Climate Action

Proposal for an Effort Sharing Regulation 2021-2030

Policy

On 20 July 2016, the European Commission presented a legislative proposal, the "Effort Sharing Regulation", setting out binding annual greenhouse gas emission targets for Member States for the period 2021–2030. These targets cover sectors of the economy that fall outside the scope of the EU Emissions Trading System (EU ETS). These sectors, including transport, buildings, agriculture and waste management, account for almost 60% of total EU emissions. The proposal is the follow-up to the Effort Sharing Decision, which established national emissions targets for Member States in the non-ETS sectors between 2013 and 2020.

30% reduction of emissions from the non-ETS sectors

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 proposed 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 proposal recognises the different capacities of Member States to take action by differentiating targets according to GDP per capita across Member States. This ensures fairness because higher income Member States take on more ambitious targets than lower income Member States. EU leaders recognised that an approach for higher income Member States based solely on relative GDP/capita would mean that some would have relatively high costs for reaching their targets. To address this, these targets are adjusted to reflect cost-effectiveness for those Member States with an above average GDP per capita. In line with the guidance of the European Council, the resulting 2030 targets range from 0% to -40% compared to 2005 levels.

Ensuring fair and cost-effective achievement of targets

The proposed Regulation maintains existing flexibilities under the current Effort Sharing Decision (e.g. banking, borrowing, buying and selling) and provides two new flexibilities to allow for a fair and cost-efficient achievement of the targets.

  • New one-off flexibility to access allowances from the EU ETS: This allows eligible Member States to achieve their national targets by covering some emissions in the non-ETS sectors 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. Since the transfer is strictly limited in volume, and decided beforehand, predictability and environmental integrity are maintained.
  • New flexibility to access credits from the land use sector: In order to stimulate additional action in the land use sector, the proposal permits Member States to use up to 280 million credits over the entire period 2021-2030 from certain land use categories to comply with their national targets. All Member States are eligible to make use of this flexibility, while access is higher for Member States with a larger share of emissions from agriculture. In line with EU leaders' guidance, this recognises that there is a lower mitigation potential for emissions from the agriculture sector.
  • Banking, borrowing, buying and selling: Just like under the current Effort Sharing Decision, in years where emissions are lower than their annual emission allocations (AEAs), Member States can bank any surplus and use them in later years. In years where emissions are higher than the annual limit, they can borrow a limited amount of AEAs from the following year's allocation. This gives Member States the flexibility to deal with annual fluctuations in emissions over the 2021-2030 period 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 as it allows Member States to access emissions reductions where they are the cheapest and the revenue can be used to invest in modernisation.

The table below includes the target and the maximum level of access to the new flexibilities for each Member State:

 2030 target compared to 2005Maximum annual flexibility (as a % of 2005 non-ETS emissions)
One-off flexibility from ETS to Effort Sharing RegulationFlexibility from land use sector to Effort Sharing Regulation*
LU-40%4%0.2%
SE-40%2%1.1%
DK-39%2%4.0%
FI-39%2%1.3%
DE-38% 0.5%
FR-37% 1.5%
UK-37% 0.4%
NL-36%2%1.1%
AT-36%2%0.4%
BE-35%2%0.5%
IT-33% 0.3%
IE-30%4%5.6%
ES-26% 1.3%
CY-24% 1.3%
MT-19%2%0.3%
PT-17% 1.0%
EL-16% 1.1%
SI-15% 1.1%
CZ-14% 0.4%
EE-13% 1.7%
SK-12% 0.5%
LT-9% 5.0%
PL-7% 1.2%
HR-7% 0.5%
HU-7% 0.5%
LV-6% 3.8%
RO-2% 1.7%
BG0% 1.5%

*Estimate, limit is expressed in absolute million tonnes over 10 years.

Clear rules for reporting and following up progress

Member States maintain an obligation to comply with annual limits determined according to a linear trajectory in the period 2021-2030.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' GHG 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 on climate change and is in line with the Commission commitment to Better Regulation.

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 added to the following year's obligation.

Gases and sources

The proposed Regulation covers the following greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), nitrogen trifluoride (NF3) and sulphur hexafluoride (SF6). This proposed Regulation applies to the greenhouse gas emissions from IPCC source categories of energy, industrial processes and product use, agriculture and waste excluding emissions covered by the EU ETS and emissions and removals covered by the LULUCF Regulation.

Stakeholder input

Stakeholders were involved at various stages in the development of this proposal, e.g. by:

The results are summarised in Annex 8.2 of the Impact assessment. The legislative proposal has been submitted to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions for further consideration under the ordinary legislative procedure.

 

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.

 

Documentation

Key Documents

Stakeholder feedback

Stakeholder feedback – summary

Stakeholder feedback - all contributions