MEMO/08/797
Brussels, 17 December 2008
Questions and Answers on the Decision on
effort sharing
1. How is the 20% greenhouse gas target shared between sectors and Member
States?
The total effort for greenhouse gas reduction needs to be divided between the
EU ETS and non-ETS sectors. This will be done as follows:
- a 21% reduction in EU ETS sector emissions compared to 2005 by 2020; (see
MEMO on revision of the EU ETS)
- a reduction of around 10% compared to 2005 for the sectors that are not
covered by the EU ETS.
Taken together, this results in an overall
reduction of -14% compared with 2005, which is equivalent to a reduction of -20%
compared with 1990. A larger reduction is required of the EU ETS sector because
it is cheaper to reduce emissions in the electricity sector than in most other
sectors.
Since a single, EU-wide cap under the EU ETS will be introduced from 2013, an
effort sharing arrangement between Member States has been determined solely for
the reduction in emissions from sectors not covered by the EU ETS.
These sectors, which are made up of small-scale emitters in a wide range of
sectors such as transport (cars, trucks), buildings (in particular heating),
services, small industrial installations, agriculture and
waste[1], currently represent
some 60% of total GHG emissions in the EU. As a rule, it will be left to Member
States to define and implement policies and measures in such sectors, although a
number of EU-wide measures in areas such as energy efficiency standards,
CO2 emissions from cars and waste will also contribute to emission
reductions in these sectors.
[ Figures and graphics available in PDF and WORD PROCESSED ]
2. How is the -10% target for sectors not covered by the EU ETS shared
among Member States?
Member States all have individual targets expressed as a percentage, which
average out at -10%. GDP/capita has been used as the main criterion when setting
the national targets. This approach has two advantages. It ensures that the
actual efforts and the associated costs are distributed in a fair and equitable
manner, and it allows for further, accelerated growth in less wealthy countries
where economic development still needs to catch up with other Member States. The
package therefore ensures that there will be no negative effect on economic and
social cohesion.
Countries with a low GDP per capita will be allowed to emit more than they
did in 2005 in non –ETS sectors because their relatively higher economic
growth will probably be accompanied by increased emissions in sectors such as
transport. The reduction required in Member States where GDP/capita is below the
EU average is therefore correspondingly lower (i.e. less than -10% below 2005
levels). Less wealthy Member States will be allowed to increase their emissions
in non-ETS sectors by up to 20% above 2005 levels. These targets do, however,
still represent a cap on their emissions and will still require a reduction
effort.
By contrast, in the wealthier Member States, where GDP/capita exceeds the EU
average, an emissions reduction above the EU average is required, up to a
maximum figure of -20% below 2005 where GDP/capita is highest.
The 20% limit on national emission reductions or increases compared with 2005
ensure that the targets for each country remain technically and economically
feasible and that there is no unreasonable increase in overall costs.
3. What can a Member State do to meet its national target in the non ETS
sector?
In sectors that do not come under the EU ETS, such as buildings and road
transport, many of the important decisions will be made at Member State level.
Individual EU governments will introduce policies and measures to lower
emissions such as traffic management, shifts away from carbon-based transport,
taxation regimes, the promotion of public transport, biofuels, urban and
transport planning, improved energy performance standards for buildings more
efficient heating systems, and renewable energy for heating. Measures to reduce
and recycle waste streams, and to reduce landfilling can also have a significant
impact on GHG emissions. The revised guidelines for State aid in the area of
environment that were adopted as part of the package earlier this year will
increase the ability of Member States to implement such measures, while avoiding
distortions of competition in the internal market.
A number of important EU-wide measures will also help Member States to reduce
emissions and thus meet their national targets. New efficiency standards for
boilers and water heaters, for example, together with adequate labelling systems
to inform consumers, could help deliver major emissions reductions in buildings.
The full implementation of the Landfill Directive (in 2016) will deliver further
important emission reductions, as reducing the landfilling of biodegradable
waste will bring a major reduction in emissions of methane, a powerful
greenhouse gas.
In addition, Member States can also use credits from Clean Development
Mechanism (CDM) and Joint Implementation (JI) projects (see point 5).
4. Why are all objectives based on the year 2005, and not on 1990, as the
Kyoto Protocol?
