Effort Sharing Regulation

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Recognising that not all emission reductions can be driven by the market, the EU needs to be more ambitious about cutting emissions in the non-traded sectors, such as transport, buildings and agriculture

Sandbag’s aim is to focus our effort on the policies which have the biggest impact in terms of EU climate action. The Effort Sharing Regulation (ESR) is the sister to the EU Emissions Trading System (ETS), covering the ‘non-traded’ sectors, that is those emissions that are not covered by the ETS.
More than half of the EU’s greenhouse gas emissions come from the non-traded sectors, such as transport, buildings, agriculture and waste. Unlike the EU ETS, which is a market based mechanism with an overall EU emission limit, the ESR is a governance tool, providing an overarching target of reductions for the EU but assigning individual targets to Member States. National targets are differentiated on the basis of their GDP/capita, with some adjustments for cost-efectiveness.
The first Effort Sharing Decision was introduced in the 2020 Climate and Energy package in 2009, setting national reductions targets for the period 2013-2020.
In July 2016, the European Commission published its proposal for the second phase, which will run between 2020-2030 (see Sandbag’s analysis). This sets out an EU reduction target for these sectors of 30% below 2005 levels by 2030. Individual Member State targets range from -40% to 0%, creating a wide range of constraints. With a provisional agreement between the Council and the European Parliament reached in December 2017, the reform process is expected to be completed by early 2018.
Sandbag has worked to influence the reform of the ESR to ensure it is robust and delivers real emission reductions. Recent reports focused on:

Demonstrating that a 30% target by 2030 is not sufficient to deliver the necessary EU emission reductions in the context of the Paris Agreement, and barely goes beyond business as usual
Exposing that the starting point of the trajectory for 2021-2030 as proposed by the Commission was not sufficient to ensure even this -30% reduction target
Developing and proposing solutions that would enable a higher target to be put in place for the EU, at lower cost. In particular, we have called for a European Project Based mechanism to be developed, and for flexibilities proposed in the ESR, including a link with the EU ETS and LULUCF sectors, to be abandoned or at least restricted as much as possible.

We work to influence the European Commission, European Parliament and key Member States.

Successes

Our successes have included:

Highlighting the importance of a sufficiently ambitious starting point – based on real emissions – to avoid an inflation of the carbon budget for 2021-2030;
Recognition of a Project Based Mechanism as a way for Member States to jointly achieve emissions reductions;
Ensuring that the use of ETS allowances under the ESR effectively reduces the emission budget under the EU ETS by an equal amount