EU Member States have binding annual greenhouse gas emission targets for 2021-2030 for those sectors of the economy that fall outside the scope of the EU Emissions Trading System (EU ETS). These sectors, including transport, buildings, agriculture, non-ETS industry and waste, account for almost 60% of total domestic EU emissions.
In October 2014, EU leaders set a binding economy-wide domestic emission reductions target of at least 40% by 2030 compared to 1990.
They specified that sectors of the economy not covered by the EU ETS must reduce emissions by 30% by 2030 compared to 2005 as their contribution to the overall target.
The Effort Sharing Regulation translates this commitment into binding annual greenhouse gas emission targets for each Member State for the period 2021–2030, based on the principles of fairness, cost-effectiveness and environmental integrity.
The Regulation was adopted on 14 May 2018.
The Regulation continues to recognise the different capacities of Member States to take action by differentiating targets according to gross domestic product (GDP) per capita across Member States.
This ensures fairness because higher income Member States take on more ambitious targets than lower income Member States.
However, an approach for higher income Member States based solely on relative GDP per capita would mean that some would have relatively high costs for reaching their targets.
To address this, the targets are adjusted to reflect cost-effectiveness for those Member States with an above average GDP per capita.
The resulting 2030 targets range from 0% to -40% compared to 2005 levels.
For each Member State the 2030 target is the end point of a linear reduction trajectory defining annual emission reductions for the years 2021-2030.
The trajectory is drawn from a point defined by two elements:
To address challenges which might be faced by certain lower income Member States, an additional adjustment of in total 41 million tonnes is provided in the year 2021. A safety reserve of maximum 105 million tonnes has also been added.
The reserve is subject to the achievement of the EU' s target of a 30% reduction by 2030 and only available ex post in 2032 as a last resort under strict conditions (e.g. only if the 2013-2020 targets have been overachieved).
The Regulation maintains existing flexibilities under the current Effort Sharing Decision (e.g. banking, borrowing and buying and selling between Member States) and provides two new flexibilities to allow for a fair and cost-efficient achievement of the targets.
This allows eligible Member States to achieve their national targets by covering some emissions with EU ETS allowances which would normally have been auctioned. EU-wide, this cannot be more than 100 million tonnes CO2 over the period 2021-2030.
Eligible Member States have to notify the Commission before 2020 of the amount of this flexibility they will use over the period. They can revise the amount twice downwards.
The flexibility is strictly limited in volume and not taken into account for calculating the feed-in into the ETS market stability reserve. Environmental integrity is maintained and the impact on the carbon market is very limited.
To stimulate additional action in the land use sector, Member States can use up to 280 million credits over the entire period 2021-2030 to comply with their national targets.
All Member States are eligible to make use of this flexibility if needed for achieving their target, while access is higher for Member States with a larger share of emissions from agriculture. This recognises that there is a lower mitigation potential for emissions from the agriculture sector.
The Regulation maintains these flexibilities available under the Effort Sharing Decision.
In years where emissions are lower than their annual emission allocations, Member States can bank surpluses and use them in later years. For high cumulative surpluses, banking limits have been added.
In years where emissions are higher than the annual limit, Member States can borrow a limited amount of allocations from the following year.
This gives Member States the flexibility to deal with annual fluctuations in emissions due to weather or economic conditions.
Member States can also buy and sell allocations from and to other Member States. This is an important vehicle to ensure cost-effectiveness. It allows Member States to access emissions reductions where they are the cheapest, and the revenue can be used to invest in modernisation.
Project-based mechanisms within the EU are a possible way to underpin these transfers.
The table below includes the target and the maximum level of access to the new flexibilities for each Member State:
|2030 target compared to 2005||Maximum annual flexibility (as a % of 2005 effort sharing sectors emissions)|
|Flexibility from ETS to Effort Sharing Regulation||Flexibility from land use sector to Effort Sharing Regulation*|
*Estimate, limit is expressed in absolute million tonnes over 10 years.
The Commission will evaluate and report annually on progress towards achieving the targets.
If any Member State is not on track, they will be required to make an appropriate action plan.
To reduce administrative burden and allow for the potential contribution from the land use sector (which has a 5-year compliance period), a comprehensive review of Member States' emissions reports and a more formal compliance check will be organised every 5 years. This closely aligns the proposal with the 5-year review cycle set out in the Paris Agreement.
Where a Member State still does not meet its annual obligation in any year, taking into account the use of flexibilities, the shortfall is multiplied by a factor of 1.08 and this penalty is added to the following year's obligation.
Stakeholders were involved at various stages in the development of the Regulation, e.g. through:
The results are summarised in Annex 8.2 of the Impact assessment.
The public had the possibility to provide feedback on the legislative proposal after it was adopted by the European Commission. Feedback was received from 11 stakeholders and a summary was presented to the European Parliament and the Council.