Climate action

Setting targets for greenhouse gas emission reductions is a key driver for climate action and vital to ensure the world is on track to avoid catastrophic climate change.

 

In 2015, the global community agreed to limit temperature rise to 1.5°C above pre-industrial levels. This commitment was sealed in the Paris Agreement. To track the collective progress towards this global objective, each country needs to develop an emission reduction strategy for the long term and regularly set and review domestic climate targets, the so-called nationally determined contributions (NDCs).

 

In 2019, the EU agreed on a long term climate target and pledged to reach a climate-neutral economy by 2050. This means that by that date, domestic emissions will need to be net-zero, with all remaining emissions being absorbed by emission sinks such as forests.

 

In December 2020, the European Council agreed to increase the EU’s 2030 climate target to at least -55% net emission reductions, compared to 1990 levels. Although a welcome improvement from the previous -40% target, the new NDC is still not sufficiently strong to stop dangerous climate change and reflect the EU’s fair contribution to the 1.5°C goal of the Paris Agreement. In addition, in contrast to the old target, the new NDC includes carbon removals as a way to achieve the 2030 net emission cuts, watering down the required efforts from mitigating sectors.

 

Action in this decade will be most decisive in reaching the 1.5°C objective and in light of the principles of equity and capacity to act, the EU must therefore further increase its 2030 climate target under the Paris Agreement to at least 65% gross emission reductions compared to 1990 emissions, with carbon removals being increased in addition and separately from mitigation efforts. Being a rich economy and responsible for a substantial part of historic emissions, the EU should also achieve net-zero emissions well before mid-century and by 2040 at the latest.

 

In the EU, the 2030 overall climate target is implemented through the 2030 Climate and Energy Framework, in particular through three pieces of EU legislation: the EU Emissions Trading System (EU ETS), the Effort-Sharing Regulation (ESR) and the LULUCF Regulation that addresses land-based emissions. These legislative files have been revised in 2022 as part of the Fit For 55 package that was launched in July 2021. Unfortunately, as a result of this review, the EU will only slightly overachieve its 2030 goal reaching -57% net emission reductions and continues to be off-track to meet the 1.5°C goal. Additional immediate urgent actions are needed to enable steep emission reductions in the short term and allow the EU to achieve at least -65% gross emission reductions by 2030, compared to 1990 levels.

 

The European Climate Law requires the European Commission to propose a 2040 target and define a projected indicative EU greenhouse gas budget for the 2030-2050 period. CAN Europe calls the EU to reach net zero emissions by 2040 at the latest and to deliver steep domestic net emission reductions in order to stay within a limit of approximately 27.5 GtCO2e cumulative greenhouse gas emissions, including LULUCF, in the period 2020-2050. In addition, to fulfil its fair share of any remaining global budget, it is necessary for the EU to deliver significant additional support to enable mitigation in Global South countries.

 

In addition, the EU needs to shorten its 10-years policy cycles, unfit for the purpose of tackling such a serious, urgent and constantly developing threat as the climate emergency, to align with the 5-years cycles agreed at the international level and establish an EU 2035 target. This will allow the EU to comply with article 4.7 of the European Climate Law and with the commitment it took at COP26 to submit in 2025 an NCD for 2035.

The Effort Sharing Regulation (ESR) or Climate Action Regulation sets legally-binding emission reduction targets for each EU Member State for the sectors not covered by the EU’s Emissions Trading Scheme (ETS). These non-ETS sectors are responsible for nearly 60% of the EU’s total emissions and include ground transportation, agriculture, waste and buildings.

 

The current ESR (that was agreed in 2018) aims to reduce emissions in these sectors by 30% across the EU by 2030, compared to 2005 levels. Following the decision to raise the overall EU emission reduction to at least 55% net emissions by 2030, in July 2021 the European Commission proposed a revision of the regulation (as part of the Fit for 55 package). The new target would be 40% reductions by 2030. This target is broken down into legally-binding national targets, which vary from country to country and are based on wealth, measured by GDP per capita.

 

The new proposal adds approximately an extra 10% reductions to the existing ESR targets of each Member State to add up to the new EU wide ESR target of -40% by 2030. The wealthiest Member States need to reduce their emissions by 50% below 2005 levels and the poorest around 10%.

