(1)

The Paris Agreement (4), adopted on 12 December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) (the ‘Paris Agreement’), entered into force on 4 November 2016. The Parties to the Paris Agreement have agreed to hold the increase in the global average temperature well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels. That commitment has been reinforced with the adoption under the UNFCCC of the Glasgow Climate Pact on 13 November 2021, in which the Conference of the Parties to the UNFCCC, serving as the meeting of the Parties to the Paris Agreement, recognises that the impacts of climate change will be much lower at a temperature increase of 1,5 °C compared with 2 °C, and resolves to pursue efforts to limit the temperature increase to 1,5 °C.

(2)

The need for action to reduce greenhouse gas emissions is becoming increasingly urgent, as stated by the Intergovernmental Panel on Climate Change (IPCC) in its reports of 7 August 2021 entitled ‘Climate change 2021: The Physical Science Basis’, of 28 February 2022 entitled ‘Climate Change 2022: Impacts, Adaptation and Vulnerability’ and of 4 April 2022 entitled ‘Climate Change 2022: Mitigation of Climate Change’. The Union should therefore address that urgency by stepping up its efforts.

(3)

The Union has in place a regulatory framework to achieve the 2030 greenhouse gas emission reduction target of at least 40 % that was endorsed, before the entry into force of the Paris Agreement, by the European Council in 2014. That regulatory framework consists, inter alia, of Directive 2003/87/EC of the European Parliament and of the Council (5) establishing a system for greenhouse gas emission allowance trading within the Union (EU ETS), Regulation (EU) 2018/841 of the European Parliament and of the Council (6) requiring Member States to balance greenhouse gas emissions and removals from land use, land use change and forestry (LULUCF), and Regulation (EU) 2018/842 of the European Parliament and of the Council (7) establishing national targets for reduction of greenhouse gas emissions by 2030 in the sectors which are not covered by Directive 2003/87/EC or by Regulation (EU) 2018/841.

(4)

The communication of the Commission of 11 December 2019 on ‘The European Green Deal’ provides a starting point for the achievement of the Union’s climate-neutrality objective at the latest by 2050 and the aim of achieving negative emissions thereafter as laid down in Article 2(1) of Regulation (EU) 2021/1119 of the European Parliament and of the Council (8) (‘European Climate Law’). The European Green Deal combines a comprehensive set of mutually reinforcing measures and initiatives aimed at achieving climate neutrality in the Union by 2050 and sets out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the Union’s natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. At the same time, that transition has gender equality aspects as well as a particular impact on some disadvantaged and vulnerable groups, such as older people, persons with disabilities and persons with a minority racial or ethnic background. It must therefore be ensured that the transition is just and inclusive, leaving no one behind.

(5)

On 16 June 2022, the Council adopted a Recommendation on ensuring a fair transition towards climate neutrality (9), in which it highlighted the need for accompanying measures and for paying particular attention to supporting those regions, industries, micro, small and medium-sized enterprises, workers, households and consumers that will face the greatest challenges. That Recommendation encourages Member States to consider a set of measures in the areas of employment and labour market transitions, job creation and entrepreneurship, health and safety at work, public procurement, taxation and social protection systems, essential services and housing, as well as, inter alia, with a view to strengthening gender equality, education and training.

(6)

Through the adoption of Regulation (EU) 2021/1119, the Union has enshrined in legislation a binding objective of economy-wide climate neutrality by 2050, thus reducing emissions to net zero by that date, and the aim of achieving negative emissions thereafter. That Regulation also establishes a binding Union domestic reduction target for net greenhouse gas emissions (emissions after deduction of removals) of at least 55 % compared to 1990 levels by 2030. Furthermore, it establishes that the contribution of net removals to the Union 2030 climate target is to be limited to 225 million tonnes of CO2 equivalent.

(7)

In order to implement the commitments laid down in Regulation (EU) 2021/1119 as well as the Union’s contributions under the Paris Agreement, the Union regulatory framework for achieving the 2030 greenhouse gas emission reduction target should be adapted.

(8)

Regulation (EU) 2018/842 lays down obligations on Member States with respect to their minimum contributions for the period from 2021 to 2030 to fulfilling the Union’s current greenhouse gas emission reduction target of 30 % below 2005 levels in 2030 in the sectors covered by Article 2 of that Regulation. It also lays down rules on determining annual emission allocations and for the evaluation of Member States’ progress towards meeting their minimum contributions.

