Today, the European Commission (EC) has published a first glimpse of the mitigation contributions the EU intends to contribute to the Paris Protocol. The Communication launched today entitled “The Paris Protocol – A blueprint for tackling global climate change beyond 2020” includes a proposal for the EU’s proposed Intended Nationally Determined Contribution (INDCs) prepared in line with the information requirements agreed in Lima. However, the proposed INDCs leave doors open for the EU’s 2030 emissions reduction target to be significantly undermined. The proposed INDCs will now be discussed by Member States experts in meetings today and on Friday. 

The final version of the EU’s mitigation contribution is expected to be signed off by the EU’s environment ministers in their next meeting on 6 March 2015. This upcoming announcement will make the EU the first region to flesh out its pledge following the Lima UNFCCC meeting. A wave of contribution announcements from other countries are expected over the course of the year which will build momentum towards the Paris agreement set to be delivered at the UN 2015 negotiations in Paris this December.

This proposed INDCs published by the European Commission today does not address several issues that may significantly weaken the EU’s climate pledge:

1.  Inclusion of land use and forest management could reduce the climate target by up to 5% 

The EC’s vision reiterates that the climate framework covers all sectors and all sources of emissions, including agriculture, forestry and other land uses (LULUCF), of at least 40% domestic reductions in emissions by 2030. However, the way land use emissions are addressed in the EU’s emission reduction target is critical because the land use sector does not only contribute to emissions, it also removes carbon from the atmosphere. The final INDCs must be clear that LULUCF emissions are addressed in such a way that it does not undermine the integrity of the overall target. A clear language that emissions and removals from LULUCF sector be treated separately and on top of the EU’s ‘at least’ 40% domestic target will be an important signal for other countries as they prepare their INDCs. Key principles for how the EU should include LULUCF in its climate policy are laid out in a briefing by NGOs.

2.  Allowing the linking of Emissions Trading Systems could undermine domestic nature of EU’s climate target

Although the at least 40% GHG target was clearly presented as a domestic target, the EC communication proposes that an accounting system should recognise net transfers between those countries that have decided to link their domestic carbon markets when evaluating compliance. This would allow the EU’s Emissions Trading System (EU ETS) to continue its linkages with jurisdictions outside of the EU, such as Iceland, Liechtenstein and Norway as well as potentially Switzerland, which whom the EU is currently negotiating to link its ETS.

However, letting allowances from other jurisdictions outside of Europe to count towards the 40% GHG target would effectively allow “foreign” allowances inside the EU and undermine the domestic nature of the EU’s climate target. This is especially problematic because to date the EU does not have safeguards for ETS linking to protect the EU’s carbon market from emission units with low environmental integrity that are generated due to an overgenerous cap, or from offsets that might get laundered into Europe through another ETS system.

3.  Failing to address the surplus of emission allowances in the EU ETS could further undermine the EU’s climate target by 9%.

Europe’s carbon market is currently not functioning properly due to an oversupply of emission allowances equaling more than 2 billion, which has depressed the carbon price to a historic low level. By 2020, the surplus is expected to accumulate to 2.6-4.5 billion excess emission permits. The surplus is the result of a combination of factors, including the large inflow of international carbon offset. This hot air could sabotage Europe’s climate efforts for decades to come, as the excess allowances are automatically carried-over into the 2030 climate framework. This could contaminate the proposed 40% climate target by watering down the effective reduction to only 24%-31%.

Fortunately, the European Parliament recently voted to establish a Market Stability Reserve that will soak up an increasing amount of excess pollution permits from 2019 onwards. This will ensure that EU’s 40% climate target is not undermined by the full scope of the up to 4.5 billion surplus allowances. It remains however an absolute necessity to permanently remove these excess pollution permits from the EU’s carbon market to ensure that future climate targets are not weakened. The upcoming review of the EU ETS will address this.

For more information see our media advisory here.  Key elements of the European Commission’s vision for the Paris Protocol include:

1. Key elements for the Paris Protocol: Most notably, a long term goal to reduce global emissions by at least 60% below 2010 levels by 2050, a global review of the target every 5 years and strengthened transparency and accountability. Only countries with mitigation commitments shall be allowed to join the protocol and shall be equally legally binding. The protocol should enter into force as soon as countries accounting for more than 80% of current global emissions have ratified the protocol.
2. Principles for ambitious reductions of GHG emissions: The EU’s 2030 climate and energy framework adopted in October 2014 should form the basis for the EU’s contributions. The document reiterates that the framework sets out a binding, economy-wide reduction target, covering all sectors and all sources of emissions, including agriculture, forestry and other land uses, of at least 40% domestic reductions in emissions by 2030. It also states that the Protocol should require emissions reductions in those sectors, as well as international aviation, shipping and fluorinated gases, dealt with by ICAO, IMO, and the Montreal Protocol by the end of 2016. The communication leaves doors open to increase this target with the use of international credits as long as their environmental integrity is fully secured and double counting is avoided, in case the Paris negotiations warrant a more ambitious target.
3. Ensuring a regular review of the climate targets: The protocol should set out a process to regularly review and strengthen mitigation commitments every five years. The review should invite Parties to explain why they think their actions have been fair and ambitious, but the EC’s document does not explain on which basis this assessment should be done. The EC is of the view that financial commitments should not be part of the INDCs but part of accompanying COP decisions.
4. Strengthened transparency and accountability: Key elements of a common transparency and accountability system must include robust rules on MRV and accounting. To achieve this, the most recent set of annual emissions inventories from 2010 covering the period up to 2015 should be submitted by countries. The EC communication also proposes that an accounting system should recognise net transfers between those countries that have decided to link their domestic carbon markets when evaluating compliance. The EC also proposes the establishment of a new non-political expert body to facilitate implementation and address questions related to compliance.
5. Promoting adaptation to climate change: The EC highlights that the land use sector with regard to resilience of food security is key to adaptation and proposes that the protocol should facilitate assistance to particularly vulnerable regions and countries, including through providing financial and technical support and capacity building. However, the document does not explain how adaptation or finance be linked to the INDCs and does not mention the need to address loss and damage. 
6. Promoting implementation and cooperation: The EC suggests that all resources should be effectively used to reach various internationally agreed sustainable development and climate objectives and requests clarity from all countries on the climate impacts of financial flows that do not fall within the remit of climate finance. It states that it is too early to elaborate on the scale and type of climate-related finance and highlights that the importance of the private sector as a key source to scaling up climate finance. The document suggests that the Protocol should clarify the role of the GCF and the GEF and proposes that the financing framework of the Protocol should be consistent with the financing for development process and the post-2015 development agenda. Finally, it highlights that carbon pricing and the investment policies of public development banks will play a crucial role.
7. Mobilising other EU policies: Finally, the EC states that it will step up its climate diplomacy ahead of Paris and lists a number of EU policies that can actively support the EU’s climate objectives, including in the fields of economic and development cooperation, trade and environmental policy.