A new study analyzing national climate plans reveals a concerning trend within the European Union: 12 member states are projected to miss their climate targets under the Effort Sharing Regulation (ESR). This regulation, part of the EU’s climate and energy package, mandates binding national greenhouse gas targets for the 27 member states, requiring a collective 40% reduction in emissions (compared to 2005) by 2030. These targets cover five key sectors: road transport, buildings, small industry, waste, and agriculture, with each country’s goal adjusted based on its GDP, imposing stricter requirements on wealthier nations.
Under current plans, EU emissions are only projected to fall by 35.5% by 2030, falling short of the 40% target by 4.5%. Germany and Italy emerge as the worst performers, with Germany projected to miss its targets by 10% and Italy by 7.7%. France narrowly anticipates meeting its targets, while the Netherlands is projected to barely meet its goals. The report, published by Transport & Environment (T&E), highlights the potential for significant financial penalties for countries failing to meet their climate goals.
The ESR allows countries that overachieve their targets to sell emission credits to those falling short. These credits are expected to be traded at an average price of €129. Countries like Greece and Poland are projected to accumulate surplus credits, while Spain anticipates overachieving by 7% and potentially receiving €10 billion from underperforming nations. However, Germany, projected to miss its target by 10%, could face a hefty €16.2 billion bill. Similarly, Italy could incur costs reaching €15.5 billion.
The report warns that with numerous countries likely to miss their targets, a scarcity of emission credits could arise, potentially driving up prices in a 2030 bidding war. This highlights the urgent need for countries to implement new policies to meet their targets and avoid substantial financial burdens. T&E emphasizes that countries have time to rectify their policies and implement measures like increased renewable energy uptake, building insulation, and other efficiency initiatives to reach their 2030 targets. While countries were expected to submit new National Energy and Climate Plans (NECPs) by June 30th, only four met the deadline: Netherlands, Denmark, Finland, and Sweden. Of these, only six countries – Croatia, Czechia, Hungary, Luxembourg, Slovenia, and Spain – received a clear pass mark from the Commission for their draft NECPs, indicating alignment with EU climate goals. Denmark, after revising its draft documents, is now projected to meet its targets.
The stark reality of potential financial penalties and the risk of a bidding war over scarce emission credits underscores the critical need for EU member states to prioritize climate action and implement ambitious policies to achieve their emissions reduction targets.
