Europe’s carbon budgets are becoming dangerously unmoored from the 2030 target they were meant to protect. New rules are urgently needed to course-correct Europe’s carbon budgets and emissions to control for Brexit, unregulated aviation emissions and other unanticipated threats, writes Damien Morris, director of consultancy Futureproof.
While it is widely recognised that Europe has a domestic target to cut greenhouse gases by at least 40% in 2030, this climate target lacks any independent existence in law. Instead, this headline commitment is enforced by a package of legislation under Europe’s so-called 2030 Climate and Energy Framework with Europe’s carbon budgets acting as the ultimate backstop for Europe’s greenhouse gas target. These include the EU Emissions Trading System (ETS), which directly limits emissions from power stations, factories, and aircraft, and the EU Effort Sharing Regulation (ESR) which limits member states’ emissions arising from heat, transport, waste and agriculture.
When the European Commission initially proposed the 2030 framework, the various carbon budgets all fit together like an intricate jigsaw puzzle to align with the 2030 greenhouse gas targets. The trajectory proposed for the EU ETS and the national targets in the Effort Sharing Regulation duly converged just over 40% below 1990 levels. Unfortunately, however, some of the initial assumptions used to determine these trajectories and targets have since grown obsolete.
To begin with, the absolute level of the greenhouse gas target changes over time. Revisions to the greenhouse gas inventory redefine 1990 emissions and effectively change the baseline that the 40% reduction in emissions is calculated from. Some of the parameters that have been included in the draft carbon budgets legislation were set on the basis of earlier greenhouse gas inventories with different 1990 baselines. In effect, static carbon budgets are being required to hit a moving target.
A more serious threat, however, arises from changes to the types of emissions covered by Europe’s carbon budgets. The targets and trajectories for the carbon budgets were initially determined on the basis that emissions from outbound international flights would be included and would also count towards the EU climate target. Since then, the Commission has proposed indefinitely extending a derogation for the majority of international flights from the EU ETS.
This derogation establishes an incompatibility between the scope of emissions covered by the carbon budgets and the scope of emissions included in the intended greenhouse gas target. It also threatens to reduce the stringency of the carbon budgets for the sectors which are still covered. We estimate this derogation would make more than 200 million additional allowances available to stationary sectors in the EU ETS, owing to reduced aviation demand.
Similarly, we find that the secession of the UK from the EU, if accompanied by an exit from the EU ETS and the EU ESR, would leave the carbon budgets stranded 39.5% below 1990 levels for the remaining 27 member states, falling short of the official EU climate goal.
The critical issue is not that the EU carbon budgets might arrive half a percentage point or so short of the target in 2030, or that they contain a few hundred million more allowances than they should, but that there was nothing preventing the situation from being far worse. At present, no formal checks exist to ensure that Europe’s carbon budgets are resilient to changes like these and can continue to adequately deliver the greenhouse gas target. Instead, accountability for achieving the target has been unhealthily reliant on political pressure from advocacy groups and other stakeholders rather than internal regulatory checks and balances.
To protect the EU target against future shocks, Futureproof’s new report, Hitting a Moving Target, recommends that EU policymakers introduce a “triple lock” on the greenhouse gas target: defining the target more clearly in law, routinely recalibrating the EU’s carbon budgets to ensure they line up with the official target, and periodically reviewing policies and measures to ensure that EU emissions also fall in line with that target.
The third recommendation, in particular, would help resolve the current disconnect between the compliance framework and the target. Currently, member states and companies can remain fully compliant with the carbon budgets while collectively exceeding the EU’s 2030 greenhouse gas target simply by using carbon allowances banked from previous years. Clear triggers should be introduced in legislation to strengthen current policies or introduce new policies if emissions are not declining at an appropriate pace, making 2030 a hard deadline for achieving the required 40% cut in emissions.
Once an EU greenhouse gas target has been politically agreed, enforcing that target should be a technical and regulatory challenge, not an ongoing political challenge. While the process for determining the new legislation implementing the 2030 target is already very far progressed, we hope that these recommendations might yet be considered and incorporated. We feel these three measures, taken together, would resolve some persistent ambiguities about the nature of the EU’s greenhouse gas target and better ensure that the target is faithfully delivered.
Futureproof’s report, Hitting a Moving Target is published today.
