(1)

The ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC), which was approved on behalf of the European Community by Council Decision 94/69/EC (3), is to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.

(2)

The view of the Community, most recently expressed, in particular, by the European Council of March 2007, is that in order to meet this objective, the overall global annual mean surface temperature increase should not exceed 2 °C above pre-industrial levels , which implies that global greenhouse gas emissions should be reduced to at least 50 % below 1990 levels by 2050. The Community’s greenhouse gas emissions covered by this Decision should continue to decrease beyond 2020 as part of the Community’s efforts to contribute to this global emissions reduction goal. Developed countries, including the EU Member States, should continue to take the lead by committing to collectively reducing their emissions of greenhouse gases in the order of 30 % by 2020 compared to 1990. They should do so also with a view to collectively reducing their greenhouse gas emissions by 60 to 80 % by 2050 compared to 1990. All sectors of the economy should contribute to achieving these emission reductions, including international maritime shipping and aviation. Aviation is contributing to these reductions through its inclusion in the Community greenhouse gas emission allowance trading scheme (hereinafter referred to as the "Community scheme). In the event that no international agreement which includes international maritime emissions in its reduction targets through the International Maritime Organisation has been approved by the Member States or no such agreement through the UNFCCC has been approved by the Community by 31 December 2011, the Commission should make a proposal to include international maritime emissions in the Community reduction commitment with the aim of the proposed act entering into force by 2013. Such a proposal should minimise any negative impact on the Community's competitiveness while taking into account the potential environmental benefits.

(3)

Furthermore, in order to meet this objective, the European Council of March 2007 endorsed a Community objective of a 30 % reduction of greenhouse gas emissions by 2020 compared to 1990 as its contribution to a global and comprehensive agreement for the period after 2012, provided that other developed countries commit themselves to comparable emission reductions and economically more advanced developing countries commit themselves to contributing adequately according to their responsibilities and capabilities.

(4)

The European Council of March 2007 emphasised that the Community is committed to transforming Europe into a highly energy-efficient and low greenhouse-gas-emitting economy and has decided that, until a global and comprehensive agreement for the period after 2012 is concluded, and without prejudice to its position in international negotiations, the Community makes a firm independent commitment to achieve at least a 20 % reduction of greenhouse gas emissions by 2020 compared to 1990.

(5)

Energy efficiency improvements are a crucial element for Member States to meet the requirements under this Decision. In this context, the Commission should closely monitor progress towards the objective to reduce energy consumption by 20 % by 2020, and propose additional actions if progress is insufficient.

(6)

Directive 2003/87/EC (4) establishes a scheme for greenhouse gas emission allowance trading within the Community, which covers certain sectors of the economy. All sectors of the economy should contribute to emission reductions in order to cost-effectively achieve the objective of a 20 % reduction of greenhouse gas emissions by 2020 compared to 1990 levels.. Member States should therefore implement additional policies and measures in an effort to further limit the greenhouse gas emissions from sources not covered under Directive 2003/87/EC.

(7)

The effort of each Member State should be determined in relation to the level of its 2005 greenhouse gas emissions covered by this Decision, adjusted to exclude the emissions from installations that existed in 2005 but which were brought into the Community scheme in the period from 2006 to 2012. Annual emission allocations for the period from 2013 to 2020 in terms of tonnes of carbon dioxide equivalent should be determined on the basis of reviewed and verified data.

(8)

Member States’ reduction efforts should be based on the principle of solidarity between Member States and the need for sustainable economic growth across the Community, taking into account the relative per capita GDP of Member States. Member States that currently have a relatively low per capita GDP, and thus high GDP growth expectations, should be allowed to increase their greenhouse gas emissions compared to 2005, but should limit this greenhouse gas emissions growth to contribute to the independent reduction commitment of the Community. Member States that currently have a relatively high per capita GDP should reduce their greenhouse gas emissions compared to 2005.

(9)

To further ensure a fair distribution between the Member States of the efforts to contribute to the implementation of the independent reduction commitment of the Community, no Member State should be required to reduce its greenhouse gas emissions in 2020 to more than 20 % below 2005 levels nor allowed to increase its greenhouse gas emissions in 2020 to more than 20 % above 2005 levels. Reductions in greenhouse gas emissions should take place between 2013 and 2020. Each Member State should be allowed to carry forward from the following year a quantity of up to 5 % of its annual emission allocation. Where the emissions of a Member State are below that annual emission allocation, a Member State should be allowed to carry over its excess emission reductions to the subsequent years.

(10)

As a means to even out the differences in abatement costs faced by different Member States, by allowing for increased geographical flexibility, and at the same time, as a means to enhance the overall cost-effectiveness of the total commitment of the Community, Member States should be able to transfer part of their annual emission allocation to other Member States. The transparency of such transfers should be ensured by way of a notification to the Commission and the registration of each transfer in the registries of both Member States involved. Such transfers 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 arrangements.

