How can the EU’s largest climate tool spur Europe’s low-carbon transition?
Executive Summary
In summer 2016, the European Commission presented a legislative proposal for the Effort Sharing Regulation (ESR) for the 2021-2030 period. The ESR sets national emission reduction targets for the EU Member States for the transport, buildings, agriculture and waste sectors.
Covering 60% of the EU’s total greenhouse gas emissions, it is a centerpiece of Europe’s efforts to implement the goals of the Paris climate change agreement. If designed correctly, the ESR can help secure a climate friendly transformation of our society and lead to more livable cities, cleaner air, reduced energy poverty and the creation of jobs. These benefits will be the result of the EU and national policies that are implemented to meet the targets set by the ESR.
However, the current 2030 target of reducing emissions by 30% in the sectors not covered by the EU Emissions Trading System (EU ETS) is too low to keep global warming in check. Moreover, the introduction of loopholes would mean that in reality emissions could fall by much less than the 30% by 2030, potentially only by 23%. This means that countries would meet their targets on paper, but not necessarily in practice.
The ESR offers different flexibilities and trading options to make it less costly to comply with the targets. Flexibilities amount to loopholes when they undermine the low-carbon transition of the non-ETS sectors. Allowing countries to use forestry or ETS credits for compliance instead of actually reducing emissions in the ESR sectors, undermines not only the environmental integrity of the proposal but also the climate friendly transition of the European economy.
Furthermore, the current starting point of the ESR does not accurately reflect the actual 2020 emissions and rewards countries that fail to meet their 2020 target, leading to more greenhouse gasses being emitted between 2021 and 2030.
This policy brief analyses the Effort Sharing proposal and provides recommendations to policymakers on how to improve it.
