Effort sharing negotiations final

Effort sharing legislation negotiations update

The effort sharing decision deals with the share of emissions reductions from sectors not covered by the emissions trading scheme.

Outsourcing reductions through external offsetting

The Commission proposal on effort sharing envisaged significant use of external offsetting (such as the Kyoto protocol CDM/JI) for emissions reductions from all sectors not covered by the ETS. The overall proportion proposed by the Commission would have amounted to 2/3s of the overall emissions reduction effort. The EP ENVI committee voted to limit the proportion to be accounted for by external offsetting to around 20%. However, the summit agreed to allow member states to use external offsetting to account for over 80% of their overall emissions reduction target.

Compliance and internal flexibility

Under the Commission proposal, which has now been endorsed, member states would annually limit their non-ETS emissions in a linear manner progressing towards the overall 2020 reduction target. This marks a considerable improvement from the current provisions for compliance with the Kyoto protocol. Under the new legislation, member states can borrow a limited amount from the following year's quota or bank any over-achieving of their target.  

The Parliament introduced a possibility to transfer (or sell) over-achievement between Member States within a given year. Under the final 'compromise', this was extended it further to cover prior selling of future over-achievement up to 5% of annual emissions and for it to be usable in any given year within the period up to 2020.

The EP ENVI committee voted for strong compliance mechanisms (fines equivalent to ETS penalties; withholding of ETS allowances; a multiplier for reductions the following year). This was intended to ensure more effective compliance than through the cumbersome and lengthy standard infringement procedures. In the final 'compromise, there was agreement on maintaining a 'multiplier' as a compliance mechanism - this would mean that any emissions reductions not achieved would have to be replaced the following year, with an abatement factor (multiplier) of 1.08.

The 'compromise' on the table would mean less than 20%  of the greenhouse gas emissions reductions that should be realised by non-ETS sectors would  actually have to be delivered in the EU. However, mechanisms for compliance are significantly better than under the current situation.