(11)

Significant greenhouse gas emission reductions should be made within the Union. The use of credits from project activities should be limited so that it is supplemental to domestic action. The Union remains committed to the continued improvement of the Clean Development Mechanism (CDM) and will seek improvements through the appropriate international processes. It is important that credits from project activities used by Member States represent real, verifiable, additional and permanent emission reductions and have clear sustainable development benefits and no significant negative environmental or social impacts. Member States should also report on the qualitative criteria they apply for the use of such credits.

(12)

In order to provide for flexibility for Member States in implementing their commitments, to promote sustainable development in third countries, in particular in developing countries, and to provide certainty to investors, the Community should continue to recognise a certain amount of credits from greenhouse gas emission reduction projects in third countries before a future international agreement on climate change (hereinafter referred to as the international agreement on climate change) has been reached. Member States should ensure that their policies for purchasing these credits enhance the equitable geographical distribution of projects, in particular by increasing the share of cCertified emission reductions (CERs) purchased from least developed countries (LDCs) and small island developing States (SIDS), and enhance the achievement of an international agreement on climate change.

(13)

Member States should therefore be able to use greenhouse gas emission reduction credits issued for reductions that were made during the period from 2008 to 2012 and that result from project types which were eligible for use in the Community scheme during that period. Member States should also be able to use greenhouse gas emission reduction credits for reductions that were made after the period from 2008 to 2012, that result from projects that were registered during the period from 2008 to 2012 and that result from project types which were eligible for use in the Community scheme during that period.

(14)

Very few CDM projects have been implemented in LDCs. Given that the Community supports the equitable distribution of CDM projects, including through the Commission’s Global Climate Change Alliance as set out in the Commission Communication of 18 September 2007 entitled ‘Building a Global Climate Change Alliance between the European Union and poor developing countries most vulnerable to climate change’, it is appropriate to provide certainty on the acceptance of credits from projects started after the period from 2008 to 2012 in LDCs, for project types that were eligible for use in the Community scheme during the period from 2008 to 2012. That acceptance should continue until 2020 or the conclusion of a relevant agreement with the Community, whichever is the earlier.

(15)

In order to provide for further flexibility for Member States and to promote sustainable development in developing countries, Member States should be able to use additional credits from projects resulting from agreements concluded by the Community with third countries. Without an international agreement on climate change that determines the assigned amount for developed countries, Joint Implementation (JI) projects cannot continue after 2012. Greenhouse gas emission reduction credits resulting from such projects should, however, continue to be recognised by means of agreements with third countries.

(16)

The continued ability for Member States to use CDM credits is important to help ensure a market for those credits after 2012. To help ensure such a market and in order to ensure further greenhouse gas emission reductions within the Community, and thus enhance the implementation of the objectives of the Community relating to renewable energy, energy efficiency, energy security, innovation and competitiveness, it is proposed to allow the annual use by Member States of credits from greenhouse gas emission reduction projects in third countries, up to a quantity representing 3 % of the greenhouse gas emissions of each Member State not covered under Directive 2003/87/EC in 2005, or in other Member States, until an international agreement on climate change has been reached. Member States should be allowed to transfer the unused part of that quantity to other Member States. Certain Member States with a negative limit, or a positive limit of at most 5 %, as set out in this Decision, should, in addition to the credits referred to above, be allowed annually to use additional credits amounting to 1 % of their verified emissions in 2005 from projects in LDCs and SIDS, subject to compliance with one of the four conditions set out in this Decision.

(17)

This Decision should be without prejudice to more stringent national objectives. Where Member States limit the greenhouse gas emissions covered by this Decision beyond their obligations under this Decision in order to meet a more stringent objective, the limitation imposed by this Decision on the use of greenhouse gas emission reduction credits should not apply to the additional emission reductions to attain the national objective.

(18)

In order to increase the cost-effectiveness of attaining national objectives, in particular for Member States with ambitious objectives, Member States can make use of credits resulting from Community-level projects as defined in Article 24a of Directive 2003/87/EC.

(19)

Once an international agreement on climate change has been reached, Member States should only accept emission reduction credits from countries which have ratified that agreement and subject to a common approach.

(20)

The fact that certain provisions of this Decision refer to the approval of an international agreement on climate change by the Community is without prejudice to the conclusion of that agreement also by Member States.

(21)

Upon the approval of an international agreement on climate change for the period after 2012 and as provided for in that agreement, the Community and its Member States should participate in the financing of measurable, reportable, verifiable and nationally appropriate greenhouse gas emissions mitigation action, consistent with the objective of limiting overall global annual mean surface temperature increase to 2 °C compared to pre-industrial levels, in developing countries which have ratified the agreement.