(9)

While emissions trading will also apply to greenhouse gas emissions from maritime transport as well as from buildings, road transport and additional sectors, the scope of Regulation (EU) 2018/842 should be maintained. Regulation (EU) 2018/842 should therefore continue to apply to the greenhouse gas emissions from domestic navigation, but not to those from international navigation. The inclusion of installations for the incineration of municipal waste in Annex I to Directive 2003/87/EC, for the purposes of Articles 14 and 15 of that Directive, should not change the scope of Regulation (EU) 2018/842 either. The greenhouse gas emissions of a Member State within the scope of Regulation (EU) 2018/842 to be taken into account for compliance checks will continue to be determined upon completion of inventory reviews in accordance with Regulation (EU) 2018/1999 of the European Parliament and of the Council (10).

(10)

In line with the 2006 IPCC guidelines for national greenhouse gas inventories, CO2 emissions from biomass for energy are reported under land use, land use change and forestry inventory categories under Regulation (EU) 2018/841. To avoid double counting, greenhouse gas emissions from biofuels, bioliquids and biomass fuels are zero-rated for the purpose of determining greenhouse gas emissions under Regulation (EU) 2018/842. In order to take into account the effects of indirect land use change and to promote the sustainability of such fuels, it is important that all Member States fully implement Directive (EU) 2018/2001 of the European Parliament and of the Council (11), including its sustainability and greenhouse gas emission savings criteria for such fuels.

(11)

In some sectors, greenhouse gas emissions have either increased or remained stable. In its communication of 17 September 2020 on ‘Stepping up Europe’s 2030 climate ambition – Investing in a climate-neutral future for the benefit of our people’, the Commission indicated that the increased 2030 overall greenhouse gas emission reduction target can only be achieved with the contribution of all sectors.

(12)

In its conclusions of 11 December 2020, the European Council stated that the new 2030 greenhouse gas emission reduction target will be delivered collectively by the Union in the most cost-effective manner possible, that all Member States will participate in that effort, taking into account considerations of fairness and solidarity, while leaving no one behind, and that the new 2030 target needs to be achieved in a way that preserves the Union’s competitiveness and takes account of Member States’ different starting points and specific national circumstances and greenhouse gas emission reduction potential, including those of island Member States and islands, as well as efforts made.

(13)

In order to achieve the new Union 2030 target of reducing net greenhouse gas emissions by at least 55 % compared to 1990 levels, the sectors covered by Regulation (EU) 2018/842 will need to reduce their greenhouse gas emissions progressively until they reach – 40 % in 2030 compared to 2005 levels. Regulation (EU) 2018/842 also contributes to achieving the objectives of the Paris Agreement, as well as the Union’s objective of climate neutrality at the latest by 2050 under Regulation (EU) 2021/1119, the achievement of which requires convergence of all Member States’ efforts over time, while taking into account specific national circumstances.

(14)

The greenhouse gas emission reduction target for 2030 laid down in Regulation (EU) 2018/842 needs to be revised for each Member State. The methodology used for the revision of the 2030 national greenhouse gas emission reduction targets should be the same as the one that was used when Regulation (EU) 2018/842 was adopted, where the national contributions were determined in consideration of the different capacities and cost-efficiency opportunities in Member States so as to ensure a fair and balanced distribution of the effort. The greenhouse gas emission reduction target for each Member State in 2030 should thus be determined in relation to the level of its 2005 greenhouse gas emissions covered by that Regulation, as reviewed pursuant to Article 4(3) thereof, excluding verified greenhouse gas emissions from installations that operated in 2005 and which were only included in the EU ETS after 2005.

(15)

As a consequence, as from the year of entry into force of this Regulation, new binding national limits, expressed in annual emission allocations, are necessary. Those limits will progressively lead to the 2030 greenhouse gas emission reduction target of each Member State. The annual limits for the years preceding the year of entry into force of this Regulation set out in Commission Implementing Decision (EU) 2020/2126 (12) are maintained.

(16)

The COVID-19 pandemic and Russia’s war of aggression against Ukraine are impacting the Union’s economy and the level of its greenhouse gas emissions to a degree that cannot yet be fully quantified. On the other hand, the Union is deploying its largest stimulus package ever and accelerating the transition away from fossil fuels, which also has a potential impact on the level of greenhouse gas emissions. Due to those uncertainties and other unforeseen events having an impact on greenhouse gas emissions, it is appropriate to review the emissions data in 2025 and, if necessary, update the annual emission allocations in 2025 for the years 2026 to 2030. That update should be based on a comprehensive review of the national inventory data carried out by the Commission in order to determine the average greenhouse gas emissions of each Member State in the years 2021, 2022 and 2023.

