The Climate Action Regulation, also known as the Effort Sharing Regulation (EU ESR) is Europe’s tool to reduce the climate impact of sectors that are not covered by the EU’s Emissions Trading System. Covering 60% of the EU’s greenhouse gas emissions, the law sets binding national emission reductions targets for the 2021-2030 period for sectors such as transport, buildings, agriculture and waste management.

Under the Effort Sharing  Regulation, the EU-wide emissions reduction effort is shared between all the EU Member States. This is done mostly on the basis of a country’s wealth as measured by GDP per capita. These national targets add up to an overall 2030 target of -30% compared to 2005 emission levels for the EU as a whole.

To make it less costly to comply with their climate targets, Member States are allowed to make use of different flexibilities. Some of them, however, undermine the carbon-free transition of the non-ETS sectors by allowing more greenhouse gases to be emitted in these sectors up to 2030. These loopholes include for example using forestry credits or allowances from Europe’s carbon market.

As all other EU climate policies, the Effort Sharing Regulation is being revised in order to bring it in line with the EU Green Deal and the climate-neutrality target. Carbon Market Watch calls for the EU to use this opportunity to close the loopholes that currently undermine the law’s effectiveness, and strengthen national climate targets in line with an EU wide goal of 65% emission reductions by 2030.  Furthermore, countries and regions must ensure that decisions on for example city planning, agricultural subsidies, public transport infrastructure, building renovations and waste collection, support the transition to carbon-free societies.