Commission takes stock of how key pieces of climate legislation are operating

The Commission has today published reports on the operation of several pieces of climate legislation: the European Climate Law; the EU Emissions Trading System (EU ETS) Directive; the Effort Sharing Regulation; and the Land Use, Land Use Change and Forestry (LULUCF) RegulationThese reports are required under the legislation, to provide an overview of how the different elements of climate policy are being implemented.

European Climate Law

By enshrining the 2050 climate-neutrality objective into legislation and providing for continuous progress on adaptation to climate change, the EU has set the long-term direction of travel and provided certainty for future investment decisions. The report details the actions taken since the European Climate Law’s entry into force to speed up the transition to climate neutrality, to enhance adaptative capacity, strengthen resilience and reduce vulnerability to climate change.

The EU Emissions Trading System Directive, Effort Sharing Regulation  and Land Use, Land Use Change and Forestry Regulation were revised as part of the ‘Fit for 55’ legislative package, aligning them with the updated 2030 climate target to reduce net greenhouse gas emissions by at least 55% compared to 1990 levels, as set out in the European Climate Law. Other additional initiatives in the field of energy or transport were adopted to speed up the transition to climate neutrality and deliver the European Green Deal.

The Communication on a recommended 2040 Climate target, launched the process of setting the 2040 emissions reduction target for the EU, opening a broad political debate and dialogue with European citizens, stakeholders and governments on the way forward. This will inform the next Commission in making the legislative proposal to include the 2040 target in the European Climate Law.

In parallel, action is underway to enhance adaptive capacity, strengthen resilience and reduce vulnerability to climate change. The Communication on Managing climate risks in Europe stresses key actions for the EU and its Member States to better anticipate, understand and manage increasing climate risks, notably to clarify risk ownership, and in that way protect people and prosperity.

Emissions Trading System

As part of the ‘Fit for 55’ legislative package, the scope of the EU ETS was broadened, and the rate of annual emission reductions has been increased. 

  • The EU ETS was expanded to cover maritime transport and additional emissions from aviation. 
  • Altogether, the emissions cap has been tightened to bring emissions down 62% by 2030 compared to 2005 levels and the operational parameters of the Market Stability Reserve (MSR) have been calibrated to maintain a balanced EU carbon market. 
  • To help advance sectoral decarbonisation, free allocation rules have been updated. 
  • A new emissions trading system for fuels used in buildings, road transport and additional sectors (mainly small industry) has been introduced and will start operating in 2027 to stimulate cost-effective emission reductions in these sectors (ETS 2). A Social Climate Fund has been created to use the revenues from emission trading to help vulnerable households and micro-enterprises to make the transition. It will come into force one year before the ETS2 system starts operating. 
  • To aid other sectors in tackling the decarbonisation challenge, more resources from the ETS framework have been leveraged for the green transition. 
  • To ensure that the money from pricing pollution lead to investments in the green transition, Member States must use 100% of the revenues from the sales of EU allowances on climate and energy purposes. 

The increased ambition that has been set in the EU ETS will only be achieved if the legal framework is implemented correctly. A review of the ETS will be presented in 2026 primarily focusing on whether to include waste management in the EU ETS from 2028 and whether it would be possible to integrate removals and non-permanent use of captured carbon in the EU ETS. 

Effort Sharing Regulation

Member States are making progress towards achieving their increased national targets under the Effort Sharing Regulation. Measures adopted at EU level will help Member States to reduce their emissions in the sectors covered by this Regulation (i.e. domestic transport (excluding aviation), buildings, agriculture, small industry and waste). These EU measures are supplemented by Member States’ policies at national level, taking into account their specific circumstances. Based on Member States’ draft updated National Energy and Climate Plans (NECPs), additional efforts are needed for the EU to meet its target to reduce emissions under the Effort Sharing Regulation by 40% in 2030 compared to 2005. The Commission made recommendations to Member States on improving their draft updated NECPs in December 2023 and suggested that most Member States should put additional policies and measures in place to fill the gap in reaching the Effort Sharing targets. Member States should submit their final Plans by end-June 2024. 

Land Use, Land-Use Change and Forestry

The Land Use, Land-Use Change and Forestry Regulation covers emissions and removals from soils, plants and other biomass. The land sector plays a key role in achieving the EU climate neutrality objective as well as building a sustainable bioeconomy. It has the potential to provide long-term climate benefits, but also offers other vital services to society, such as bio-based materials, food and ecosystem services.

The revised Regulation brought an enhanced target to increase land-based net removals in the EU by an additional 42 million tonnes of CO₂ equivalent (Mt CO₂-eq) by 2030, as compared to the yearly average over the period 2016-2018. This will result in a total net sink at the EU level of -310 Mt CO₂-eq. The target is distributed in a way that requires each Member State to step up its climate ambition in their land use policies.

Under the new Regulation, Member States are obliged to gradually achieve better reporting accuracy, in line with the more advanced methods in the guidelines of the Intergovernmental Panel on Climate Change (IPCC) and making use of new monitoring technologies. 

The EU’s carbon sink has been on the decline in the last decade, and based on the draft NECPs, the EU is currently not on track to meet the 2030 net removal target, falling short by around 50 Mt CO₂-eq. It is essential to reverse this negative trend and increase the resilience of the EU land sector by putting in place appropriate policies to make natural carbon sinks stable, resilient and long-lasting, supporting the goal of the climate-neutral sustainable bioeconomy.

The Commission will begin an evaluation process in 2024 to assess the regulation against the “Better Regulation” principles, such as effectiveness, efficiency, and coherence with other land sector policies. The European Commission and the European Environment Agency have today also published a LULUCF Handbook to support Member States in the design and implementation of their land sector policies.

Read more:

Commission report on the operation of the European Climate Law and of the Effort Sharing Regulation, and on the Emissions Trading System Directive

Commission report on the Land Use, Land-Use Change and Forestry Regulation 

Handbook on the updated Land Use, Land-Use Change and Forestry Regulation 

Press release: Commission welcomes completion of key ‘Fit for 55′ legislation, putting EU on track to exceed 2030 targets (including Q&A on ETS, ESR and LULUCF) 

Press release: Commission presents recommendation for 2040 emissions reduction target (6/02/2024)

Press release: Commission calls to improve updated NECPs (18/12/2023)

 

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