TACKLING 60% OF THE EU’S CLIMATE PROBLEM

The document details the Effort Sharing Decision (ESD), which manages greenhouse gas reduction targets for EU Member States in sectors not covered by the EU Emissions Trading System (EU ETS). It explains how targets are set based on GDP per capita, the role of Annual Emission Allocation units (AEAus), and the specific reporting and compliance cycles managed by the European Commission. The report also outlines seven flexibility options—including banking, borrowing, and the use of Kyoto units—and discusses how the ESD interacts with other EU directives on renewable energy and energy efficiency, as well as the Kyoto Protocol.

• The Effort Sharing Decision (ESD) covers non-ETS sectors, which represent nearly 60% of the EU's emissions, and sets a collective EU target of a 10% reduction below 2005 levels by 2020.
• Individual Member State targets under the ESD are based on wealth (GDP per capita), ranging from a 20% reduction for the wealthiest to an allowed 20% increase for the poorest by 2020.
• Compliance is managed through Annual Emission Allocation units (AEAus), where one unit equals one tonne of CO2eq; these units are held only by Member States and the European Commission, not private companies.
• Member States can utilize seven flexibility mechanisms to meet targets: borrowing up to 5% from future years, unlimited banking of unused AEAus, transferring up to 5% of future AEAus, transferring unused AEAus after compliance is established, using Kyoto units (CERs and ERUs) up to 3% of 2005 emissions, transferring unused CDM quotas, and using domestic offsets under Article 24a.
• Non-compliance results in an infringement procedure and a penalty where the following year's AEA is decreased by 1.08 times the previous year's shortfall, alongside a temporary suspension of emission allocation and credit transfers.
• The ESD framework interacts with the Renewable Energy Directive and the Energy Efficiency Directive, which mandate measures such as renovating 3% of public sector buildings annually from 2014 and setting binding renewable energy shares for 2020.
• Member States face a 'double compliance situation' due to discrepancies between the ESD and the Kyoto Protocol regarding base years, Global Warming Potentials (GWP), and the inclusion of LULUCF and NF3.

APA

Carbon Market Watch (2014). TACKLING 60% OF THE EU’S CLIMATE PROBLEM. https://carbonmarketwatch.org/wp-content/uploads/2014/05/Report-Legislative-Framework-of-the-ESD-Carbon-Market-Watch_WEB.pdf

Chicago

Carbon Market Watch. TACKLING 60% OF THE EU’S CLIMATE PROBLEM. 2014. https://carbonmarketwatch.org/wp-content/uploads/2014/05/Report-Legislative-Framework-of-the-ESD-Carbon-Market-Watch_WEB.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=TACKLING 60% OF THE EU’S CLIMATE PROBLEM |date=May 2014 |url=https://carbonmarketwatch.org/wp-content/uploads/2014/05/Report-Legislative-Framework-of-the-ESD-Carbon-Market-Watch_WEB.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2014tackling, author = {{Carbon Market Watch}}, title = {{TACKLING 60\% OF THE EU’S CLIMATE PROBLEM}}, institution = {Carbon Market Watch}, year = {2014}, month = may, url = {https://carbonmarketwatch.org/wp-content/uploads/2014/05/Report-Legislative-Framework-of-the-ESD-Carbon-Market-Watch_WEB.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }