Policy Engagement Overview
The aggregated evidence of corporate and industry lobbying on the update of the ESR shows supportive engagement from most sectors. However, some entities use their support for an increased ESR 2030 target as a way of arguing in tandem for lower ambition of the EU ETS 2030 emissions reductions target, which covers sectors including the steel and chemical industries.
Long-term Lobbying Trends
The buildings and transportation sector supported setting sectoral GHG targets under the ESR in 2020-21,including industry associations CEMBUREAU and the Community of European Railway and Infrastructure Companies (CER).
Entities across European industry supported maintaining the ESR alongside the potential expansion of the EU ETS to the road transportation and buildings sectors in 2020-21, including the Corporate Leaders Group (CLG), the German Chemical Industry Association (VCI) and EDF.
Heavy industry and cross-sector associations, including BusinessEurope and Cefic, supported increasing the ambition of the 2030 ESR target, but this seems to be in order to reduce the ambition of the 2030 target for ETS sectors.
Several entities advocated against strengthening the ESR, BusinessEurope advocated for maintaining the right for Member States to bank, borrow, trade and use EU ETS and LULUCF credits (flexibilities) to achieve their emission reduction targets. thyssenkrupp stated that the policy must ensure that there are no additional burdens for EU ETS sectors.
New Lobbying Trends since EU Commission Proposal in July 2021
Utilities companies took broadly supportive positions on the proposed reforms to the use of flexibilities to achieve ESR targets, although Iberdrola and Enel suggested they must have clear limits. Iberdrola proposed a 2025 review of the EU’s carbon budget to ensure that overall ESR emissions reductions are not artificially inflated.
Impacts on Policy Ambition
By considering the potential scenarios in the EU Commission's original Impact Assessment Report for ESR reform, and comparing this to the final proposal, a gauge of the impact of industry lobbying can be taken. In this case, supportive engagement across EU sectors appears to have strengthened the EU Commission and Council’s proposal for the ESR, although retaining a weaker position on flexibilities.
EU Commission Proposal
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ESR Scope and Targets: The scope of the ESR has been retained, and it continues to set binding national targets. Furthermore, the increase in the target to 40% compared to 2005 values is in line with the ambition stated in the EU Commission’s inception impact assessment as necessary to reach 55% EU-wide emissions reduction target. However, lobbying on EU ETS ambition in relation to the ESR may have been partially successful (see EU ETS Reform policy page).
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Flexibilities: The flexbilities which allow Member States to meet their targets with LULUCF and ETS credits remain in the proposal, and it introduces a new LULUCF reserve of credits from net GHG removals between 2026-2030 to be used to meet national targets.
EU Parliament Position
The EU Parliament adopted its position on the Effort Sharing Regulation on 8 July, representing a minor increase in ambition relative to the EU Commission's proposal.
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Overall ambition: The Parliament proposal maintained the 2030 target at 40% emissions reduction, however a process was introduced to set non-CO2 emissions targets for agriculture
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Flexibilities: It proposed the deletion of the new LULUCF reserve, however the separate EU ETS and LULUCF flexibilities remained.
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Additional targets: The Parliament proposed that the Commission present EU-wide targets for the reduction of non-CO2 emissions.
#### EU Council Position
The EU Council adopted its position on the Effort Sharing Regulation on 29 June, representing a minor weakening of ambition relative to the EU Commission’s proposal.
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Overall ambition: The Council maintained the 2030 target at 40% emissions reduction, as in the Commission proposal.
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Emissions trajectories: The proposal amended the Commission’s proposed review of emissions trajectories in 2025, so that this would only take place if it would lead to higher emissions caps.
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Flexibilities: The Council preserved LULUCF and EU ETS flexibilities, as in the Commission proposal, but increased flexibilities so that more emissions quotas could be transferred between countries.
Policy Passed
EU policymakers passed the https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=consil%3APE_72_2022_REV_1 file in April 2023, settling on a 40% emissions reduction target by 2030. The agreement maintained most flexibilities, however removed the additional LULUCF reserve in line with the Parliament’s higher ambition position.
