On Thursday 17 July, the European Commission announced the adoption of an amendment to Implementing Decision (EU) 2020/2126 (https://aeur.eu/f/hyu ), which sets the annual quantity of emissions allocated to each Member State under the Effort Sharing Regulation (ESR) (https://aeur.eu/f/hyv ), following a revision by some Member States of their intention to use “flexibility under the EU Emissions Trading System (‘ETS’)”, in accordance with the same regulation.
This reflects the latest notifications sent by Denmark and Luxembourg.
The ESR sets an overall target for the European Union of a 40% reduction in greenhouse gas emissions by 2030 compared to 2005 levels.
It covers sectors not included in the ETS, i.e. domestic transport, buildings, agriculture, small industry and waste.
To help certain Member States achieve their targets, flexibility has been introduced, allowing nine countries (Belgium, Denmark, Ireland, Luxembourg, Malta, the Netherlands, Austria, Finland and Sweden) to cancel, each year from 2021 to 2030, a limited number of EU ETS emission allowances.
In return, these countries receive an equivalent amount of allocations for use in meeting their reduction targets in the sectors covered by the Effort-Sharing Regulation. The cancelled allowances are deducted from the quantity that these Member States would otherwise have auctioned.
Each Member State concerned may therefore choose, within a limit set at European level, the percentage it wishes to apply to its 2005 emissions in the sectors covered by the Effort Sharing Regulation to determine the quantity of ETS allowances to be cancelled each year.
In 2024, these percentages could be revised for the 2026-2030 period. Only Denmark and Luxembourg changed their initial notification, announcing that they will not make use of any ETS flexibility over this period.
The nine Member States concerned will have a final opportunity to adjust their choice regarding the quantity of ETS allowances they wish to convert into allocations under the Effort Sharing Regulation for the years 2028 to 2030, by 31 December 2027. (Original version in French by Nithya Paquiry)