Revised Effort-sharing Regulation

Members' Research Service

Dec 1

Written by Dessislava Yougova.

The revised Effort-sharing Regulation (ESR) establishes more ambitious binding targets for each Member State for reducing greenhouse gas (GHG) emissions in key sectors, and brings the effort-sharing legislation into line with the upgraded EU-wide emissions reduction target for 2030 to achieve climate neutrality by 2050.

Background

The revision of the Regulation on binding annual GHG emissions reductions by Member States from 2021 to 2030 ('Effort-sharing Regulation', ESR) is part of the 'fit for 55' set of legislative proposals tabled by the European Commission in July 2021. To contribute to the new EU climate ambitions – climate neutrality by 2050 and a decrease in net emissions by at least 55 % by 2030 – Member States have to achieve a collective 40 % reduction in their GHG emissions by 2030, compared with 2005, in the domestic transport, buildings, agriculture, small industry, waste, energy supply and product use sectors. The Commission thus proposed new binding targets for reducing emissions per country and a revision of the annual emissions allocations (AEAs), i.e. the maximum level of emissions each Member State can generate per year. Following interinstitutional negotiations, the European Parliament and the Council agreed to maintain the common target and national contributions set in the Commission proposal. Compromise was reached on how to calculate the AEAs and on the flexibilities aimed at assisting Member States in their efforts. In line with Parliament's position, the additional voluntary reserve – new flexibility proposed by the Commission – was removed, while corrective action towards Member States was strengthened. Member States are also required to ensure a just and socially fair transition for all when undertaking actions to limit GHG emissions.

Objectives and targets

The revised ESR establishes national reduction targets ranging from 10 % to 50 % compared with 2005 emissions, and sets AEAs, calculated in tonnes of CO₂ equivalent, which will be reduced progressively until 2030. Since Member States are primarily responsible for implementing policies in effort-sharing sectors, they are free to choose the appropriate measures across these sectors to meet their commitments. The effort-sharing legislation also includes flexibilities, such as borrowing, banking and trading emissions. The Commission controls and assesses compliance with the ESR provisions through annual assessments of progress towards the targets, and compliance checks in 2027 and 2032.

Effort-sharing legislation covers emissions from a wide range of sources, such as petrol and diesel used for road transport, fuels used for heating and cooling in buildings, animal digestion and fertilisers used in agriculture, waste treatment, and smaller industrial installations, all accounting for around 60 % of total EU emissions. At EU level, about two thirds of ESR emissions are CO₂, with road transport representing about a third and direct emissions in buildings, a fifth. ESR also covers almost all non-CO₂ GHG emissions, of which half come from agriculture. The impact assessment shows that strengthening climate ambition in the ESR will particularly affect these three sectors, which will have to reduce their GHG emissions significantly by 2030. Achieving ESR targets will also contribute to air quality in urban areas through improved residential heating and transport – sectors included in the new emissions trading system (ETS) II.

Implementation on the ground

The ESR, initially adopted in 2018, is the successor to the Effort-sharing Decision (ESD), which set the national targets for the 2013-2020 period. Between 2005 and 2020, EU GHG emissions fell by 16.3 % in the effort-sharing sectors, overachieving the 10 % reduction target set by the ESD. The EU climate and energy legislation required Member States to adopt integrated national energy and climate plans (NECPs) for the 2021-2030 period. These plans, which are due to be updated by 30 June 2024, provide key information on how each country aims to achieve its emissions reduction target. In 2022, the Commission reported that the EU-27 would reduce emissions in ESR sectors by 22 % by 2030 if Member States continued to rely only on current national climate measures. Projections in the 2023 progress report show that, if all planned measures were implemented, emissions could be cut by 32 %, which is still below the new reduction target of 40 %. The Commission thus urges Member States to step up their climate action by implementing additional measures in relevant sectoral policies. The report also notes that in 2022, emissions covered by the ESR decreased by 2.9 % compared with 2021, while transport was the main driver of increased GHG emissions. In the agricultural sector, only a slight drop in emissions is expected by 2030. Below is a selection of regional and local initiatives related to the effort-sharing sectors.

Electromobility in Gothenburg, Sweden
Between 2019 and 2020, 210 electric buses were introduced in various locations across the Västra Götaland region, including Gothenburg. The city has already made significant progress in electrifying its public transport, and now aims to make the entire transport system electrified and fossil-free by 2030. The first hybrid electric ferry has already been introduced as part of the regular public transport system operating on the river Göta. The emissions of CO₂, nitrogen oxides and particulate matter could thus be reduced by a third.
Multiple mobility in Cotentin, France
Since 2019, the local authority of Cotentin agglomeration (Normandy) has offered electric bikes for rent for a maximum of 12 months. Users wishing to buy their own electric bikes received a subsidy. Owing to its enormous success, the initiative made 200 additional electric bikes available for long-term rental in 2022. An on-demand transport network was also implemented throughout the entire agglomeration, allowing inhabitants of the smallest municipalities to reach main transport axes. They can book a vehicle that will pick them up and drop them off at the closest stop on a regular bus line. At least one stop is available in each municipality.
Fourteen sustainable dwellings using local resources in Formentera, Spain
The Reusing Posidonia project was developed by the Balearic Institute of Housing in cooperation with the Balearic Islands Government, and funded at 41 % by the EU's LIFE+ programme. Under the project, 14 dwellings were constructed to demonstrate the feasibility of an innovative model of multi-family residential buildings that prioritises ecological locally sourced products such as dried Posidonia, a type of seagrass used in roof insulation. The reported results show a significant reduction in energy and water consumption and waste generation compared with conventional buildings, as well as in CO₂ emissions generated during the works.
Improved flux prototypes for N2O emission reduction from agriculture in Tuscany, Italy
This project, developed under the LIFE+ programme, improved the monitoring of nitrous oxide (N2O) emissions from agricultural soil by developing two prototypes to measure emission fluxes. The project also contributed to the understanding of how N2O emissions are produced, and promoted the use of specific agricultural practices for reducing these GHG emissions in Tuscany. The Tuscany region, beneficiary partner of the project, was involved in the measurement tests of GHG emissions in different cropping systems, as well as in drafting, disseminating and monitoring the adoption of the best practices manual.
Regional subsidy for energy renovation work, Île-de France
The Île-de-France region offers residents who own their homes a subsidy for replacing their oil-fired, wood or coal boilers. The objective is to encourage the use of more efficient and ecological heating solutions, such as equipment for solar-powered heating or hot water production, heat pumps other than air-to-air, and thermodynamic water-heater hybrid systems. This local subsidy of €1 000, valid until the end of 2023 and compatible with national aids, is granted only if the works are carried out by competent professionals.

For more insights on the legislative process leading up to the adoption of the new legislation, see our 'Legislation in progress' briefing or consult the Legislative Train Schedule.

Read this 'at a glance' note on 'Revised Effort-sharing Regulation' in the Think Tank pages of the European Parliament.

Read more on 'EU measures against climate change'.