Executive summary

The Effort Sharing Decision (ESD) is a centerpiece of Europe’s climate legislation as it sets annual emission reduction targets for each Member State for the greenhouse gas emissions from the transport, building, agriculture and waste sectors. The ESD was adopted in 2009 to implement the EU’s 2020 climate target and has been designed for the 2013-2020 period. To implement the newly agreed 2030 climate target, the European Commission is expected to present a new legislative proposal to reduce emissions from ESD sectors in the 2021-2030 period in the first half of 2016.

Compared to the existing legislation, a number of key factors surrounding the EU’s post-2020 targets have changed. A higher 2030 climate ambition and the decision not to make use of international carbon offsets has resulted in a search for new options to reduce emissions cost-efficiently – so called flexibilities.

Adjusting the ESD to these new parameters provides a unique opportunity to increase the potential of the ESD to act as a catalyzer for a climate-friendly transition of highly emitting sectors. A key challenge will be to design these flexibilities in a way to help reduce emissions cost-effectively while upholding the integrity of the climate target and subsequently drive emissions abatement in the transport, building, agriculture and waste sectors. Flexibilities with other EU climate instruments, such as using allowances from the EU’s Emissions Trading System (ETS) or temporary forestry credits to meet ESD targets, should clearly be avoided as it could reduce the overall reduction effort which effectively increases EU’s greenhouse gas emissions by up to 28% until 2030.

Drawing on the lessons learned with the ESD so far, the policy brief provides recommendations for flexibilities under the new ESD proposal for the 2021-2030 period.

Key recommendations: Focus on early action, by implementing additional policies up to 2020 that help ensure that the post-2020 climate targets can be met with limited use of flexibilities. Introduce EU-wide policies for the post-2020 period, especially for the transport, building, agriculture and waste sectors. Auction a share of allocations to implement the polluter-pays-principle. Ensure that intra-EU offsets help countries transition away from high-carbon systems, by introducing common selection criteria that channel finance to transformative projects such as deep renovation of buildings Restrict borrowing levels, to avoid further delay of action. Oppose the use of ETS allowances to meet ESD targets, to avoid undermining the 2030 emission reductions by up to 5%. Disallow offsetting permanent emissions with temporary forestry sinks, since this could significantly undermine the environmental integrity of the ESD.

 

Read full policy brief here

Read full Oeko-institut report here

Carbon Market Watch response to the EU consultation on the 2030 Effort Sharing Decision here