 

Binding national targets are crucial to deliver the much needed emission reductions and the targets under ESR (and ETS) will determine what is released into our atmosphere. To be on track to limit global temperature increase to 1.5°C as agreed in the Paris Agreement, the Effort Sharing Regulation should achieve at least 50% emission reductions by 2030, compared to 2005 levels. 

 

 

Besides a weak overall target, the ESR also allows Member States to use a number of flexibilities which work as de facto loopholes that allow countries to claim more emission reductions on paper than in the real world. Examples of this include, buying emission allowances from other countries or using excess emission credits from the EU carbon market (ETS) and the LULUCF sector to cover their failure to reduce emissions in the ESR  sectors. This has to stop so that all sectors contribute fully to the necessary decarbonisation of the economy.

The EU Emissions Trading System (ETS) is a carbon pricing tool that regulates about 36% of the EU’s total greenhouse gas emissions and covers the power sector, the industry sector and the aviation sector. The remaining emissions are covered by the Effort Sharing Regulation (ESR). It is the world’s largest carbon market, covering around 9,500 industrial and power plants in the EU, as well as in Iceland, Liechtenstein, Norway and Northern Ireland.

 

The EU ETS sets a limit on the amount of greenhouse gas emissions that can be emitted by all sectors covered by the system. Installations receive or buy pollution permits – called EU allowances. One EU allowance allows for one tonne of CO2 equivalent to be emitted. Each year, the limit, or cap, of allowances in the system becomes slightly more stringent. With a decreasing supply of allowances, the price of each permit, the ETS carbon price, should increase, making dirty business unprofitable over time.

 

Despite being hailed as the flagship of European climate policy, the EU ETS has a notorious history of weak and ineffective carbon price signals, major exemptions for polluting industries and a lack of incentives for sectors, particularly industry, to invest into deep decarbonisation. Even a recent revision of the system failed to align the EU ETS with the objectives of the Paris Agreement. Thus, the EU ETS continues to be in dire need of reform.

 

In the summer of 2021, as part of the Fit For 55 package, the European Commission presented a proposal to revise the EU carbon market. In order to turn the EU ETS into a true driver towards climate neutrality, the EU carbon market needs to deliver much more emission cuts, cancel all surplus allowances that drag on the carbon price signal, phase out the massive free handouts of pollution permits to heavy industry and ensure that currently unregulated sectors, such as international aviation and shipping, are included in the system and start paying for their emissions.

Industry’s contribution to EU climate ambition targets, especially that of becoming a climate-neutral continent, is an important issue to address at EU level. Industry – including factories, power plants, intensive livestock rearing and refineries – is the source of more than half of the EU’s greenhouse gas emissions and 75% of hazardous waste production.

 

 

Large-scale industrial activities are one of the main contributors to air pollution which leads to 456,000 premature deaths in Europe every year. At the same time, industry reports that they release about 4,600 tonnes of heavy metals every year into air, water and soil. That includes ecotoxic arsenic and neurotoxic lead and mercury. Their main source is coal combustion.

 

 

The EU’s Emissions Trading System (ETS) and Effort Sharing Regulation (ESR) are the main tools developed so far to address industry greenhouse gas emissions, but more tools are needed to ensure that industry can contribute effectively to the various objectives agreed in the European Green Deal to ‘transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use’.

 

 

Our industry work ranges across the ETS and ESR, and more recently has expanded to take in the EU’s Industrial Strategy and Circular Economy Action Plan. This includes the potential introduction of a carbon border adjustment mechanism which is meant to address the threat of industrial production leaving the EU because of the cost differences between EU production because we have the ETS and the rest of the world which does not have a similar carbon pricing mechanism.

 

 

Through our industrial transformation work, we aim to ensure that EU policies and tools frame industry’s efforts to go beyond shifting to renewables and climate capture and storage/use, and that industry steps up its efforts to avoid irreversible damage through climate change, biodiversity loss and other interlinked impacts. Industrial transformation means developing and strengthening synergies on actions to address multiple environmental and social challenges.

