(3)

On 10 June 2016 the Commission presented the proposal for the EU to ratify the Paris agreement. This legislative proposal forms part of the implementation of the EU's commitment in the Paris agreement. The Union's commitment to economy-wide emission reductions was confirmed in the intended nationally determined contribution of the Union and its Member States that was submitted to the Secretariat of the UNFCCC on 6 March 2015.

(3)

The Council ratified the Paris Agreement on 5 October 2016, following the consent that was given by the European Parliament on 4 October 2016. The Paris Agreement entered into force on 4 November 2016 and aims, under Article 2 thereof, ‘to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty, including by: (a) Holding the increase in the global average temperature to well below 2 oC above pre-industrial levels and pursuing efforts to limit the temperature increase to 1,5  oC above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change; (b) Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production; (c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. ’

The Paris Agreement also requires its parties to take action to conserve and enhance, as appropriate, sinks and reservoirs of greenhouse gases, including forests.

This legislative proposal forms part of the implementation of the EU's commitment in the Paris agreement. The Union's commitment to economy-wide emission reductions was confirmed in the intended nationally determined contribution of the Union and its Member States that was submitted to the Secretariat of the UNFCCC on 6 March 2015.

(4)

The Paris Agreement replaces the approach taken under the 1997 Kyoto Protocol which will not be continued beyond 2020.

(4)

The Paris Agreement replaces the approach taken under the 1997 Kyoto Protocol which will not be continued beyond 2020. The Green Investment Schemes linked to the Kyoto Protocol, which provide financial support for emission reduction projects in lower-income Member States, will therefore also be discontinued.

(4 a)

The Environment Council meeting on 21 October 2009 supported a Union objective, in the context of necessary reductions according to the Intergovernmental Panel on Climate Change (IPCC) by developed countries as a group, to reduce emissions by 80 to 95 % by 2050 compared to 1990.

(5)

The transition to clean energy requires changes in investment behaviour and incentives across the entire policy spectrum. It is a key Union priority to establish a resilient Energy Union to provide secure, sustainable , competitive and affordable energy to its citizens. Achieving this requires continuation of ambitious climate action with this Regulation and progress on the other aspects of Energy Union as set out in the Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy (16).

(5)

The transition to clean energy and the bio-economy requires changes in investment behaviour across the entire policy spectrum and incentives for small and medium-sized enterprises (SMEs) with less capital and small farms to adapt their business models . It is a key Union priority to establish a resilient Energy Union which prioritises energy efficiency and aims to provide secure, sustainable and affordable energy to its citizens as well as applying stringent sustainability and emission-reduction policies to the use of bio-based resources to replace fossil resources . Achieving this requires continuation of ambitious climate action with this Regulation and progress on the other aspects of Energy Union as set out in the Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy (16).

(9)

The approach of annually binding national limits taken in Decision No 406/2009/EC of the European Parliament and of the Council (19) should be continued from 2021 to 2030, with the start of the trajectory calculation in 2020 on the average of the greenhouse gas emissions during 2016 to 2018 and the end of the trajectory being the 2030 limit for each Member State. An adjustment to the allocation in 2021 is provided for Member States with both a positive limit under Decision 406/2009/EC and increasing annual emission allocations between 2017 and 2020 determined pursuant to Decisions 2013/162/EU and 2013/634/EU, to reflect the capacity for increased emissions in those years. The European Council concluded that the availability and use of existing flexibility instruments within the non-ETS sectors should be significantly enhanced in order to ensure cost-effectiveness of the collective Union effort and convergence of emissions per capita by 2030.

(9)

The approach of annually binding national limits taken in Decision No 406/2009/EC of the European Parliament and of the Council (19) should be continued from 2021 to 2030, with the start of the trajectory calculation in 2018 on the average of the greenhouse gas emissions during 2016 to 2018, or value of the 2020 annual emission allocation, whichever value is lower, and the end of the trajectory being the 2030 limit for each Member State . In order to reward early action and to support Member States with a lower capacity to invest, Member States with a GDP per capita below the EU average, that have during 2013 to 2020 lower emissions than their annual emission allocations for the period from 2013 to 2020 provided under Decision 406/2009/EC, may, under certain conditions, request additional allocations from a reserve.  A  supplementary adjustment to the allocation in 2021 is provided for Member States with both a positive limit under Decision 406/2009/EC and increasing annual emission allocations between 2017 and 2020 determined pursuant to Decisions 2013/162/EU and 2013/634/EU, to reflect the capacity for increased emissions in those years. The European Council concluded that the availability and use of existing flexibility instruments within the non-ETS sectors should be significantly enhanced in order to ensure cost-effectiveness of the collective Union effort and convergence of emissions per capita by 2030.