(17)

In accordance with Regulation (EU) 2021/1119, priority should be given to reductions in direct greenhouse gas emissions, which will have to be complemented by increased carbon removals in order to achieve climate neutrality. Regulation (EU) 2021/1119 recognises that carbon sinks include natural and technological solutions. It is important that a Union scheme for the certification of safely and permanently stored carbon removals obtained through technological solutions be put in place, offering clarity for Member States and market operators to enhance such carbon removals. When such a certification scheme is in force, an analysis can be made about accounting for such carbon removals under Union law.

(18)

In order to incentivise earlier action and further ensure environmental integrity, it is necessary and appropriate to lower the ceilings for borrowing and banking of annual emission allocations for the whole period from 2021 to 2030. On the other hand, Member States should be able to reduce progressively their greenhouse gas emissions and reach their increased national greenhouse gas emission reduction targets for 2030 in a cost-effective manner. In view of the new and more stringent annual emission allocations required by this Regulation, it is appropriate to increase the existing ceilings on transfers of annual emission allocations between Member States. The possibility of transferring annual emission allocations promotes cooperation between Member States, allowing them to achieve their greenhouse gas emission reduction targets cost-effectively, while preserving environmental integrity. The transparency of such transfers should be ensured, so that they are carried out in a manner that is mutually convenient, including by means of auctioning, by the use of market intermediaries acting on an agency basis, by way of bilateral arrangements or by the use of an electronic interface aiming to facilitate the exchange of information on intended transfers and to reduce transaction costs.

Member States are already required to report the summary information on concluded transfers in accordance with Commission Implementing Regulation (EU) 2020/1208 (13). After compilation by the Commission, a summary of the information provided is made available within three months of receipt of the reports from Member States, in electronic form, providing the range of prices paid per annual emission allocations transaction. In addition, within the two periods between the publication of the implementing acts referred to in Article 38(4) of Regulation (EU) 2018/1999 and the start of the compliance check procedure, the Member States can report to the Commission on the 15th of each month on concluded transfers. Moreover, in order to facilitate the exchange of information on intended transfers, Member States are invited to continually update the relevant information. A summary of the information received is compiled by the Commission and made available in a timely manner in electronic form. To improve transparency, before any effective transfer, Member States should inform the Climate Change Committee established by Regulation (EU) 2018/1999 of their intention to proceed with a transfer of part of their annual emission allocation for a given year. It is therefore appropriate to amend Regulation (EU) 2018/1999.

(19)

For certain Member States, it is possible to have a limited cancellation of EU ETS emission allowances taken into account for the purposes of compliance with Regulation (EU) 2018/842 (the ‘EU ETS flexibility’). Of those Member States that are eligible, two have not made use of the EU ETS flexibility and one has not made full use of it. In view of the increased ambition level set by this Regulation, those Member States should be granted a new opportunity to make use or further use of that flexibility. It is therefore appropriate to set a new deadline by which it is possible for those Member States to notify the Commission of an intention to make use or further use of that flexibility. In addition, given the particular structure of Malta’s economy, the national greenhouse gas emission reduction target of that Member State based on gross domestic product per capita is significantly above its cost-effective reduction potential. It is therefore appropriate to increase Malta’s access to that flexibility, without compromising the Union’s greenhouse gas emission reduction target for 2030.

(20)

In addition to the EU ETS flexibility, it is possible for a limited quantity of net removals and net emissions from LULUCF to be taken into account for Member States’ compliance under Regulation (EU) 2018/842 (the ‘LULUCF flexibility’). In order to ensure that sufficient mitigation efforts are deployed up to 2030, it is appropriate to limit the use of the LULUCF flexibility by separating the use of the LULUCF flexibility into two separate time periods, each capped by a limit corresponding to half of the maximum amount of total net removals set out in Annex III to Regulation (EU) 2018/842. It is also appropriate to bring the title of that Annex into line with Regulation (EU) 2018/841 following its amendment by Commission Delegated Regulation (EU) 2021/268 (14). As a consequence, there is no longer a need for Regulation (EU) 2018/842 to empower the Commission to adopt delegated acts to amend the title of its Annex III. Article 7(2) of Regulation (EU) 2018/842 should therefore be deleted.

(21)

Where the Commission finds that a Member State is not making sufficient progress towards meeting its annual emission levels under Regulation (EU) 2018/842, the corrective action mechanisms under that Regulation should be strengthened in order to allow swift and effective action. It is therefore appropriate to revise the requirements which apply to corrective action plans to be submitted by Member States to the Commission in the case of failure to make sufficient progress.

