Climate action

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Binding annual greenhouse gas emission reductions by Member States ("Effort Sharing Regulation")

Overall state of play

Commission Proposal
• Adopted by the Commission on 20 July 2016, COM/2016/0482
• Adopted by the Commission on 14 July 2021, COM/2021/555
Legal Act adopted: Regulation (EU) 2018/842, Date of effect: 9 July 2018

State of play, main conclusions, outlook

The Effort Sharing Regulation (ESR), as adopted in 2018, sets national targets for emission reductions from road transport, heating of buildings, agriculture, small industrial installations and waste management. Its objective is to achieve 30% greenhouse gas emission reductions compared to 2005, in a manner that is fair for Member States given their different capacities, while ensuring cost-efficiency and environmental integrity at EU level.

In 2021 the Commission adopted a proposal to revise the Regulation. The focus of the proposal is on increasing the Union’s 2030 target for the reduction of emissions to -40% compared to 2005 levels, and review of the emission targets at national level, accordingly. The proposed 2030 national targets range from -10% to -50% compared to 2005 levels.

The proposal keeps the overall architecture of the Regulation and therefore the estimated savings and benefits remain the same.

Estimated savings and benefits

Regulation (EU) 2018/842 was estimated to reduce administrative costs associated with compliance monitoring and reporting by approximately €575 000-690 000 per year over a ten year period.

State of Play:

Adopted: COM/2016/0482, adopted by the Commission on 20 July 2016

Which objective(s) did the Commission pursue?

Less frequent compliance checks are recommended in the Commission proposal, i.e. every five years instead of annually, that will significantly reduce the administrative burden for both Member States and the European Commission while maintaining and simplifying annual reporting.

In addition, the Commission proposal sets national emission targets for every Member State for 2030 expressed as a percentage reduction from 2005 emission levels as well as access to new flexibilities to achieve those targets cost effectively. Collectively, these national targets give an overall EU reduction of 30% in the sectors covered by the proposal. The 2030 targets range from 0% to -40% compared to 2005 levels.

Estimated savings and benefits

It was estimated that administrative costs associated with compliance checks will be reduced by approximately €575 000-690 000 per year over a ten year period.

There are no direct reporting obligations or other administrative consequences for businesses, SMEs or micro-enterprises.

State of Play:

Adopted: Regulation (EU) 2018/842, Date of effect: 9 July 2018

Outcome of Legislative Procedure

The main changes introduced by the co-legislators include:

• An earlier start of the trajectory calculation for most Member States, expected to reduce the total EU emission budget by around 120 million tonnes CO₂ eq.
• A new safety reserve of up to 105 million tonnes CO₂ eq. available to help less wealthy Member States which have overachieved their targets in 2013-2020. The reserve would be only created if the EU as a whole reaches its 2030 target.
• Minor changes to the flexibilities as well as to Annex IV adjustmet of Latvia and Malta.

The main elements of the Commission proposal remained intact after adoption by the legislator. Therefore the expectation remains that administrative costs associated with compliance checks will be reduced by approximately €575 000-690 000 per year over the ten year period 2021-2030.

State of Play:

Adopted on 16 December 2020, Commission Implementing Decision 2020/2126 setting out the values for the 2005 greenhouse gas emissions for each Member State and the Member States' annual emission allocations (AEAs) for the period from 2021 to 2030, pursuant to Article 4(3) of the Effort Sharing Regulation.

In addition to determining the values for the 2005 greenhouse gas emissions for each Member State and the Member States' annual emission allocations (AEAs) for the period from 2021 to 2030, Commission Implementing Decision 2020/2126 also sets the total quantities that may be taken into account for a Member State’s compliance under Article 9 of the Effort Sharing Regulation, pursuant to the flexibility foreseen in Article 6 of the Regulation.

Estimated savings and benefits

The main benefit of the Implementing Decision determining the adjusted AEAs and the maximum flexibilities for eligible Member States is the possibility for Member States to trade the AEAs and use the flexibilities for compliance with the Regulation, so that they can reduce emissions in the sectors covered by the Regulation in a cost-effective manner.