(9 a)

In order to set the Union on track to a low-carbon economy, this Regulation provides for a long-term emission reductions trajectory to reduce from 2031 the greenhouse gas emissions covered by this Regulation. The Regulation also contributes to the aim of the Paris Agreement to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.

(10a)

In order to preserve full efficiency of the market stability reserve established by Decision (EU) 2015/1814  (1a) of the European Parliament and the Council, the cancellation of allowances as the result of the use of the flexibility laid down in this Regulation following the reduction of EU ETS allowances should not be taken into account as allowances that have been cancelled in accordance with Directive 2003/87/EC when determining, under Decision (EU) 2015/1814, the total number of allowances in circulation in a given year pursuant to that Decision.

(11)

A range of Union measures enhance Member States’ ability to meet their climate commitments and are crucial to achieving necessary emission reductions in the sectors covered by this Regulation. These include legislation on fluorinated greenhouse gases, CO2-reductions from road vehicles, energy performance of building, renewables, energy efficiency and the Circular Economy, as well as Union funding instruments for climate-related investments.

(11)

A range of Union measures enhance Member States’ ability to meet their climate commitments and are crucial to achieving necessary emission reductions in the sectors covered by this Regulation. These include legislation on fluorinated greenhouse gases, CO2-reductions from road vehicles, improvements in the energy performance of buildings, an increase in renewables, greater energy efficiency and promotion of the Circular Economy, as well as Union funding instruments for climate-related investments.

(11a)

In order to achieve those emissions reductions and in an effort to maximise the role of the agriculture sector, it is important that Member States promote innovative mitigation actions with the greatest potential, including: conversion of arable to permanent grassland; management of hedges, buffer strips and trees on agricultural land; new agroforestry and woodland planting schemes; prevention of tree removal and deforestation; low or no till and use of cover/catch crops and crop residues on land; carbon auditing and soil/nutrient management plans; improved nitrogen efficiency and nitrification inhibition; wetland/peat land restoration and conservation; and enhanced livestock breeding, feeding and management methods for lower emissions.

(11b)

This Regulation, including the available flexibilities, provides an incentive for emission reductions consistent with other Union legal acts on climate and energy for sectors that are covered by this Regulation, including in the area of energy efficiency. Given that over 75 % of the greenhouse gas emissions are energy-related, increased efficiency of energy use and energy savings will play an important role in delivering such emissions reductions. Ambitious energy efficiency policies are therefore key not only for higher fossil fuel import savings ensuring energy security and lower consumer bills, but also for an increased uptake of energy-saving technologies in buildings, industry and transport, the strengthening of economic competitiveness, local job creation as well as improving health conditions and tackling energy poverty. Paying for themselves over time, measures taken in sectors covered by this Regulation are a cost-effective way of helping Member States achieve their targets under this Regulation. Accordingly, when translating this Regulation into national policies, it is important that Member States pay particular attention to the specific and different potentials for energy efficiency improvements and investments across sectors.

(11c)

The transport sector is not only a major greenhouse gas emitter but has also been the fastest growing sector in energy consumption since 1990. It is important, therefore, that further efforts are made by the Commission and the Member States to improve energy efficiency, foster a shift to sustainable transport modes and reduce the sector’s high carbon dependency. The decarbonisation of the energy mix by promoting low emission energy for transport, for example by sustainable biofuels and electric vehicles, will contribute to the CO2 emission reduction target, in line with the goals of the Paris Agreement. That could be facilitated by ensuring that the sector has a clear and long-term framework to provide certainty and upon which to base investments.

(11d)

The impact of energy and sectorial policies on the Union and national climate commitments should be assessed with common quantified methods, so that their impacts are transparent and verifiable.

(12)

Regulation [] [on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework] lays down accounting rules on greenhouse gas emissions and removals relating to land use, land-use change and forestry (LULUCF). While the environmental outcome under this Regulation in terms of the levels of greenhouse gas emission reductions that are made is affected by taking into account a quantity up to the sum of total net removals and total net emissions from deforested land, afforested land, managed cropland and managed grassland as defined in Regulation [], flexibility for a maximum quantity of 280 million tonnes of CO2 equivalent of these removals divided among Member States according to the figures in Annex III should be included as an additional possibility for Member States to meet their commitments when needed. Where the delegated act to update the forest reference levels based on the national forestry accounting plans pursuant to Article 8 (6) of Regulation [LULUCF] is adopted, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of Article 7 to reflect a contribution of the accounting category managed forest land in the flexibility provided by that Article. Before adopting such a delegated act, the Commission should evaluate the robustness of accounting for managed forest land based on available data, and in particular the consistency of projected and actual harvesting rates. In addition, the possibility to voluntarily delete annual emission allocation units should be allowed under this Regulation in order to allow for such amounts to be taken into account when assessing Member States' compliance with requirements under Regulation [].

(12)

Regulation [] [on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework] lays down accounting rules on greenhouse gas emissions and removals relating to land use, land-use change and forestry (LULUCF). While the environmental outcome under this Regulation in terms of the levels of greenhouse gas emission reductions that are made is affected by taking into account a quantity up to the sum of total net removals and total net emissions from deforested land, afforested land, managed cropland, managed grassland and where applicable managed wetland as defined in Regulation [], flexibility for a maximum quantity of 280 million tonnes of CO2 equivalent of these removals divided among Member States according to the figures in Annex III should be included as an additional possibility for Member States to meet their commitments when needed. Where the delegated act to update the forest reference levels based on the national forestry accounting plans pursuant to Article 8 (6) of Regulation [LULUCF] is adopted, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of Article 7 to reflect a  balanced contribution of the accounting category managed forest land in the flexibility of 280 million provided by that Article. Before adopting such a delegated act, the Commission should evaluate the robustness of accounting for managed forest land based on available data, and in particular the consistency of projected and actual harvesting rates. In addition, the possibility to voluntarily delete annual emission allocation units should be allowed under this Regulation in order to allow for such amounts to be taken into account when assessing Member States' compliance with requirements under Regulation [].

(12a)

Achieving, in a mutually coherent manner, the multiple Union objectives linked to the agricultural sector, including climate mitigation and adaptation, air quality, the conservation of biodiversity and ecosystem services and support for rural economies, will require changes in investment and incentives, supported by Union measures, such as the CAP. It is vital that this Regulation take into account the objective of contributing to the objectives of the Union Forest Strategy to promote a competitive and sustainable supply of wood for the Union bio-economy, the Member States’ national forest policies, the Union Biodiversity Strategy and the Union Circular Economy Strategy.

(13)

In order to ensure efficient, transparent and cost-effective reporting and verification of greenhouse gas emissions and of other information necessary to assess progress with Member State's annual emissions allocations, the requirements for annual reporting and evaluation under this Regulation are integrated with the relevant Articles under Regulation (EU) No. 525/2013, which should therefore be amended accordingly. The amendment of that Regulation should also ensure that progress of Member States in making emission reductions continues to be evaluated annually, taking into account progress in Union policies and measures and information from Member States. Every two years, the evaluation should include the projected progress of the Union towards meeting its reduction commitments and of Member States towards fulfilling their obligations. However, the application of deductions should only be considered at five-year intervals, so that the potential contribution from deforested land, afforested land, managed cropland and managed grassland taking place pursuant to Regulation [] can be considered. This is without prejudice to the duty of the Commission to ensure compliance with the obligations of Member States resulting from this Regulation or to the power of the Commission to initiate infringement proceedings for this purpose.

(13)

In order to ensure efficient, transparent and cost-effective reporting and verification of greenhouse gas emissions and of other information necessary to assess progress with Member State's annual emissions allocations, the requirements for annual reporting and evaluation under this Regulation are integrated with the relevant Articles under Regulation (EU) No 525/2013, which should therefore be amended accordingly. The amendment of that Regulation should also ensure that progress of Member States in making emission reductions continues to be evaluated annually, taking into account progress in Union policies and measures and information from Member States. Every two years, the evaluation should include the projected progress of the Union towards meeting its reduction commitments and of Member States towards fulfilling their obligations. A full compliance check should be carried out every two years. The application of the potential contribution from deforested land, afforested land, managed cropland and managed grassland taking place pursuant to Regulation [] should be considered in accordance with the intervals laid down in that Regulation . This is without prejudice to the duty of the Commission to ensure compliance with the obligations of Member States resulting from this Regulation or to the power of the Commission to initiate infringement proceedings for this purpose.

(13 a)

As the sectors covered by this Regulation constitute more than half of the Union’s greenhouse gas emissions, the emission reduction policies in these sectors are highly important in order to fulfil the Union's commitments in accordance with the Paris Agreement. Therefore, the monitoring, reporting and follow up procedures under this Regulation should be fully transparent. Member States and the Commission should make the information concerning compliance with this Regulation publicly available and should ensure the proper involvement of the stakeholders and the public in the review process of this Regulation. The Commission is also urged to create an efficient and transparent system to monitor the outcome of the flexibilities introduced.

(14)

As a means to enhance the overall cost-effectiveness of total reductions, Member States should be able to transfer part of their annual emission allocations to other Member States. The transparency of such transfers should be ensured and may be carried out in a manner that is mutually convenient, including by means of auctioning, the use of market intermediaries acting on an agency basis, or by way of bilateral agreements.

(14)

As a means to enhance the overall cost-effectiveness of total reductions, Member States should be able to bank or borrow part of their annual emission allocations. Member States should also be able to transfer part of their annual emission allocations to other Member States. The transparency of such transfers should be ensured and may be carried out in a manner that is mutually convenient, including by means of auctioning, the use of market intermediaries acting on an agency basis, or by way of bilateral agreements.

(15)

The European Environment Agency aims to support sustainable development and to help achieve significant and measurable improvement in Europe’s environment by providing timely, targeted, relevant and reliable information to policy-makers, public institutions and the public. The European Environment Agency should assist the Commission, as appropriate in accordance with its annual work programme.

(15)

The European Environment Agency aims to support sustainable development and to help achieve significant and measurable improvement in Europe’s environment by providing timely, targeted, relevant and reliable information to policy-makers, public institutions and the public. The European Environment Agency should assist the Commission, as appropriate in accordance with its annual work programme , and contribute directly and effectively to coping with climate change .

(17)

In order to ensure uniform conditions for the implementation of Article 4 according to which annual emission limits for Member States will be established, implementing powers should be conferred on the Commission . Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council  (21).

(17)

The power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of supplementing this Regulation by determining the annual emission allocations for Member States .

(19a)

In addition to the efforts to reduce its own emissions, it is important that the Union, in line with the aim of increasing its positive impact on the global carbon handprint, envisage, together with third countries, climate solutions by implementing joint projects with those countries, in the 2030 climate policy context, taking into account that the Paris Agreement refers to a new international cooperation mechanism for combating climate change.

(20)

This Regulation should be reviewed as of 2024 and every 5 years thereafter in order to assess its overall functioning. The review should take into account evolving national circumstances and be informed by the results of the global stocktake of the Paris Agreement.

(20)

This Regulation should be reviewed as of 2024 and every 5 years thereafter in order to assess its overall functioning. The review should take into account evolving national circumstances and be informed by the results of the global stocktake of the Paris Agreement.

To comply with the Paris Agreement it is necessary that the Union makes progressively stronger efforts and submits every five years a contribution reflecting its highest possible ambition.

The review should therefore take into account the Union’s objective to reduce economy-wide greenhouse gas emissions by 80 to 95 % by 2050 compared to the 1990 levels and the aim of the Paris Agreement of achieving a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century. It should be based on best available science and should rely on a preparatory report by the European Environment Agency.

The review of the emission reductions of Member States for the period from 2031 should take into account the principles of fairness and cost-effectiveness.

(-a)

(a)

the cumulative quantity taken into account for that Member State for all years of the period from 2021 to 2030 does not exceed the level set in Annex III for that Member State;

(a)

the cumulative quantity taken into account for that Member State for all years of the period from 2021 to 2030 does not exceed the level set in Annex III for that Member State;

(b)

such quantity is in excess of that Member State's requirements under Article 4 of Regulation [][LULUCF];

(b)

such quantity is demonstrated to be in excess of that Member State's requirements under Article 4 of Regulation [][LULUCF] during the five year periods set out in in Article 12 of Regulation [][LULUCF];

(c)

the Member State has not acquired more net removals under Regulation [][LULUCF] from other Member States than it has transferred; and

(c)

the Member State has not acquired more net removals under Regulation [][LULUCF] from other Member States than it has transferred; and

(d)

the Member State has complied with the requirements of Regulation [] [LULUCF].

(d)

the Member State has complied with the requirements of Regulation [] [LULUCF].

(a)

an addition to the Member State's emission figure of the following year equal to the amount in tonnes of CO2 equivalent of the excess greenhouse gas emissions, multiplied by a factor of 1,08 , in accordance with the measures adopted pursuant to Article 11; and

(a)

an addition to the Member State's emission figure of the following year equal to the amount in tonnes of CO2 equivalent of the excess greenhouse gas emissions, multiplied by a factor of 1,08 , in accordance with the measures adopted pursuant to Article 11; and

(b)

the Member State shall be temporarily prohibited from transferring any part of its annual emission allocation to another Member State until it is in compliance with this Regulation. The Central Administrator shall implement this prohibition in the registry referred in Article 11.

(b)

the Member State shall be temporarily prohibited from transferring any part of its annual emission allocation to another Member State until it is in compliance with this Regulation. The Central Administrator shall implement this prohibition in the registry referred in Article 11.

(a)

its total annual emission allocations for the period 2013 to 2020 determined in accordance with Article 3(2) and Article 10 of Decision No 406/2009/EC exceed its total annual verified greenhouse gas emissions for the period 2013 to 2020;

(b)

its GDP per capita at market prices in 2013 is below the EU average;

(c)

it has used to the maximum extent the flexibilities referred to in Articles 6 and 7 to the levels set in Annexes II and III;

(d)

it has used to the maximum extent the flexibilities referred to in Article 5(2) and (3) and it has not transferred emission allocations to another Member State pursuant to Article 5(4) and (5); and

(e)

the Union as a whole meets its target referred to in Article 1(1).