. Identifying those companies and providing direct investment support or policy certainty could, according to the model, substantially shift the aggregate outcome.

A Monitor That Could Scale Across the EU

The method's greatest limitation is also its most practical constraint: it works primarily in countries where VAT transaction data are recorded electronically and comprehensively. Hungary meets that requirement. So do Belgium, Spain, Portugal, and Ecuador - but most EU countries do not yet have comparable data infrastructure for this kind of analysis.

Thurner and Stangl argue that creating similar monitors across all EU member states should be a policy priority. Without company-level transition data, the EU is effectively flying blind on whether its industrial and commercial sectors are actually decarbonizing. Supply-side metrics tell only part of the story; the demand side, where firms must actually change how they consume energy, determines whether 2050 targets remain reachable.

The causal interpretation also warrants care. The study identifies statistical associations between firm characteristics and transition behavior, but the data design does not allow researchers to definitively separate correlation from causation. Thurner notes, however, that the associations are consistent across sectors and large enough in magnitude to point toward genuine behavioral mechanisms rather than statistical noise.