MEPs call for more ambitious Member State carbon budgets

MEPs have called for stricter carbon budgets in the 2020s, and extending annual budgeting up to 2050

MEPs in the Environment Committee (ENVI) voted to adopt a position on Tuesday on the Commission’s proposed Effort Sharing Regulation (ESR), which when passed into law will set annual non-ETS carbon budgets for Member States from 2021-30, replacing the current Effort Sharing Decision (ESD).
 
The MEPs’ Report (which has yet to be published) comprises the following proposed amendments to the Commission’s draft law (which can be found here):
 
Compromise Amendments A, B, C, D, E
ENVI Amendments 3, 28, 30, 31, 64, 94, 113, 114, 194, 249
TRAN Amendments 5, 6, 8, 25 26
ITRE Amendments 1, 2, 6, 12
AGRI Amendments 2, 5, 10
 
The amendments would retain the Commission’s proposed 2030 carbon budgets for Member States, with a linear reduction from 2021, but would start with lower budgets in 2021, thereby reducing the overall carbon budget for the period.
 
The MEPs have also proposed including (non-ETS) emissions from aviation and shipping within the scheme, and extending budgeting from 2030 to 2050, with a linear reduction terminating in budgets that are at least 80% below each Member State’s 2005 emissions.
 
In terms of flexibilities, the amendments would allow more borrowing from future years’ budgets, and more trading of budgets between Member States, but introduce new restrictions on banking budgets. The MEPs also propose restricting the extent to which Member States can count net removals from LULUCF within their emissions accounting, allowing for a total of 190 million tonnes, rather than 280 million tonnes.
 
The amendments would retain the Commission’s proposal to allow Member States to use up to 100 million ETS allowances towards compliance, but would require the cancelled permits to be counted as still in circulation for the purposes of calculating the ETS market surplus. This would essentially lower the Market Stability Reserve threshold by up to 100 million in ETS Phase IV.
 
The MEPs have also proposed a new flexibility mechanism—the Early Action Reserve—that would allow low-GDP-per-capita Member States that have overachieved their ESD targets to expand their ESR budgets by up to 70 million tonnes between 2026-30 under certain conditions. This amounts to allowing limited banking of ESD budgets into the ESR period.
 
The amendments leave open the possibility of incorporating Paris flexibility mechanisms and domestic offsetting schemes under Article 24a of the ETS Directive into the ESR. They would also require more regular checks on progress (every two years), greater transparency, and an earlier review of ambition in 2018.
 
Parliament is expected to vote on the Report (and any other amendments tabled ahead of plenary) in June, thereby adopting a position. Member State governments, meanwhile, aim to reach a position at the Environment Council on 19th June, potentially enabling the file to move to trilogue.
 
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