This report shows that EU-wide cost-effective emission reduction opportunities will not align with Member States’ national reduction targets. These targets will be set based on GDP/capita with some adjustments in line with the solidarity principle. If the sharing of effort were aligned better with cost-effective reduction opportunities spread across the Member States, the Effort Sharing Decision (ESD) target could be increased to 50% below 2005 and up to 2 billion tonnes of additional emission reductions could be delivered between 2021-2030.
This report should be considered alongside The Effort Sharing Dinosaur (May 2016), our report revealing problems with the current scheme.
In order to facilitate additional, fair, and cost-effective emissions reductions in the ESD by 2030, and consequently, in the whole economy by 2050, in its proposal for ESD II, the EU institutions should:
- Introduce a new market-based flexibility between Member States; the European Project-Based Mechanism (EPM).
- Prevent the inclusion of any flexibilities that would dilute the 2030 target and increase the surplus of AEAs. This includes not carrying-over the expected surplus of AEAs from ESD I to ESD II and avoiding the creation of flexibilities with other climate policies (particularly ETS and LULUCF) before 2030;
If an EPM is introduced into ESD, it could pave the way towards the establishment of an EU economy-wide carbon budget post-2030 that will make use of the efficiency created by market based mechanisms (an EPM and the ETS) to enable a more ambitious emission reduction effort in the period until 2050.