The year 2005 has been used as the base year or yardstick against which
greenhouse gas reductions are presented. Calculating reductions and renewable
energy shares in comparison with 2005 gives a transparent and easily
understandable picture of the changes needed, as it compares such changes with
what is effectively the present situation.
The data for 2005 is also more reliable and more easily available. It
includes verified emissions at installation level within the EU ETS, as well as
the overall greenhouse gas emissions of Member States as officially reported to
the United Nations Framework Convention on Climate
Change[2].
5. Can Member States use the Clean Development and Joint Implementation
Mechanisms to meet their national targets under the Effort Sharing Decision?
In the original Commission proposal, the annual level of Clean Development
Mechanism (CDM) and Joint Implementation (JI) credits any Member State could use
in 2013-2020 was limited to 3% of 2005 emissions. In the final agreement, this
will remain the rule in the absence of international progress beyond the EU's
20% independent reduction commitment. However, the final agreement also allows
Member States that have to reduce their non-ETS emissions, or are allowed to
increase them by up to 5%, to use an additional 1% of credits. These
credits can come only from CDM projects in least developed countries and small
island developing states, are non bankable and non transferable, and are
available only to Member States meeting at least one of the following four
conditions:
- the overall cost of the package for the Member State concerned is higher
than or equal to 0.7% of GDP according to the Commission's impact
assessment;
- the specific approach for setting targets on the basis of the GDP/cap
instead of on the basis of the cost-effective potential has lead to a cost
increase of at least 0.1% of GDP according to the Commission's impact
assessment;
- more than 50% of the Member State's total emissions covered by the Effort
Sharing Decision are transport-related;
- the Member States's renewable energy target is in excess of
30%.
The Member States concerned are: Austria, Finland, Denmark,
Italy, Spain, Belgium, Luxembourg, Portugal, Ireland, Slovenia, Cyprus and
Sweden.
Access to CDM and JI credits has to be carefully balanced, and the final
agreement sticks close to the critical balance struck by the Commission in its
original proposal.
Greater use of credits can increase the cost-effectiveness of reducing
emissions but also means that the emission reductions take place outside the EU,
reducing the domestic benefits for the EU in terms of technological leadership
and pollution reductions. The limits on credits aim to ensure that the package
triggers investments in cleaner technologies and renewable energy and thus puts
Europe on the way to becoming a low carbon economy. From the same perspective,
Member States are encouraged to use fewer credits than the allowed maximum.
6. What happens when an international agreement is reached?
The EU will increase its target up to 30% if developed countries agree to
take equivalent measures under a satisfactory international agreement. To send a
clear signal to the rest of the world on this commitment, the package contains
detailed provisions that will take effect when an international agreement is
reached and ratified. In particular:
- - The targets can be adapted to be consistent with a higher international
target. The Member States' targets should be adjusted to achieve the Community's
greenhouse gas reduction commitment in this context,
- - The Commission will propose how to include emissions and removals related
to land-use, land-use change, and forestry (LULUCF).
7. How do
emissions need to evolve between 2013 and 2020?
The third phase of the EU ETS and the national targets for non-ETS emissions
foresee a linear reduction path in 2013-2020. In the Effort Sharing Decision,
Member States have annual binding emission limits in accordance with the
reduction path and they must report their emissions to the Commission each year.
This will ensure a gradual move towards agreed 2020 targets, in sectors where
changes take time, such as buildings, infrastructure, and transports.
To increase the cost-effectiveness of the reduction path, several flexibility
measures are provided, allowing Member States to:
- - bank and borrow emission budgets (5% max.) between years
- - transfer overachieved emission reductions between Member States
- - invest in projects in other Member States
These flexibilities
do not increase the total amount of greenhouse gas emissions in the EU, they
only change the location of reductions and allow small changes in timing.
In addition to this, Member States may use credits from the Clean Development
and Joint Implementation Mechanisms in countries outside the EU (see point 5
above)
Some Member States have already achieved their respective Kyoto commitments,
and they have therefore been given a starting point that allows them to follow a
more logical reduction trajectory from today until the starting point. This
adjustment of the starting point gives a marginal effect on emission reductions
in the period 2013-2019, and does not affect the final target in 2020 in any
way.
