Effort Sharing Decision
Questions and Answers on the Effort Sharing Decision (October 2013)
How is the European Union's greenhouse gas emission reduction target for 2020 shared out between sectors and Member States?
The 2009 climate and energy package implements the goal of reducing EU greenhouse gas emissions to 20% below 1990 levels by 2020. The reduction effort is shared out as follows:
- a 21% reduction in emissions from sectors covered by the EU emissions trading system (EU ETS) compared to 2005 levels;
- an around 10% reduction from most other sectors compared to 2005. These sectors are covered by the Effort Sharing Decision (ESD).
Taken together, these two instruments will deliver an overall reduction of 14% compared with 2005, which is equivalent to a reduction of 20% compared with 1990. A larger reduction is required of the EU ETS sectors because it is cheaper to reduce emissions in the electricity sector than in most other sectors.
Since a single, EU-wide cap on EU ETS emissions will be introduced from 2013, the effort-sharing arrangement between Member States under the ESD has been determined solely for the reduction in emissions from sectors not covered by the EU ETS. These sectors include transport (road and rail, but not aviation or international maritime shipping), buildings (in particular heating), services, small industrial installations, agriculture and waste. Though many of the emitters are small, collectively these sectors represent some 60% of the EU's total greenhouse gas emissions. Emissions from land use, land use change and forestry (LULUCF) are not included in the ESD.
As a rule, it is up to Member States to define and implement their own policies and measures to reduce emissions from the ESD sectors. However, a number of EU-level measures taken in areas such as energy efficiency standards, limits on CO2 emissions from cars and vans, and waste management will also contribute to emission reductions in these sectors.
How is the 10% reduction target for sectors covered by the Effort Sharing Decision shared out between Member states?
All Member States have taken on national emission targets for 2020 which are expressed as a percentage change from 2005 levels. Collectively, these national targets give an overall reduction of 10%.
GDP per capita has been used as the main criterion when setting the national targets. This approach has two advantages. It ensures that the actual efforts and the associated costs are distributed in a fair and equitable manner. It also allows for further, accelerated growth in less wealthy countries where economic development still needs to catch up with other Member States.
Under the ESD countries with a low GDP per capita will be allowed to emit more than they did in 2005 because their relatively higher economic growth will probably be accompanied by increased emissions in sectors such as transport. The emissions reduction required in Member States where GDP per capita is below the EU average is therefore correspondingly lower (i.e. less than 10% below 2005 levels). Less wealthy Member States will be allowed to increase their emissions in the ESD sectors by up to 20% above 2005 levels. These targets do, however, represent a cap on their emissions and will still require a reduction effort.
By contrast, in the wealthier Member States, where GDP per capita exceeds the EU average, emission reductions above the EU average are required. These go up to a maximum target of 20% below 2005 in the Member States with the highest GDP per capita.
The 20% limit on national emission reductions or increases compared with 2005 ensures that the targets for each country remain technically and economically feasible and that there is no unreasonable increase in overall costs.
What can a Member State do to meet its national target in sectors covered by the Effort Sharing Decision?
In sectors such as buildings and road transport, many of the important decisions will be made at Member State level. Policies and measures to lower emissions potentially include traffic management, shifts away from carbon-based transport, taxation regimes, the promotion of public transport, biofuels, urban and transport planning, improved energy performance standards for buildings more efficient heating systems, and renewable energy for heating. Measures to reduce and recycle waste streams, and to reduce landfilling can also have a significant impact on greenhouse gas emissions.
Guidelines for State aid in the area of environment increase the ability of Member States to implement such measures while avoiding distortions of competition in the internal market.
A number of important EU-wide measures will also help Member States to reduce emissions and thus meet their national targets. New efficiency standards for boilers and water heaters, for example, together with adequate labelling systems to inform consumers, could help deliver major emissions reductions in buildings. The full implementation of the directive on the landfilling of waste (in 2016) will deliver a major reduction in emissions of methane, a powerful greenhouse gas.
In addition, Member States can also use a range of flexibilities, including credits from Clean Development Mechanism (CDM) projects (see point 5).
2005 represented the current situation when work began on the economic analysis which underpins the climate and energy package. Calculating emission reductions and renewable energy shares for 2020 against 2005 levels therefore gives a transparent and easily understandable picture of the changes needed.
Can a Member State set a more ambitious national target for its greenhouse gas emissions than its obligations under EU legislation?
Yes, there is nothing to prevent Member States from adopting their own targets for emissions from sectors under the Effort Sharing Decision and giving visibility to their own efforts to fight climate change, tracking progress and engaging the public. Indeed, a number of Member States, including Denmark, Germany, Sweden and the United Kingdom, have adopted such national targets that go beyond their commitments under EU legislation.
However, national targets cannot be set for total greenhouse gas emissions in 2013-2020 because it cannot be known by how much emissions from sectors covered by the EU ETS will be reduced in each Member State. This is because from 2013 there is a single, EU-wide cap on EU ETS emissions in place of the national caps which existed previously.