(22)

The Union and the Member States are parties to the United Nations Economic Commission for Europe Convention on access to information, public participation in decision-making and access to justice in environmental matters (15) (the ‘Aarhus Convention’). Public scrutiny and access to justice are essential elements of the democratic values of the Union and tools to safeguard the rule of law.

(23)

The Union’s climate action should make use of the latest science. The advice of the European Scientific Advisory Board on Climate Change, established under Article 10a of Regulation (EC) No 401/2009 of the European Parliament and of the Council (16), should therefore be considered in the context of Regulation (EU) 2018/842.

(24)

In view of the introduction of a strengthened compliance regime in Regulation (EU) 2018/841 as of 2026, it is appropriate to abolish the deduction of the greenhouse gas emissions generated by each Member State in the period from 2026 to 2030 in the LULUCF sector in excess of its removals. Article 9(2) of Regulation (EU) 2018/842 should therefore be amended accordingly.

(25)

It is appropriate that the review of Regulation (EU) 2018/842 in 2024 take account of the Union’s greenhouse gas emission reduction targets under Regulation (EU) 2021/1119, the Union’s commitment to the objectives of the Paris Agreement and any relevant commitments resulting from the Conferences of the Parties to the UNFCCC. Moreover, that review should include a reduction pathway for greenhouse gas emissions that is compatible with the binding objective of climate neutrality in the Union by 2050 under Regulation (EU) 2021/1119.

(26)

Non-CO2 greenhouse gas emissions, such as methane, nitrous oxide and fluorinated gases, account for over 20 % of the Union’s greenhouse gas emissions. Non-CO2 greenhouse gas emissions are covered by Regulation (EU) 2018/842 and therefore will necessarily be part of the measures that Member States will put in place in order to comply with their increased 2030 greenhouse gas emission reduction targets under this Regulation. By 30 June 2023, Member States are to submit a draft update of their integrated national energy and climate plans to the Commission. The Commission will issue guidance in that respect, including to encourage Member States to set out targets and policies to reduce methane emissions. Likewise, Member States are to assess whether their strategic plans under the common agricultural policy should be revised to reflect the increased ambition in Regulation (EU) 2018/842 introduced by the amendments thereto through this Regulation. The Commission will include information on the results obtained by the combination of Union and national efforts in relation to non-CO2 greenhouse gas emissions in the annual reports under Article 29(5) of Regulation (EU) 2018/1999. The Commission is also to assess draft integrated national energy and climate plans and can issue recommendations to Member States that do not make sufficient progress. The Commission will, in the context of the review of Regulation (EU) 2018/841, assess the current trends and future projections of greenhouse gas emissions from agriculture as well as regulatory options to ensure their consistency with the objective of achieving long-term greenhouse gas emission reductions in all sectors of the economy in accordance with the Union’s climate-neutrality objective and the Union’s intermediary climate targets set out in Regulation (EU) 2021/1119. When reviewing Regulation (EU) 2018/842, the Commission will assess how all sectors covered by that Regulation contribute to the reduction of greenhouse gas emissions, including in particular the reduction achieved as regards non-CO2 greenhouse gas emissions, also in sectors other than agriculture.

(27)

Since the objectives of this Regulation, namely to adjust, in light of Regulation (EU) 2021/1119, the obligations of Member States with respect to their minimum contributions for the period from 2021 to 2030 to fulfilling the Union’s target of reducing its greenhouse gas emissions and to contribute to achieving the objectives of the Paris Agreement, cannot be sufficiently achieved by the Member States but can rather, by reason of their scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(28)

Regulations (EU) 2018/842 and (EU) 2018/1999 should therefore be amended accordingly,

(1)

Article 1 is replaced by the following:

(*1)  Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1).’;"

(2)

in Article 2, paragraph 1 is replaced by the following:

(*2)  Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).’;"

(3)

Article 4 is amended as follows:

(4)

Article 5 is amended as follows:

(5)

Article 6 is amended as follows:

(6)

Article 7 is amended as follows:

(7)

Article 8 is replaced by the following:

(8)

in Article 9, paragraph 2 is replaced by the following:

(9)

Article 15 is replaced by the following:

(10)

the following Article is inserted:

(*3)  Regulation (EC) No 401/2009 of the European Parliament and of the Council of 23 April 2009 on the European Environment Agency and the European Environment Information and Observation Network (OJ L 126, 21.5.2009, p. 13).’;"

(11)

Annexes I, II and III are amended in accordance with the Annex to this Regulation.

(1)

in Article 26, paragraph 3 is replaced by the following:

(2)

in Annex V, Part 1, first paragraph, point (n) is replaced by the following: