The French Presidency of the Council of the European Union transmitted to the Member States, on Friday 22 April, a second draft compromise on the revision of the EU climate Effort Sharing Regulation (ESR).
This regulation sets national targets for the reduction of greenhouse gas (GHG) emissions by 2030 that are not covered by the EU Emissions Trading System (ETS) nor by the Land Use, Land Use Change and Forestry (LULUCF) Regulation.
These emissions are mainly from road transport, heating of buildings, agriculture, small industrial installations, and waste management.
In order for EU countries to meet their target and thus contribute to the collective effort, annual emission allowances are set for each Member State and are gradually reduced until 2030.
The Regulation also contains flexibilities to assist Member States.
One of them allows EU countries with national reduction targets above the EU average and their economically sound mitigation potential (Belgium, Denmark, Ireland, Luxembourg, the Netherlands, Austria, Finland and Sweden), as well as Malta, to use a limited number of allowances from the ETS to cover their emissions in the ESR sectors, by cancelling allowances that would otherwise have been auctioned.
This cancellation is limited to a maximum of 100 million ETS allowances collectively.
On this point, the French Presidency’s new draft compromise introduces something new.
According to the text, one sixth of the total amount of ETS allowances that can be taken into account under this flexibility would be cancelled for each year from 2025 to 2030 for the above-mentioned Member States that have notified the Commission of their intention to make use of the flexibility.
Paris also proposes to introduce a new obligation for flexibility to transfer emission allowances between Member States.
This would require the Member State concerned to inform the ‘Climate Change Committee’ - established by EU Regulation 525/2013 - of its intention to transfer part of its annual emissions allocation for a given year in order to improve transparency.
See the draft compromise: https://aeur.eu/f/1cu (Original version in French by Damien Genicot)