EU Commission Proposes Emissions Cuts for Member States

28 July 2016

The European Commission proposed country-specific emissions targets last week, clarifying the roles individual members could play in helping the bloc reach a 40 percent reduction in greenhouse gas emissions by 2030 compared to 1990.

The proposal, known as the Effort Sharing Regulation, targets the sectors not included in the EU Emissions Trading System (EU ETS), namely transport, buildings, agriculture, and waste. Emissions from these sectors account for about 55 percent of the EU’s greenhouse gas output.

In the run-up to the UN climate conference held last December in Paris, the EU committed to the 40 percent emissions cut through its intended nationally determined contribution (INDC), submitted on behalf of all 28 EU members. Unclear at that stage, however, was how those cuts might be allocated from 2021 to 2030 among the individual member states, which vary significantly in population, economic output, and carbon reliance.

The European Commission has now proposed reductions based on relative GDP per capita, with higher-earning countries making deeper cuts. Using 2005-level emissions as a baseline, the proposed emission reductions for the period 2021 to 2030 vary from 40 percent for Luxembourg and Sweden to 0 percent  for Bulgaria, with most countries seeing double-digit proposed reductions.

The proposal includes the UK, given that the country remains a full EU member for the time being, despite the vote last month by citizens to leave the bloc. Formal negotiations for this exit have not yet been launched.

The proposals also include requirements for member states to report on their progress toward meeting these goals, along with setting annual interim targets within the broader 2021-2030 period.

Building from 2020

The Effort Sharing Regulation builds upon a previous plan, the Effort Sharing Decision, which is the emissions roadmap guiding countries’ cuts from 2013 through 2020.

Together with the EU Emissions Trading System, the Effort Sharing Decision serves as a key component of the EU’s greenhouse gas strategy. The EU ETS, the world’s first major carbon market, began in 2005 and covers carbon dioxide from power and heat generation, energy-intensive industry, and commercial aviation, as well as nitrous oxide and perfluorocarbons. Emissions covered by the ETS account for about 45 percent of the EU’s greenhouse gas emissions.

The Effort Sharing Decision, on the other hand, covers transport outside of aviation and international maritime shipping, along with buildings, agriculture and waste. The plan committed the EU to reducing emissions in those sectors 20 percent by 2020, compared to 2005 levels. Better carbon efficiency throughout the EU economy, renewable energy sources, and the 2008 financial crisis will help the EU surpass that initial goal.

In 2014, the European Council specified that the EU would accomplish its overall emission goals for the year 2030 through a 43 percent cut in ETS sectors and a 30 percent cut in non-ETS sectors by 2030 compared to 2005. Despite reaching the preliminary 2020 goal, the EU’s longer-term goals appear more daunting. (See Bridges Weekly, 3 November 2014)

Currently, the EU is not on track to reach either the targeted 40 percent reductions from 1990 by 2030, nor the 30 percent greenhouse gas reduction in non-ETS sectors compared to 2005. Even taking into account all the binding targets and policies focused on energy efficiency, transport, and renewables, non-ETS emissions are only projected to decrease by around 24 percent below 2005 levels in 2030, as the European Commission reports. Given this context, the European Commission proposed the new, country-specific targets to spur emissions-cutting national policies.

The proposed Effort Sharing Regulation also has two flexibilities built in to help countries achieve emissions reductions in a more cost-efficient manner. Nine countries are eligible to cancel out some of their ETS allowances and have those cancellations count toward emission reductions. In addition, each member is eligible to bank a limited amount of carbon credits from forests and cropland.

EU Commissioner for Climate Action and Energy Miguel Arias Cañete praised the proposal, saying that the “ambitious” plan is “one I am convinced we can achieve through the collective efforts of all member states.” 

“The national binding targets we are proposing are fair, flexible, and realistic,” he added. “With these proposals, we are showing that we have done our homework and that we keep our promises.”

Some climate watchers have suggested that more work can be done, however. Climate Action Network (CAN) Europe cautioned that, since countries’ emissions baselines will be established by averaging their emissions from 2016 to 2018, the proposal “rewards” countries that are falling behind on their 2020 emissions reductions pledges. This policy feature may also disincentivise countries from cutting more emissions before 2020.

Policymakers are expected to scrutinise and debate the proposals for at least a year, Carbon-Pulse reports, and any changes to the final bill must receive approval from a majority of the EU Parliament and member states in the EU Council, as well as the European Commission.

In the meantime, Norway and Iceland have expressed interest in participating in the Effort Sharing Regulation, with both already members of the ETS. The current proposal is “without prejudice” to either of their positions.

The European Commission anticipates more legislative proposals later in 2016 focused on renewable energy and energy efficiency that will complement the Effort Sharing Regulation and speed up the EU’s transition to a cleaner economy.

ICTSD reporting; “EU Commission unveils post-2020 plan to cut emissions outside ETS,” CARBON PULSE, 20 July 2016; “ANALYSIS: EU’s 2030 climate plan hits southern states while shielding the east,” CARBON PULSE, 22 July 2016.

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