A new report comissioned by Greenpeace and prepared by Ecofys, explains how setting 2030 targets will reinvigorate the ETS and will put EU emissions on track to limit global temperature increase below two degrees Celsius (2°C).
In order to keep this goal within reach, increasing global emissions need to reach their peak this decade and start declining at a significant pace. But at present, emissions are projected to increase beyond those levels.
The European Commission estimates that by 2020, the companies participating in the ETS will have accumulated a surplus of 1.5 to 2.3 billion allowances, which may be banked and used beyond 2020. This is about the same size as the annual emissions budget of ETS companies (just below 2 billion tonnes).
The 2°C goal, that was agreed by the EU in 1996 and reconfirmed many times later, is the starting point of an indication of the EU’s ‘fair share’ within global pathways.
An indicative ‘fair share’ can be provided by using equity principles for defining a reasonable share in the total effort by all countries. As the perception of ‘fairness’ is largely subjective, a range of equity principles reflecting the various positions in the international climate change negotiations have been considered. For instance, in one type of equity approach all countries participate immediately, working towards converging per capita emissions. In other approaches some countries are obliged to start reducing earlier than others based on their historical responsibility for climate change and/or economic capability.
Most effort sharing approaches allow for international emissions trading, meaning that credits can be bought from abroad if the effort cannot be met entirely domestically. If international credits are allowed, developed countries like the EU usually are expected to achieve part of their target domestically and part by the purchase of credits. The domestic emissions may therefore be higher than the nominal target.
According to calculations in this study, the EU’s 20% target for 2020 is less stringent than its ‘fair share’. Assuming that the 2°C goal is reached at lowest global costs and taking into account different equity principles, the ‘fair share’ of the EU by 2020 in the ‘immediate action’ scenario would be an emissions reduction of around 25% (median of a full range from 18 to 40%), compared to 1990.
This would also be realistic, as EEA projections already suggest reductions up to 25% if all planned policies are executed. (Earlier calculations (by Höhne et al. in 2007) indicated that a ‘fair share’ would require more ambitious reductions for the EU of between 30 and 40%. However, these calculations were based on a global pathway that is no longer attainable as actual emissions since then turned out to be too high.
I the same assumptions, the EU’s ‘fair share’ by 2030 would be an emissions reduction of around 49% (range from 39 to 79%). The domestic reductions of 40 to 44% by 2030 suggested by the European Commission’s low carbon road map are within the lower end of this range of the ‘fair share’ under global ‘immediate action’, if they are not watered down by surplus allowances from earlier trading periods. In addition to domestic reductions the EU is assumed to support developing country reductions, e.g. by the purchase of international allowances, which requires the target to be more ambitious than 40 to 44%.