FIT FOR 55 FACTSHEET: Effort Sharing Regulation

by Callum Mason

The prior regulation had a target of reducing EU emissions 30% below 2005 levels by 2030. In the original regulation, member states could borrow emissions for the following year and, if they over-performed in their emissions cuts, could ‘bank’ these reductions for future years so that they could emit slightly more if they needed to.  Member states could trade carbon emissions reductions with other member states, e.g. if they reduced more than they were required to, they could sell the right to other states to emit slightly more carbon emissions.  Originally, if member states failed to reduce their emissions in line with these targets they could balance this failure by carbon storage through carbon capture or land-based carbon storage such as forest planting. If member states failed to reduce their emissions they were required to submit to the commission a corrective action plan that specified how it would rectify this with a strict timetable.

The EU now has a greater target of reducing emissions by 40% below 2005 levels in 2030.  These trading schemes have been reduced to encourage faster emissions reductions. Countries can now bank less emissions (10% instead of 30%). This trading scheme has been restricted to encourage states to target actual reductions instead of trading reduction credits. Additionally, states must use the revenues gained to tackle climate change, and information on the sale and use of these carbon trades must be publicly available.  Now, states are obligated to prioritize concrete emissions reductions. States will have to prove their carbon removal projects are actually effective at storing carbon. This will be done with a new regulatory framework of assessment that will now be created. This action plan now has to be more detailed, with an explanation of why progress has been slow, and details of what spending and investments in emissions reductions have been made. The state also has to consult its own climate advisory body for advice on how to reach its targets. These plans shall now be accessible to the public and shall be reviewed by the commission. The commission will now submit reports assessing whether member states’ reduction plans are good enough for the new targets, with recommendations about how they can meet the new targets.

Commentary: 

With this updated legislation, the EU Parliament has made emissions reduction objectives substantially more ambitious, with stricter rules for member states designed to ensure that these greater targets are met. It is especially welcome that the parliament has focused less on carbon trading and carbon capture. Instead, it is clear that, in line with the latest IPCC report, the focus has been firmly placed on genuine emissions reductions. This means that there is now more pressure on member states to prove they are cutting emissions year on year and greater consequences for states that fail to do this. With this said, there continue to be questions as to whether a 40% reduction in emissions by 2030 will be enough to avoid harmful climate change. And finally, more ambitious legislation could have stipulated greater punishments for states that failed to meet their targets. Currently, the updated legislation has a system where states must report their failures to the commission. This is welcome; however, stronger legal deterrents such as large fines or even criminal charges could have been considered.