8. Will there be tougher targets in the future?
If we are to limit climate change to 2°C above the temperature in
pre-industrial times, reductions will have to continue worldwide after 2020 as
well. Global emissions need to be halved by the middle of this century. To give
certainty of this development, the effort sharing decision clearly states that
EU greenhouse gas emissions should continue to decrease beyond 2020 with
a view to collective reduction of 80% by 2050 compared to 1990. However, in
reaching the 20% reduction target by 2020, we will be taking a decisive step on
the path to steeper reductions in the future. At the same time, more advanced
technologies will be needed to meet more stringent reductions in the future.
9. Will the rest of the world follow suit?
International negotiations on a global climate agreement for the post-2012
period are under way and due to be concluded in December 2009 at the UN climate
change conference in Copenhagen.
The package allows the EU to show global leadership by example, and to
demonstrate that fighting climate change is fully compatible with continued
economic prosperity.
10. What sort of penalties will be involved if national targets are not
met?
Each Member State is granted an annual budget of total allowed emissions in
non-ETS sectors. The amounts are in accordance with a linear reduction path
towards the final 2020 target. Member States are however allowed to borrow 5% of
their allowed emissions from the next year and can bank the emission reductions
they make in excess of their reduction targets for the following year.
Member States already monitor their greenhouse gas emissions and report on
them every year. If a monitoring report for a given year shows that a Member
State is not in accordance with the allowed amounts specified in the
effort-sharing Decision, it will have to take corrective action. Underachieved
emission reductions will have to be achieved in the next year; multiplied by a
factor of 1.08. On top of this, Member States will have to submit a corrective
action plan to the Commission detailing e.g. by which measures and when they
intend to get back on track with a view to meeting their 2020 targets. The
Commission and the Climate Change Committee (comprising the Member States) can
comment and give recommendations on the plans. In addition, there is a temporary
suspension of the Member State's eligibility to transfer part of its emission
budget and JI/CDM rights to another Member State.
The Commission can also launch an infringement procedure against the Member
State concerned.
There may also be external factors that encourage the EU make emissions cuts.
Under the Kyoto Protocol, any non-compliance needs to be made up, plus an
additional restoration factor of 1.3.
The combination of the standard Community infringement procedure and the
mechanism for corrective action under the effort-sharing Decision goes beyond
the compliance mechanism available under the Kyoto Protocol. This strengthens
the credibility of the EU's mitigation measures and also increases certainty for
Member States which achieve greater emissions than required and would like to
sell their surplus emission allocations to another Member State.
11. Can a Member State set its own overall target for a reduction in
greenhouse gas emissions?
The fact that there is no overall legally binding target for greenhouse gas
emissions is the logical consequence of the introduction of a single EU-wide cap
for the EU emissions trading system. Eventually, the market operators will
decide where emission reductions will take place, most probably in places where
they are most cost-efficient. It is therefore not possible to define a specific
target for a country at EU level. Naturally this will not prevent Member States
from adopting their own targets, giving visibility to their own efforts to fight
climate change, benchmarking progress and engaging the public.
12. What are the next steps?
Following the agreement by the institutions on this decision, the immediate
next step will be the technical implementation of what has been decided: to
establish rules for transfers, prepare guidelines for reporting and plans, etc.
Further adjustments will also be needed when an international agreement on
climate change is reached. The Commission will then report on implications and
options for moving to a 30% reduction, as well as for the potential inclusion of
LULUCF and maritime emissions in the effort sharing Decision, the EU ETS, or
through another measure.
The Commission will also need to assess the needs and possibilities for
further measures in non-ETS sectors and develop legislative proposals as
appropriate. This assessment will involve sector analysis and modelling to
determine policies and measures, as well as stakeholder and Member State
consultations.
[1] Agriculture and waste
lead to substantial amount of non CO2 greenhouse gas emissions
(methane, N20). All non CO2 greenhouse gas emissions
represent some 20% of total greenhouse gas emissions in the EU, CO2
represents some 80%
[2] Malta and Cyprus have
no reduction commitment under the Kyoto Protocol and thus no annual emission
reporting requirement under the UNFCCC. But under the EU Monitoring Mechanism
Decision 280/2004/EC an annual inventory report has to be compiled by all Member
States.
|