The EU Parliament and Council agree on stricter rules for members' emissions

The European Parliament and the Council of the EU have reached a provisional agreement on stricter regulation of greenhouse gas (GHG) emissions in EU member states, including less flexibility and more transparency. They have notably agreed on a revision of the effort-sharing regulation (ESR), which sets binding annual GHG emission reductions for member states and currently regulates roughly 60% of EU emissions. They have agreed to increase the mandatory GHG reduction target for 2030 at EU level from 30% to 40%, compared to 2005 levels. All EU countries must now reduce GHG emissions with targets ranging between 10% and 50%. The targets for each member state are based on GDP per capita and cost-effectiveness.

The new annual GHG emission allocations will be defined by a linear trajectory ending in 2030 and consisting of three steps. First, for 2021 and 2022, they will be based on the average of a member states’ GHG emissions in 2016, 2017 and 2018. Second, for 2023-2025, they will be based on the annual GHG emission allocation for that member state in 2022. Third, for 2026-2030, they will be based on the annual allocation for that member state in 2023 plus nine-twelfths based on the average of its GHG emissions during the years 2021, 2022 and 2023.

In addition, the possibility for member states to trade allowances with other member states will be limited to 10% of the allowances for 2021-2025. For 2026-2030 the maximum will be 15%.  In 2021-2025, member states will be able to borrow a maximum of 7.5% of the allowances from the following year to be used in years where emissions are higher than the annual limit. For 2026-2030 the maximum will be 5%. Finally, in years where emissions are lower, member states will be able to save emissions for the following year. 75% of the annual emission allocation in 2021 can be saved and used later. For 2022-2029 the figure would be reduced to 25%.