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The European Parliament adopts the Effort Sharing Regulation (ESR)

19 April 2018 | Markets | 1

The Effort Sharing Regulation (ESR), which was politically agreed in December 2017, was adopted at the plenary session of the European Parliament on Wednesday 17 April and will then be finally adopted by the Council.

The ESR is one of the key instruments of the European Union's climate policy which, in combination with the recently revised EU ETS Directive, aims to ensure that the EU meets its global climate targets by 2030.

While the EU Emissions Trading Scheme (EU ETS) regulates emissions from large fixed installations such as coal-fired power plants and heavy industry, the ESR sets binding targets for Member States in sectors with more dispersed emissions, such as transport, construction, waste and agriculture, which account for almost 60% of total EU emissions.

The approved Regulation converts the target of reducing GHG emissions from 30% to 2030 for diffuse emissions into binding annual targets for each Member State.

The proposal recognises the different capacities of Member States to act by differentiating the targets according to their individual GDP per capita. This ensures fairness, with Member States with higher incomes taking on more ambitious targets than those with lower incomes.

The new regulation includes a series of "flexibility" instruments to achieve the objectives, such as inter-state transfers, banking and borrowing mechanisms, LULUCF credits, the conversion of ETS units to ESR, the safety reserve mechanism or the starting bonus.

Below are some specific data on Spain in the ESR:

  • Its emissions reduction target rises substantially from -10% in 2020 to -26% in 2030 (national targets range from 0% in Bulgaria to -40% in Sweden and Luxembourg).
  • Its LULUCF share is 29.1 million, 10.4% of the total (France has the highest percentage with 20.8%).
  • It does not have a "starting bonus" (a "carrot" for the countries of Eastern Europe, as it does not include a "banking" of phase 3 rights).
  • It does not have one-off "cancellation" (the concession to countries with more ambitious targets, which can convert part of their EUAs into Annual Emission Allocations (AEAs)).
  • It is entitled to request an increase in its allocation of AEAs from the Safety Reserve: a reserve of 105 million for countries with below-average GDP per capita and which have exhausted all other flexibility instruments.

 

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Source: Factor CO2