In view of the meeting of EU Environment Ministers on 28 June, the French Presidency of the Council of the European Union shared with the Member States on Friday 10 June a draft political agreement (‘general approach’) on the revision of the EU Climate Effort Sharing Regulation (2018/842).
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 Regulation (LULUCF).
These emissions are mainly from road transport, the heating of buildings, agriculture, small industrial installations, and waste management.
Combined, the national targets will lead to a 40% reduction in EU emissions by 2030 (compared to 2005 levels) in the sectors covered by the ESR, according to the European Commission’s proposal (see EUROPE 12762/2).
In order for EU countries to meet their target and thus contribute to the collective effort, binding annual limits, expressed in emission allowances, are set for each Member State and are gradually reduced until 2030.
The targets set by the Commission range from a 10% reduction in emissions (Bulgaria) to a 50% reduction (Finland, Luxembourg, Germany, Denmark, Sweden).
These ‘national contributions’, as well as the EU-wide target (-40%), are maintained in the French Presidency’s document which was obtained by EUROPE.
On the other hand, Paris proposes to review the linear trajectory towards 2030.
In its proposal for the revision of the regulation, the European Commission had planned to update the annual emission allowances for the years 2026 to 2030 in 2025. The reason given was to take into account uncertainties in emission levels linked to the Covid-19 pandemic.
The Presidency, on the other hand, suggests that this adjustment of a Member State’s emissions path for the period 2026-2030 should only be retained if this update leads to higher annual limits for the Member State in order to “give predictability to Member States on the consequences of any unforeseen event”.
Strengthening flexibilities
Contrary to the position adopted by the European Parliament (see EUROPE 12968/20), the draft general approach provides for the strengthening of some flexibilities left to Member States to reach their national target in 2030.
Paris thus proposes to increase the volume of allowances that can be traded between Member States. According to the French document, a Member State could transfer up to 10% of its annual emission allowance for a given year for the period 2021-2025 and up to 20% between 2026 and 2030, compared to the current limits of 5% and 10%.
In order to increase the transparency of such trading, this change is accompanied by a new obligation for 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.
The draft general approach furthermore relaxes the way in which the flexibility can be used, allowing some Member States (Belgium, Denmark, Ireland, Luxembourg, the Netherlands, Austria, Finland, Sweden and Malta) to use a limited number of allowances from the EU Emissions Trading System (ETS) to cover their emissions from the sectors in the ESR, by cancelling allowances that would otherwise have been auctioned.
While the Commission wanted to give Malta the possibility to notify its intention to use this flexibility until 31 December 2023, the Presidency proposes to extend this possibility to the other above-mentioned Member States that have not yet done so.
In addition, 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 those Member States that have notified the Commission of their intention to make use of the flexibility.
With regard to the establishment of an additional safety reserve - consisting of the net greenhouse gas removals that the Member States participating in the reserve have generated over the period 2026-2030 and that exceed their respective targets under the LULUCF Regulation - the draft text provides for an extension from 6 to 12 months of the period allowed for Member States to notify their decision not to contribute to, and thus not to benefit from, the reserve.
See the draft general approach: https://aeur.eu/f/22p (Original version in French by Damien Genicot)