The European Union has implemented targets to address climate change, air pollution and increase the share of renewable energy. Local governments play a significant role in executing actions to contribute to these targets while meeting local sustainability targets. This research aims to guide the local governance by assessing the impact of implementing key energy targets from the European Union at the local level from a sustainability perspective using indicators based on sustainable development goals. An energy system optimization model is used to assess the case study of Gällivare, a municipality in Northern Sweden. The results show that localized climate and air quality targets effectively support the integration of renewable energy, improvements in energy efficiency, and reductions in final energy consumption. Air quality targets correspond carbon reduction targets and subsequently leading to the net zero emission. However, while air pollution targets help achieve 100% carbon dioxide reduction by 2050, achieving 100% reduction in air pollution requires specific air pollution targets.