The European Commission published, on Thursday 29 October, the roadmaps for four flagship legislative initiatives on climate change. These are to be adopted in June 2021 with a view to contributing to the achievement of the European Union’s climate objectives, in particular the new objective of reducing greenhouse gas (GHG) emissions by at least 55% by 2030 (compared to 1990 levels).
ETS
The first roadmap concerns the revision of the Directive (2003/87) establishing the EU Emissions Trading Scheme (ETS).
Several options are mentioned for this revision.
The Commission’s impact assessment will in particular explore the possibility of a one-off reduction of the ETS cap, i.e. the limit on the total level of GHGs that can be emitted by facilities covered by the scheme.
The objective would thus be to bring it closer to the actual level of emissions.
Often considered too high, the current cap is reduced each year by applying a percentage of the average total quantity of allowances issued annually in 2008-2012. Called the linear reduction factor, this percentage is currently 1.74% and will be 2.2% from 2021 onwards.
This linear reduction factor could itself be subject to change, the roadmap indicates.
The Commission also intends to review the ‘market stability reserve’ (MSR) for the treatment of unused emission allowances after three years of operation and will explore further avenues for the parameters of the MSR.
Operational since January 2019, this reserve is supposed to settle the surplus of emission allowances that has been accumulating in the ETS since 2009.
In addition, the institution plans to extend the ETS to maritime emissions and is examining the possibility of extending it to other sectors, such as buildings and road transport, or to emissions from the combustion of fossil fuels, while assessing whether a transitional system is needed.
Finally, the roadmap indicates that the Commission will also look into the rules for allocating free allowances to combat carbon leakage and the consistency of the ETS with a possible future European Border Carbon Adjustment Mechanism (see EUROPE 12591/21).
LULUCF
In order to align EU legislation with the EU’s climate objectives, the Commission also intends to revise the regulation (2018/841) on land use, land use change, and forestry (LULUCF).
According to the roadmap, the institution is considering, among other things, strengthening the current regulation and increasing its ambition in line with the ‘2030 Climate Action Plan’.
Another option would be to increase flexibility with the Regulation (2018/842) on effort sharing.
In addition, the Commission is examining the possibility of combining the agriculture and LULUCF sectors into a single climate policy pillar with a separate target.
Effort sharing
Another of the Commission’s major climate-related projects is the revision of the Regulation (2018/842) setting binding annual reductions in GHG emissions for each EU country from 2021 to 2030, also known as the ‘effort sharing regulation’.
The roadmap mentions three options here: (1) phase out this Regulation as a consequence of the extension of the ETS and merge non-energy related emissions from agriculture and GHG emissions and removals under the LULUCF Regulation into a single climate policy instrument; (2) maintain the current sectoral scope of the Regulation in parallel with the extension of ETS; (3) limit the Regulation only to sectors not covered by the ETS.
Vehicle emissions
Finally, the last roadmap concerns the revision of the Regulation (2019/631) setting CO2 emission performance standards for new cars and vans.
Considering that the introduction of CO2 standards for vehicles has proven to be “an effective policy tool”, the Commission believes that further efforts are needed to reduce road transport emissions by 90% by 2050.
Among the options being explored, the institution is considering setting stricter emission targets and reviewing the established deadlines. The current Regulation 2019/631 sets reduction targets of 15% for cars and vans from 2025, and 37.5% for cars and 31% for vans from 2030, compared to 2021.
Other options being explored include: a new mechanism to take into account the potential contribution of renewable and low-carbon fuels in determining compliance with manufacturers’ targets and the possibility of allocating potential revenues from fines paid by manufacturers to a specific programme or fund.
For each of the four initiatives, the public consultation period is open until 26 November.
To consult the roadmaps: https://bit.ly/2TA8Iau (Original version in French by Damien Genicot)