(22)

Upon the approval of an international agreement on climate change for the period after 2012 and as provided for in that agreement, the Community and its Member States should participate in the financing of assistance for developing countries which have ratified the agreement, in particular for communities and countries most at risk from climate change, with the aim of supporting them in their adaptation and risk reduction strategies.

(23)

In the event that no international agreement on climate change is approved by the Community by 31 December 2010, the Commission should make a proposal to include emissions and removals related to land use, land use change and forestry in the Community reduction commitment, in accordance with harmonised modalities, building on work carried out in the context of the UNFCCC, and ensure permanence and the environmental integrity of the contribution of land use, land use change and forestry as well as accurate monitoring and accounting, with the aim of the proposed act entering into force from 2013. The Commission should assess if the distribution of individual Member States’ efforts should be adjusted accordingly.

(24)

Progress in implementing commitments under this Decision should be annually evaluated on the basis of reports submitted under Decision No 280/2004/EC of the European Parliament and of the Council of 11 February 2004 concerning a mechanism for monitoring Community greenhouse gas emissions and for implementing the Kyoto Protocol (5). Every two years an assessment should be made on the projected progress and a full evaluation of the implementation of this Decision should be made in 2016.

(25)

Any adjustments in the coverage of Directive 2003/87/EC should be matched by a corresponding adjustment in the maximum quantity of greenhouse gas emissions covered by this Decision.

(26)

Upon the approval by the Community of an international agreement on climate change, the emission limits for Member States should be adjusted to achieve the Community’s greenhouse gas emission reduction commitment set out in that agreement, taking into account the principle of solidarity between Member States and the need for sustainable economic growth across the Community. The amount of credits from greenhouse gas emission reduction projects in third countries that each Member State can use should be increased by up to half of the additional reduction effort under this Decision.

(27)

The registries established under Decision No 280/2004/EC and the Central Administrator designated under Directive 2003/87/EC should be used to ensure an accurate processing and accounting of all transactions for the implementation of this Decision.

(28)

Since the reduction commitment of the Community imposes tasks not only on the central governments of Member States but also on their local and regional governments and on other local and regional advocacy forums and organisations, Member States should ensure cooperation between their central authorities and local authorities at different levels.

(29)

In addition to individual Member States, central governments and local and regional organisations and authorities, market actors — together with households and individual consumers — should be involved in contributing to the implementation of the Community’s reduction commitment, irrespective of the level of greenhouse gas emissions which can be attributed to them.

(30)

Member States should ensure funding for the use of new, innovative techniques in order to enable industrial operators to create new jobs, thereby increasing competitiveness and promoting the achievement of the objectives set by the Lisbon Strategy.

(31)

Since increasing electricity generation from renewable energy sources is a particularly important means of reducing greenhouse gas emissions, Member States should seek to do this in the context of Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources (6).

(32)

The measures necessary for the implementation of this Decision should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (7).

(33)

In particular, the Commission should be empowered to determine the annual emission allocations for the period from 2013 to 2020 in terms of tonnes of carbon dioxide equivalent, to indicate modalities in order to facilitate transfers by Member States of parts of their emission allocations and increase the transparency of these transfers, as well as to adopt measures to implement the provisions relating to registries and the Central Administrator. Since those measures are of general scope and are designed to amend the non-essential elements of this Decision by supplementing it with new non-essential elements, they must be adopted in accordance with the regulatory procedure with scrutiny provided for in Article 5a of Decision 1999/468/EC.

(34)

Since the objectives of this Decision cannot be sufficiently achieved by the Member States and can therefore, by reason of its scale and effects, be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Decision does not go beyond what is necessary in order to achieve those objectives,

1.

‘Greenhouse gas emissions’ means the emission of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6) from the categories listed in Annex I, expressed in terms of tonnes of carbon dioxide equivalent, as determined pursuant to Decision No 280/2004/EC, excluding greenhouse gases emissions covered under Directive 2003/87/EC.

2.

‘Annual emission allocation’ means the annual maximum allowed greenhouse gas emissions in the years 2013 to 2020 as specified in Article 3(2).

(a)

allowances for greenhouse gas emissions issued pursuant to Article 11 of Directive 2003/87/EC that results from a change in the coverage of sources under that Directive following the final approval by the Commission of the national allocation plans for the period from 2008 to 2012 pursuant to Directive 2003/87/EC;

(b)

allowances or credits issued pursuant to Articles 24 and 24a of Directive 2003/87/EC in respect of emission reductions in a Member State covered by this Decision;

(c)

allowances for greenhouse gas emissions from installations excluded from the Community scheme in accordance with Article 27 of Directive 2003/87/EC for the time that they are excluded.