A Guide to European Climate Policy

The Effort Sharing Regulation (ESR) is the EU's primary instrument for reducing greenhouse gas emissions in sectors not covered by the Emissions Trading System (ETS), accounting for approximately 60% of total EU emissions. For the 2021-2030 period, the ESR sets an overall target of -30% compared to 2005 levels, with individual Member State targets ranging from -40% to 0% based on GDP per capita. The regulation covers transport (35%), buildings (25%), agriculture (17%), industry (16%), and waste (5%). To ensure compliance, the ESR utilizes Annual Emission Allocations (AEA) and various flexibility mechanisms, including banking, borrowing, and trading units between countries, though some are criticized as 'loopholes' that may undermine decarbonization.

• The Effort Sharing Regulation (ESR) covers approximately 60% of the EU's total greenhouse gas emissions, specifically targeting sectors not included in the Emissions Trading System (ETS).
• The ESR's overall 2030 target is a 30% reduction in emissions compared to 2005 levels, with national targets for Member States distributed based on wealth (GDP per capita), ranging from a 40% reduction for the wealthiest to stable emissions (0%) for the poorest.
• The emissions covered by the ESR are distributed across five main sectors: transport (35%), buildings (25%), agriculture (17%), industry (16%), and waste (5%).
• To align with the Paris Agreement's ambition, Climate Action Network Europe suggests the ESR's 2030 target should be increased from 30% to at least 47%.
• Member States that fail to meet their climate targets face an automatic penalty where excess emissions are multiplied by a factor of 1.08 and added to the following year's emissions target.
• The ESR employs several flexibility mechanisms to lower compliance costs, including 'Banking' of overachievements, 'Borrowing' up to 5% of annual targets from future years, and the transfer of surplus units between Member States.
• Certain flexibility mechanisms, specifically those involving the land use sector and the EU ETS, are described as 'loopholes' because they may allow higher emissions in ESR sectors and undermine the low-carbon transition.

APA

de Jong, F. (n.d.). A Guide to European Climate Policy. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2017/01/European-Climate-Policy-Guide-VOL2-ENGLISH-WEB-SINGLE_.pdf

Chicago

de Jong, Femke. A Guide to European Climate Policy. Carbon Market Watch, n.d. https://carbonmarketwatch.org/wp-content/uploads/2017/01/European-Climate-Policy-Guide-VOL2-ENGLISH-WEB-SINGLE_.pdf.

Wikipedia

{{cite report |last1=de Jong |first1=Femke |title=A Guide to European Climate Policy |publisher=Carbon Market Watch |url=https://carbonmarketwatch.org/wp-content/uploads/2017/01/European-Climate-Policy-Guide-VOL2-ENGLISH-WEB-SINGLE_.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dejongndguide, author = {de Jong, Femke}, title = {{A Guide to European Climate Policy}}, institution = {Carbon Market Watch}, url = {https://carbonmarketwatch.org/wp-content/uploads/2017/01/European-Climate-Policy-Guide-VOL2-ENGLISH-WEB-SINGLE_.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }