Negotiators from different political groups in the European Parliament for the revision of the EU climate effort sharing regulation (ESR) agreed on a series of compromise amendments ahead of the voting session on the draft report by Jessica Polfjärd (EPP, Sweden) on Monday 16 and Tuesday 17 May, including the rapporteur’s proposal to bring the regulation in line with the 2050 climate neutrality target in the ‘European Climate Law’.
Adopted in 2018, the ESR 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) or the Land Use, Land Use Change and Forestry Regulation (LULUCF).
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 contains flexibilities. These include the option for Member States to set aside allowances in years when emissions are below their annual emissions quota for use in subsequent years, and the ‘safety reserve’ - corresponding to a maximum of 105 million tonnes of CO2 equivalent - which can be used by Member States with a low GDP per capita that fail to meet their emissions reduction targets.
Link with the ‘Climate Law’
Determined to strengthen the European Commission’s proposal for a revised regulation on 14 July 2021 (see EUROPE 12762/2), the Parliament’s negotiators propose, among other things, to establish a link with the ‘Climate Law’.
According to the compromise amendments obtained by EUROPE, the European Commission would thus be required to present, no later than the date of adoption of the legislative act establishing the Union’s 2040 climate target, a report examining the adequacy of the national targets set out in the ESR regulation in terms of their contribution to achieving the climate neutrality objective “in a cost-effective and fair manner”.
This report should also establish, for each Member State, an emission reduction pathway covered by the ESR “that is compatible with the objective of climate neutrality for each Member State by 2050 at the latest”.
European targets for non-CO2 emissions
In addition, negotiations between the political groups resulted in a compromise amendment calling for an EU-wide target or targets for all non-CO2 GHG emissions in all sectors.
The European Commission would be required to present a legislative proposal to this effect by July 2023 at the latest, after close consultation with the ‘European Scientific Advisory Board on Climate Change’ established by the ‘Climate Law’.
Removal of reserves
Like Mrs Polfjärd’s proposal (see EUROPE 12871/9), the compromise amendments provide for the deletion of a number flexibilities that already exist or are planned by the European Commission.
This is the case for the current ‘security reserve’ and the European Commission’s proposal to introduce an additional security reserve.
In addition, while the European Commission proposes that a Member State may “borrow” up to 10% of its annual emissions allowance for the following year during the period 2021 to 2025 and up to 5% for the years 2026 to 2029, the negotiators want 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.
No financial penalties
However, the negotiators did not retain a proposal by Mrs Polfjärd to introduce a system of financial pressure and sanctions to encourage Member States to meet their target.
This idea, although supported by the majority of political groups, was abandoned after consultation with the Parliament’s legal service, a parliamentary source told us.
However, MEPs want to strengthen the control mechanisms provided for in the regulation. If a Member State exceeds its annual emissions allowances for 2 successive years, it would then be required to revise its ‘national energy and climate plan’ (NECP), while giving the public the opportunity to participate in the process, a compromise amendment says.
Finally, while Mrs Polfjärd defended the possibility for Member States to use Carbon Capture and Use (CCU) and Carbon Capture and Storage (CCS) to meet part of their targets, the negotiators did not retain this proposal in the compromise amendments.
However, they propose to add a reference in the recitals calling for the establishment of “a Union scheme for the certification of safely and permanently stored carbon removals through technological solutions”.
“When such a certification scheme is in force, an analysis can be made about the accounting of such removals under Union law”, the compromise amendment goes on to say, while stressing that these removals are additional and do not compensate for the necessary reduction in emissions in line with the EU’s climate objectives.
The vote on the compromise amendments will take place on Monday in the European Parliament’s Committee on the Environment, Public Health and Food Safety (ENVI). The following day, the ENVI Committee will vote on the amended draft report.
See the compromise amendments: https://aeur.eu/f/1mj (Original version in French by Damien Genicot)