The European Parliament adopted by 437 votes to 142, with 40 abstentions, amendments to the proposal for a regulation of the European Parliament and of the Council Amending Regulation (EU) 2018/842 (Effort Sharing Regulation - ESR) on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement.

The matter was referred back to the competent committee for inter-institutional negotiations.

The main amendments adopted in plenary are as follows:

Binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 and beyond

This Regulation:

- lays down obligations on Member States with respect to their minimum contributions for the period from 2021 to 2030 towards fulfilling the Union’s target of reducing its greenhouse gas emissions by 40 % below 2005 levels in 2030 in the sectors covered by ESR;

- lays down rules on determining annual emission allocations and for the evaluation of Member States’ progress towards meeting their minimum contributions and paves the way for the setting of post-2030 Union’s greenhouse gas emissions reduction targets.

The amended Regulation therefore sets Member States' annual emissions allowances for the whole of the period 2023-2030, unlike the Commission's plan to readjust them in 2025, and changes the way the linear trajectory is defined.

For the purposes of the Regulation, only biofuels, bioliquids and biomass fuels that meet the sustainability and greenhouse gas emission reduction criteria set out in Directive (EU) 2018/2001 of the European Parliament and of the Council could be considered net zero emission.

Alignment with the EU and Member States' climate neutrality objective

The European Commission is invited to present a report to ensure that national targets are sufficient to achieve the long-term objective of climate neutrality by 2050 in a fair and cost-effective manner, as well as to define a greenhouse gas emission reduction pathway for each Member State.

Within six months of the publication of this report, the Commission would present proposals to limit greenhouse gas emissions for the sectors covered by the ESR.

Minimum emissions reduction contribution from non-C02 greenhouse gases for 2030

Members called for a legislative proposal to be tabled by July 2023 setting EU-wide targets for non-CO2 emissions covered by the ESR after close consultation with the Scientific Advisory Board on Climate Change.

By 31 July 2023, the Commission should submit to the European Parliament and the Council an assessment report on the EU-wide non-CO2 emission reductions planned and implemented under the relevant national and EU legislation and policies.

Flexibilities by means of borrowing, banking and transfer

The amendments propose to restrict the rules on banking, borrowing and trading of annual emission allowances and delete the provision to create a new voluntary mechanism, in the form of an additional reserve, which would help participating Member States to meet their obligations.

Corrective action

Parliament proposes to strengthen remedial measures. For example, corrective action plans submitted to the Commission should include a detailed explanation of why the Member State is not making sufficient progress to meet its obligations under the ESR.

If a Member State exceeds its annual emissions quota for two or more consecutive years , it should undertake a review of its integrated national energy and climate plan and long-term strategy under Regulation (EU) 2018/1999 on the governance of the Energy Union and climate action. The Member State should complete this review within six months

Access to justice

A new provision is introduced to ensure public access to justice for actions implementing the ESR as amended.

The Committee on the Environment, Public Health and Food Safety adopted the report by Jessica POLFJÄRD (EPP, SE) on the proposal for a regulation of the European Parliament and of the Council Amending Regulation (EU) 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement.

The objective of the Commission's proposal is to revise the Effort Sharing Regulation (ESR) so that it contributes to the ambition to reach at least 55 percent net greenhouse gas emission reductions by 2030 compared to 1990 levels in a cost-effective and coherent way while taking into account the need for a just transition and the need for all sectors to contribute to the EU’s climate efforts. The aim is to achieve a gradual and balanced trajectory towards climate neutrality by 2050.

The committee responsible recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the proposal as follows:

Binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 and beyond

The Regulation lays down obligations on Member States with respect to their minimum contributions for the period from 2021 to 2030 towards fulfilling the Union’s target of reducing its greenhouse gas emissions by 40 % below 2005 levels in 2030 in the sectors covered by the ESR. It would contribute to the long-term target of climate neutrality in the Union by 2050 at the latest, with the aim to achieve negative emissions thereafter.

Members wanted to make it clear that the regulation does not just cover the period up to 2030 but goes beyond that.

The amended regulation sets Member States' annual emission allowances for the whole period 2023-2030, unlike the Commission's plan to readjust them in 2025, and changes the way the linear trajectory is defined.

An amendment clarifies that only biofuels, bioliquids and biomass fuels that meet the sustainability and greenhouse gas emission savings criteria set out in Directive (EU) 2018/2001 of the European Parliament and of the Council can be considered net zero emission.

Measures taken to limit greenhouse gas emissions should be implemented in accordance with a just and inclusive transition . The Commission should adopt common guidelines identifying methods to assist Member States in implementing this just and inclusive transition.

Adapting national targets to climate neutrality by 2050

Members want to establish a clear link between the ESR and the objective of climate neutrality enshrined in the Climate Law.

The European Commission is asked to report back to ensure that national targets are sufficient to achieve the long-term goal of climate neutrality by 2050 in a fair and cost-effective way, and to set out a greenhouse gas emission reduction pathway for each Member State.

