Climate target
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 try 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 the next 10 years will be most decisive in reaching the 1.5°C objective and in light of the principles of equity and capacity to act, therefore the EU must increase its 2030 climate target under the Paris Agreement to at least 65% 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 climate neutrality 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 are currently under revision as part of the Fit For 55 package that was launched in July 2021. CAN Europe is calling for increasing the respective 2030 targets of each file in order to enable the EU to overshoot the at least -55% net emissions overall target. In particular, we support increasing the ETS 2030 target to at least -70% and the ESR target to at least -50% emissions, compared to 2005, and call for an increase of the EU’s natural sink capacity to 600 Mt in 2030.
Alongside a stronger climate target, CAN Europe supports a corresponding increase of the EU’s energy targets, with an energy savings target of at least 45% and a renewable energies target of at least 50% for 2030.
Effort Sharing Regulation (ESR)
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.
EU Emissions Trading System (ETS)
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.
Climate and energy governance framework
The European Climate Law, the cornerstone of the European Green Deal, was adopted after months of hard negotiations. The European Parliament and the Council came to a draft agreement on 21 April 2021 and the law entered into force on 29 July 2021. The primary goal of the was initially to set in stone the date of climate neutrality by 2050 – this it succeded.
CAN Europe has worked to influence this new framework throughout the legilsative 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. According to the Commission’s own impact assessment, that would translate into 52.8% real emissions reduction, with the remaining 2.2% being considered as “removed” from the atmosphere by forests and other natural sinks (amounting to 225 Mt removals).
- 2050 climate-neutrality objective: The Council was against a climate neutrality that would apply to each Member State individually, it is therefore that 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: This budget however will come out at the same time as the 2040 intermediate target in 2024, meaning it is ex-post, and we see it having less impact on making sure the 2040 target is in line with climate neutrality, although the European Commission guarantees it will take it into account. Unfortunately, it also means that the greenhouse gas budget does not apply to the short term, the next decade (until 2030), which is the most important decade to remain below 1.5°C.
- European Scientific Advisory Board on Climate Change: Step in the right direction. The EEA will be the secretariat of the body and will decide upon its members. It should however not be involved in its mandate. The Body is to deliver “scientific advice on already existing European measures”. This risks limiting the role of the body to be able to deliver the cross-sectoral advice the EU Climate Framework so desperately needs.
- Climate mainstreaming: Policy consistency is included, all new legislation proposals emanating from the EC will have to go through a consistency check, and if it is not consistent the EC will have to come forward and explain why.
- 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.
- Access to Justice & Energy Charter Treaty: These provisions did not make it to the final draft. The Council thought this unacceptable and out of scope.
