The European Commission adopted an amendment to Implementing Decision (EU) 2020/2126, reflecting the revision by some Member States of their intentions concerning the use of the “ETS flexibility” under the Effort Sharing Regulation (ESR).
The ESR sets an overall EU target to reduce greenhouse gas (GHG) emissions by 40% by 2030, compared to 2005 levels. The ESR covers the following sectors: domestic transport, buildings, agriculture, small industry, and waste (for more info on the ESR see: Effort sharing 2021-2030: targets and flexibilities – European Commission
The “ETS flexibility” allows nine Member States – Belgium, Denmark, Ireland, Luxembourg, Malta, the Netherlands, Austria, Finland and Sweden – to cancel, each year from 2021-2030, a limited number of EU ETS allowances and receive, in return, an equivalent amount of allocations for use in meeting their ESR obligations. These allowances are deducted from the total that the Member States would otherwise auction.
The ESR caps the amount of ETS flexibility that the eligible Member States can use. This limit is set as a percentage of the Member State’s 2005 emissions in the ESR-covered sectors. That percentage determines the maximum amount of ETS allowances that can be cancelled annually in the period 2021-2030. Within this limit, the nine eligible Member States are free to decide which percentage should be applied to its 2005 emissions when determining the annual quantity of ETS allowances to cancel.
In 2024, the nine eligible Member States were able to revise the percentage previously notified for 2026-2030. Only Denmark and Luxembourg notified changes, indicating that they will not cancel any ETS allowances in the 2026-2030 period. The decision amends Implementing Decision (EU) 2020/2126 to reflect the notifications sent by Denmark and Luxembourg.
The nine eligible Member States will have one final opportunity to revise their intentions regarding the use of the ETS flexibility, by 31 December 2027. That notification will determine the number of ETS allowances to be cancelled for the years 2028-2030.
For more information on the Effort Sharing Regulation and the ETS flexibility, please visit: Effort sharing 2021-2030: targets and flexibilities – European Commission
