The Council and the European Parliament reached a provisional political agreement on stronger emission reduction targets for member states under the so-called effort sharing regulation.

Pending a formal adoption, the provisional deal endorses an EU-level greenhouse gas emission reduction target of 40% compared to 2005, by 2030, for the sectors not covered by the EU Emissions Trading System (EU-ETS), namely road and domestic maritime transport, buildings, agriculture, waste and small industries. The agreement keeps the increased national targets assigned to each member state as proposed by the Commission and adjusts the way member states can use existing flexibilities to meet their targets.

These sectors, directly linked to our everyday lives, generate about 60% of greenhouse gas emissions. I am glad that we managed to reach a swift agreement on this proposal just in time for COP 27. This will allow the EU to show to the world that it seriously intends to reduce emissions in line with its commitments under the Paris Agreement of keeping global warming within safe levels. It is our responsibility to preserve our planet for all future generations.

Czech minister of environment Marian Jurečka

To take into account uncertainties related to unforeseen events having an impact on emissions, the Council and Parliament agreed on an update in 2025 of the linear emission trajectory set for each member state, which could lead to annual emission allocations to be adjusted upwards or downwards for the period 2026 to 2030.

The provisional agreement allows member states to ‘bank and borrow’ emission allocations. In respect of the year 2021, if their emissions were lower than their annual emission allocations, member states can bank up to 75% of their annual emission allocation for that year to subsequent years until 2030. As regards the years 2022 to 2029, member states will be able to bank up to 25% of their annual emission allocations up to that year and use them in subsequent years until 2030.

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In parallel, in years where emissions are higher than the annual limit, member states will be able to borrow allocations from the following year up to 7,5% of their annual emission allocations as regards the years 2021 to 2025 and up to 5% as regards 2026 to 2030.

The provisional agreement also makes it possible to buy and sell emission allocations between member states, up to 10% of their annual emissions allocations as regards the years 2021 to 2025, and 15% as regards the years 2026 to 2030.

Member states will be able to use a limited amount of credits generated by removals of greenhouse gases in the land use, land-use change and forestry (LULUCF) sector to comply with their targets under the effort sharing regulation. This flexibility will be divided into two periods, from 2021 to 2025 and 2026 to 2030, with no possibility of carryover between the periods.

The provisional agreement also maintains an ETS flexibility that allows nine member states to use a limited amount of ETS allowances to offset emissions in the effort sharing sectors from 2021 to 2030.

The co-legislators agreed to remove from the proposal the additional reserve which would have been made up of ‘unused’ net greenhouse gas removals generated by member states in excess of their targets under the LULUCF Regulation.

Source: Council of the EU