 

 

Read more:

Can Europe’s Position On Carbon Capture And Storage And/Or Use (CCSU)

Supporting document to response to the European Commission’s public consultation on the carbon border adjustment mechanism (CBAM)

Key priorities for a greener EU Industrial Strategy

The “Fit for 55” package which entered into force in 2023 is a key milestone on the way of reaching the overarching climate neutrality goal enshrined in the European Climate Law, also aiming to reduce net domestic emissions by 2030 by 55%. The Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action (Governance Regulation) establishes several mechanisms to ensure that Member States adopt climate policies and measures. The main elements are the National Energy and Climate Plans (NECPs – covering 10 years period) and the national Long-Term Strategies (nLTS – covering a 30 years period). In addition to these planning tools, the Governance Regulation establishes several review and reporting mechanisms. 

 

Climate planning, in particular in the form of NECPs and nLTS, has a crucial importance for the delivering of climate and energy targets. Although there are several planning requirements flowing from EU law, NECPs are the central instruments for climate planning obligations. It is thanks to this exercise that Member States actually assess what policies and measures (including finance) will need to be adopted to achieve their climate and energy targets, the impacts of these policies and measures including on levels of national energy poverty and they are encouraged to also share data on their wider socio-economic implications. The NECP process also requires Member States to engage their citizens in consultation about the proposed measures and policies.

 

Our analysis of the latest revised NECPs cast serious doubts on their ability to deliver on the Member States’ respective climate and energy objectives, due to the lack of policies and measures (and related financing) to back them up.  In 2024, the European Commission president Ursula von der Leyen tasked new Energy Commissioner Dan Jørgensen to revise the Governance Regulation during the upcoming legislature. 

 

 

CAN Europe has long been involved in monitoring the implementation of the climate and energy governance framework. Since 2019, CAN Europe has been coordinating three LIFE projects aiming to facilitate the effective and early transition of Member States across Europe to low carbon and resilient economies: Unify (2019-2022), Together for 1.5 (2022-2025) and Plan4Climate (2025-2028). 

 

 

The European Climate Law, the cornerstone of the European Green Deal, was adopted in 2021. This framework legislation writes into law the goal set out in the European Green Deal for Europe’s economy to become climate-neutral by 2050. The law also sets the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

 

 

CAN Europe has worked to influence this new framework throughout the legislative procedure by urging parties around the table to include several key elements, including an at least 65% emission reduction target compatible with science and with the EU’s Paris Agreement commitment. As often, the law could have been far more ambitious, but represents a step in the right direction.

 

 

The final version of the law contains the following elements that are worth highlighting:

• 2030 target of ‘at least 55% net’. The 2030 target negotiations were preempted by the European Council conclusions in December 2019, with Heads of States settling for an “at least 55% net” target. In order to implement this target, the Commission adopted or amended from 2021 until 2023 several key EU laws as part of its Fit for 55 legislative package. 
• 2050 climate-neutrality objective: The Council was against a climate neutrality that would apply to each Member State individually, it therefore applies to the EU as a whole. Some silver lining was language saying that the EU shall aim to achieve negative emissions after 2050.
• Greenhouse Gas Budget agreed, but only for 2030-2050:   The European Commission is required to present a greenhouse gas budget for the European Union, alongside the introduction of a climate target for 2040. When preparing this budget, the Commission is required to consider, among other elements, the advice of the recently created European Scientific Advisory Board on Climate Change (ESABCC), as well as social, economic and environmental impacts, including the costs of inaction.  
• European Scientific Advisory Board on Climate Change (ESABCC): The ESABCC is an independent advisory board composed of 15 senior scientific experts covering a broad range of relevant disciplines. It was created by the European Climate Law and started to work in 2022. Its role is to evaluate policies and identify actions and opportunities to achieve the EU’s climate targets. Among others, the ESABCC has provided scientific information to the European Commission in the preparation of the 2040 climate target and 2030-2050 greenhouse gas budget.  
• Climate mainstreaming: The European Climate Law requires the Commission to undertake a policy consistency check of EU measures with the 2050 climate neutrality objective. The Commission is also required to assess the progress made by Member States towards the achievement of the climate neutrality objective, both collectively and on the basis of national measures. These assessments are conducted every 5 years, starting in 2023. 

 

Fossil fuel subsidies: Language, in a recital, saying that the EC will have to come up with a better methodology for monitoring at Member State level, but nothing on a possible phase-out date.