Within six months of the publication of this report, the Commission should present proposals to limit greenhouse gas emissions for the sectors covered by the ESR.

Minimum emissions reduction contribution from non-C02 greenhouse gases for 2030

Members called for a legislative proposal to be presented by July 2023 setting one or more EU-wide targets for non-CO2 emissions covered by the ESR after close consultation with the Scientific Advisory Board on Climate Change.

Flexibilities by means of borrowing, banking and transfer

Members proposed to restrict the rules on banking, borrowing and trading of annual emission allowances and delete the provision to create a new voluntary mechanism, in the form of an additional reserve, which would help participating Member States to meet their obligations. The report also added a requirement that any proceeds by a Member State from emissions trading within the ESR must be allocated to climate action.

In addition, Members did not accept the proposal to introduce an additional safety reserve composed of surplus removals generated by Member States in excess of their targets in the LULUCF Regulation.

Corrective action

Remedial action plans submitted to the Commission should include:

- a detailed explanation as to why the Member State is not making sufficient progress in meeting its obligations under the ESR;

- the total amount of Union funds the Member State has received for climate and ecological transition expenditure and investments, how the use of these funds has contributed to meeting its obligations, and how it intends to use these funds to meet its obligations.

If a Member State exceeds its annual emissions quota for two or more consecutive years, it should undertake a review of its integrated national energy and climate plan and long-term strategy under Regulation (EU) 2018/1999 on the governance of the Energy Union and climate action. The Member State should complete this review within six months.

Access to justice

A new provision is introduced to ensure public access to justice for actions implementing the ESR as amended.

PURPOSE: to amend Regulation (EU) 2018/842 (Effort Sharing Regulation – ESR) on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.

BACKGROUND: the EU put in place a regulatory framework to achieve the 2030 greenhouse gas emission reduction target of at least 40% as endorsed by the European Council in 2014, before the entry into force of the Paris Agreement.

The European Green Deal launched a new growth strategy for the EU that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy. The ‘ European Climate Law ’ has made the EU's climate neutrality target by 2050 legally binding.

The Commission has presented a complementary and interconnected set of proposals as part of the 2030 Climate and Energy ‘Fit for 55’ package to achieve the greenhouse gas emission reduction target of at least 55% compared to 1990 . This ‘Fit for 55’ legislative package is the most comprehensive building block in the efforts to implement the ambitious new 2030 climate target, and all economic sectors and policies will need to make their contribution.

The ‘Fit for 55’ package, the Next Generation EU and the Multiannual Financial Framework for 2021-2027 will help to achieve the twin green and digital transitions that Europe is aiming for.

CONTENT: with this proposal, the Commission aims to amend the Effort Sharing Regulation (ESR) in order to align its contribution to achieving the increased ambition for 2030.

Accelerating emission reductions in those sectors covered by the ESR

To achieve the EU's overall emission reduction target of at least 55% by 2030, the Commission proposes to reduce emissions under the ESR by at least 40% compared to 2005 levels . All Member States should contribute to achieving the EU's rising target. New updated Member State targets would be between -10% and -50% below 2005 levels.

The ESR would continue to cover the road transport and construction sectors, in parallel with their inclusion in a new emissions trading scheme.

National targets and flexibilities

The proposal updates the framework under which the Commission will set the new Member States’ annual emission levels in the years 2023–2030 A review will be carried out in 2025 with a view to adjusting the annual emission allocations for the years of 2026 to 2030 in order to ensure that they are neither too lenient nor too stringent.

The proposal sets national ESR targets based mainly on GDP per capita, in order to ensure fairness and cost effectiveness in effort distribution, while enabling though its flexibilities a cost-efficient achievement of such targets.

Member States can decide to opt-out. This reserve could be triggered only once the requirements of the Climate Law are fulfilled, for the purpose of national compliance with ESR targets by transferring any unused LULUCF credits. They may use a limited a limited amount of credit generated under the LULUCF legislation for compliance in the ESR.

The Commission also proposes a new voluntary reserve, the additional reserve , to help Member States reaching their individual targets, allowing them to use non used net removals generated in the period 2026-2030, subject to the condition that the Union 55% emission reduction target is reached in 2030 with a maximum contribution of net removals set at 225 MtCO2Eq, as required by the European Climate Law.

Monitoring and reporting

The proposal continues the Effort Sharing Regulation with the same monitoring and reporting obligations for Member States and management tasks for the Commission. The Commission will continue to be supported by the European Environment Agency in monitoring Member States’ progress in meeting their obligations under the proposal.

Budgetary implications

The increase in the ESR targets will require additional measures at national level and Member States will need to revise and implement more stringent climate action strategies. Therefore, there is a need for capacity building support measures to be implemented throughout five years (2023-2027) allowing Member States to adjust to a more demanding framework. The total estimated cost of the support measures is EUR 1 750 000.