The European Parliament’s rapporteur for the revision of the Effort Sharing Regulation (ESR), Jessica Polfjärd (EPP, Sweden), wants to set up a mechanism to sanction EU Member States that fail to meet their national greenhouse gas (GHG) emission reduction targets, according to her draft report, which was consulted by EUROPE on Tuesday 18 January.
“It is crucial that we maintain the integrity of the new emission reduction targets and ensure that they are actually met by Member States”, said Ms Polfjärd.
Adopted in 2018, the ESR sets national targets for 2030 for reducing GHG emissions that are not covered by the EU Emissions Trading System (ETS) nor by the Land Use, Land Use Change and Forestry (LULUCF) Regulation.
These are mainly emissions from road transport, heating of buildings, agriculture, small industrial installations and waste management.
According to the European Commission’s revision proposal presented on 14 July 2021, these targets - based mainly on Member States’ GDP per capita - should lead to a reduction in EU emissions by 2030 under the ESR of at least 40% compared to 2005 levels, an increase of 11 percentage points compared to the current target (see EUROPE 12762/2).
A system of pressure and sanctions
While Ms Polfjärd, in her report, supports this increase in ambition, it is her firm conviction “that the EU’s climate objectives can only be achieved with a more robust legislative framework which requires all Member States to take action”.
Therefore, she proposes a “Pressure and Pay” system to increase transparency and introduce financial sanctions.
In 2027 and 2032, if a Member State’s examined emissions are higher than its annual emissions allocation in any specific year of the period, a financial penalty would be imposed on the Member State concerned for each tonne of CO2 equivalent above its allocation.
The penalty would be calculated by taking the average of the closing prices of ETS allowances over the previous three years, multiplied by a factor of 1.25, and would have to benefit climate action.
Half of the revenue from a penalty should thus be allocated to the ‘Innovation Fund’. The other half should be used to support EU actions under the LIFE programme or any successor programme.
On the issue of transparency, Ms Polfjärd wants to see remedial action plans made public. According to the Commission’s revision proposal, these plans would be drawn up by Member States that do not make sufficient progress towards their national target.
Alignment with the climate neutrality objective
The MEP also proposes to establish a clear link between the ESR and the 2050 climate neutrality objective of the ‘Climate Law’ (see EUROPE 12750/27).
Her draft report thus foresees that the Commission will submit to the European co-legislators, by 31 December 2026 at the latest, a report detailing the adequacy of the national targets set out in the ESR in terms of their contribution to the EU’s climate neutrality objective.
The report should also specify, for each Member State, an emission reduction pathway covered by the regulation that is compatible with the objective of climate neutrality, “with minimal divergence between all Member States”.
The Commission would then be required to present, if appropriate, one or more legislative proposals to achieve these objectives.
Deduction for carbon capture
The draft report also includes the possibility for Member States to use carbon capture and use (CCU) and carbon capture and storage (CCS) to meet part of their targets.
For the years 2024-2029, Member States could therefore take into account certified removals from carbon capture on their territory for compliance with this Regulation. However, these absorptions should not exceed 5% of the annual emission allowances for the Member State concerned.
Removal of the reserve
In addition, Ms Polfjärd proposes to remove a number of existing or planned Commission flexibilities.
This includes the current ‘safety reserve’ - which can be used by Member States with low GDP per capita that fail to meet their emission reduction targets - and the proposal to introduce an additional safety reserve.
According to the rapporteur, these tools are “redundant”, as “GDP per capita has already been taken into account when establishing the national reduction targets, and that Member States have a variety of flexibilities at their disposal to meet their targets in a cost-effective manner”.
While the Commission proposes that a Member State may “borrow” up to 10% of its annual emission allowance allocation for the following year during the period 2021 to 2025 and up to 5% for the years 2026 to 2029, the MEP wants to limit this rate to 5% over the whole period (2021 to 2029). The same applies to the ability of a Member State to transfer allowances to other Member States.
Next steps
The draft report is due to be presented on 10 February, with a view to a vote in the Parliament’s plenary session in June. The deadline for tabling amendments is 16 February.
While she expects some issues to be debated, such as “flexibilities and financial penalties”, Ms Polfjärd says she is confident.
“My impression from talks with colleagues from the EPP and the other political groups is that there is a strong preference for ambitious and stringent rules”, she told EUROPE. (Original version in French by Damien Genicot)