The EU has adopted horizontal targets for the reduction of greenhouse gas emissions. The essential tools in achieving reductions at EU level are the EU Emissions Trading System (EU ETS) that covers emissions from energy and industry as well as national reduction targets of sectors outside the emissions trading system, such as agriculture and transport. Furthermore, the EU has set targets for renewable energy and energy efficiency, in addition to pan-European regulations in several fields.
EU 2030 target: 55 % reduction of greenhouse gas emissions
The European Council decided in 2020 that EU’s greenhouse gas emissions should be reduced by at least 55 percent by 2030 compared to 1990 base levels. The target has in June 2021 been made legally binding through the adoption of the European Climate Law. To implement the 2030-target of at least 55 percent, the Commission has 14 July 2021 tabled a Fit for 55 package.. The package contains new proposals for legislation (e.g. a Carbon Border Adjustment Mechanism) and a number of revisions of existing legislation (e.g. EU ETS, Effort Sharing Regulation, Directive of Renewables Energy, Directive on Energy Efficiency, Regulation on CO2-standards for light vehicles).. In addition, the Commission is expected to present further measures in December 2021, e.g. a revision of the Directive of Energy Performance of Buildings and a new proposal for reduction of methane emissions in the energy sector.
Read more about the EU 2030 framework of climate and energy policy, which details climate efforts from 2021-2030
EU’s CO2 Emission Trading System
The EU Emissions Trading System (EU ETS) covers emissions of energy in the production of electricity, district heating, large industrial plants, oil and gas production, in addition to aviation as part of a pan-European regulation. The EU Emissions Trading System caps the amount of permissible CO2 emissions through quota allocation and creates a system of trade for CO2 quotas. For example, a company that has utilized its allowance of quotas can buy from other companies who use less. The objective is to incentivize emission reduction activities as the polluter seeks to reduce the amount they have to pay.
The regulation became effective in 2005 and is officially called the “European Union Greenhouse Gas Emission Trading System”. The legislative framework of the EU ETS for its next trading period (phase 4) was revised in early 2018 and is now up for revision again in relation to achieve the EU's updated 2030 emission reduction targets of at least 55 percent.
Read more about the EU Emission Trading System here.
Reduction of greenhouse gas from non-ETS sectors
Greenhouse gas emissions from sectors that are not part of the Emissions Trading System are regulated by a burden sharing agreement among EU Member States. For Denmark, emissions attributed to transport, agriculture and buildings with individual heating are the largest non-ETS sources of emissions. The burden sharing agreement establishes a framework for reduction shares among Member States and is based on an allocation principle of GDP. Policy measures pursued to reach the reduction target are up to each Member State to decide.
According to the agreement, reduction targets of non-ETS emissions of 0-40 % compared to 2005 base levels will be set for each Member State. A reduction target of 39 % by 2030 compared to 2005 is set for Denmark.
The agreement involves the foundation for a continuation of the existing flexibility mechanisms:
- Unlimited access to purchase of emission rights of other Member States.
- Unlimited access to purchase of EU internal project credits.
- Use of quotas from the EU Emissions Trading System (EU ETS)
- Including land use, land-use change, and forestry (LULUCF) credits from improved terrestrial
To achieve climate neutrality by 2050 and the intermediate target of an at least 55 percent net reduction in greenhouse gas emissions by 2030, the European Commission has proposed a revision of the effort sharing regulation and to strengthen and expand the scope of the EU ETS to transport and buildings.
Read more about the Fit For 55 Package here.
Emissions and terrestrial removals
Under current EU legislation adopted in May 2018, EU Member States have to ensure that accounted greenhouse gas emissions from land use, land use change or forestry are balanced by at least an equivalent accounted removal of CO2 from the atmosphere in the period 2021 to 2030.
The LULUCF Regulation implements the agreement between EU leaders that all sectors should contribute to the EU's 2030 emission reduction target, including the land use sector.
The LULUCF Regulation:
- simplifies and upgrades the current accounting methodology under Decision No 529/2013/EU and the Kyoto Protocol
- establishes a new EU governance process for monitoring how Member States calculate emissions and removals from actions in their forests
- broadens the scope of accounting to cover all managed land within the EU, using more recent benchmarks for performance – and thereby improving accuracy of the accounts
To achieve a climate-neutral EU by 2050 and the intermediate target of an at least 55 percent net reduction in greenhouse gas emissions by 2030, the European Commission has proposed a revision of the Regulation on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry (LULUCF).
Read the revised December 2019 version here.
EU Climate regulation of the transport sector
The original Renewable Energy Directive (2009/28/EC) (RED) focused on the production and promotion of renewable energy sources. The policy set a 20 percent target for the EU’s total energy needs to be met by renewables by 2020 The overall EU target for Renewable Energy Sources consumption was raised to 32 percent by 2030 in the revised Renewable Energy Directive, RED II. The revision also included a new provisions for enabling self-consumption of renewable energy, an increased 14 % target for the share of renewable fuels in transport by 2030 and strengthened criteria for ensuring bioenergy sustainability.
To achieve a climate-neutral EU by 2050 and the intermediate target of an at least 55 percent net reduction in greenhouse gas emissions by 2030, the European Commission has proposed a revision of the Renewable Energy Directive, including to increase the target from 32 percent to 40 percent by 2030.
Most of the other elements in the new directive need to be transposed into national law by Member States by 30 June 2021, when the original renewables directive will be repealed.
European strategy for low carbon emission mobility
On 20 July 2016, the Commission issued an announcement about a European Strategy for Low- Emission Mobility, which is part of the Commission's package dealing with the reduction of CO2 emissions in economic sectors belonging to the non-ETS group, which includes transport. It is important to account for transport, as the sector is responsible for a quarter of the EU’s total greenhouse gas emissions and is the main cause of air pollution in cities.
In April 2019, the European Parliament and the Council adopted a new regulation, setting CO2 emission performance standards for new passenger cars and for new vans in the EU. The regulation started applying January 1st 2020.