EUROPEAN COMMISSION Brussels, 26.10.2022 SWD(2022) 343 final COMMISSION STAFF WORKING DOCUMENT Technical information Accompanying the document Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions

Accelerating the transition to climate neutrality for Europe’s security and prosperity

































































EU Climate Action Progress Report 2022 {COM(2022) 514 final}



Contents 1.OVERVIEW OF EU CLIMATE TARGETS 2.EU’s GREENHOUSE GAS EMISSIONS: TRENDS AND PROJECTIONS 3.GREENHOUSE GAS EMISSIONS COVERED BY THE KYOTO PROTOCOL AND THE CLIMATE AND ENERGY PACKAGE 4. SUMMARY OF EU’s RESPONSES TO THE SURGE OF ENERGY PRICES AND THE RUSSIAN AGGRESSION TO UKRAINE 5. COMMISSION’S ASSESSMENT OF NATIONAL LONG-TERM STRATEGIES 6. EU GREENHOUSE GAS EMISSIONS BY SECTOR 7. TOTAL GHG EMISSIONS PER MEMBER STATE 8. GREENHOUSE GAS INTENSITY IN THE EU AND ITS MEMBER STATES 9. GREENHOUSE GAS EMISSIONS PER CAPITA IN THE EU AND ITS MEMBER STATES 10. EU ETS EMISSIONS 11. EMISSIONS COVERED BY THE EFFORT SHARING LEGISLATION 12. USE OF REVENUES FROM AUCTIONING OF ETS ALLOWANCES 13. EXAMPLES OF FUNDING OF CLIMATE RELATED PROJECTS

1.OVERVIEW OF EU CLIMATE TARGETS Table 1: Overview of existing and Commission’s proposed new climate targets (in the “Delivering the European Green Deal” package - July 2021) International commitments EU domestic legislation The EU’s commitment under the Kyoto Protocol (KP) The EU’s commitment under the Paris Agreement 2020 Climate and Energy Package 2030 Climate and Energy Framework EU ETS Effort Sharing Decision (ESD) EU ETS Effort Sharing Regulation (ESR) LULUCF Target year of period Second commitment period (2013-2020) Already in force – covers the period post 2020 2013-2020 2013-2020 2021-2030 2021-2030 2021-2030 Emission reduction target -20% at least -55% net emissions in 2030 -21% in 2020 compared to 2005 for ETS emissions -10% in 2020 compared to 2005 for non-ETS emissions Annual targets by MS. -43% in 2030 compared to 2005 for ETS emissions Proposed new target: -61% Annual targets by MS. In 2030 -30% compared to 2005 for non-ETS emissions Proposed new target: -40% No-debit target based on accounting rules Proposed new targets: -For 2035 the EU target is a climate neutral land sector (combining LULUCF and emission from agriculture non-CO2). Overall target: -20% GHG emissions reduction vs 1990 Overall target: at least -55% net domestic reduction vs 1990 Further targets - • limiting global warming to well below 2°C.;

• every 5 years to set more ambitious targets as required by science;

• report on implementation/ track progress towards the long-term goal through a robust transparency and accountability system. • balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century. Base year 1990, but subject to flexibility rules. 1995 or 2000 may be used as its base year for Nitrogen trifluoride (NF3) 1990 2005 2005 2005 2005 Subject to accounting rules 1990 for overall emission reduction target 1990 for overall emission reduction target LULUCF Included: afforestation, reforestation and deforestation and forest management, other activities if elected (new accounting rules) Included: Contributes to the commitment of decreasing emissions by at least -55%. Excluded from target, but reported in inventories. Included: Contributes to the commitment of decreasing emissions by at least -55%. In order to ensure that sufficient mitigation efforts are deployed up to 2030, the Climate Law limits the contribution of net removals to the Union 2030 climate target to 225 million tonnes of CO2 equivalent, and provides that the Union shall aim to achieve a higher volume of its net carbon sink in 2030 Aviation Domestic aviation included. International aviation not attributed. Civil aviation included: outgoing flights that start in the EU (emissions calculated on the basis of fuels sold in the EU). EU ETS: Domestic (national) and intra-EEA international aviation included. ESD: CO2 from domestic aviation excluded EU ETS: Domestic and intra-EEA international aviation and departing flights to UK and CH included. ESR: CO2 from domestic aviation excluded. Aviation generally excluded. Use of international credits Use of KP flexible mechanisms subject to KP rules The EU will not use international credits (according to its NDC) Upper limit for credit use for period 2008-2020 at a maximum of 50% of the reduction effort below 2005 levels. Annual use of carbon credits is limited to up to 3% of each Member State's ESD emissions in 2005 No No No Carry-over of units from preceeding periods Subject to KP rules including those agreed in the Doha Amendment No EU ETS allowances can be banked into subsequent ETS trading periods since the second trading period. No carry over from previous period. Indefinite validity of allowances not limited to trading periods, no need to carry over. No No Gases covered CO2, CH4, N2O, HFCs, PFCs, SF6, NF3 CO2, CH4, N2O, HFCs, PFCs, SF6, NF3 CO2, N2O, PFCs, CO2, CH4, N2O, HFCs, PFCs, SF6 CO2, N2O, PFCs, CO2, CH4, N2O, HFCs, PFCs, SF6, NF3 CO2, CH4, N2O Sectors included Energy, IPPU, agricult-ure, waste, LULUCF Energy, IPPU, agricult-ure, waste, LULUCF Energy, IPPU, agriculture, waste, LULUCF Power & heat generation, energy-intensive industry sectors, aviation Transport (except aviation), buildings, non-ETS industry, agriculture (non-CO2) and waste Power & heat generation, energy-intensive industry sectors, aviation Transport (except aviation), buildings, non-ETS industry, agriculture (non- CO2) and waste Land use, land use change and forestry Global Warming Potentials used IPCC SAR IPCC AR4 IPCC AR5 IPCC AR4 IPCC AR5 Applicable to number of MS 15 (additio-nal KP targets for single MS) EU-27, UK and Iceland EU-27 EU-27 EU-27 2.EU’s GREENHOUSE GAS EMISSIONS: TRENDS AND PROJECTIONS In 2021, EU greenhouse gas emissions continued the 30-years descending trend. EU-27 domestic greenhouse gas (GHG) emissions, including international aviation, amounted to 3525 MtCo2-eq, below the 2019 level of 3735 MtCo2-eq, despite the strong rebound in emissions following the unprecedented fall in 2020 due to the pandemic (see Figure 1 ). This translates into a reduction in GHG emissions of 28.1% compared to the 1990 base year (or 28.7% when international aviation is excluded). Hence, overall GHG emissions remain on a downward trend, although more effort is needed to reach the EU’s long-term climate targets. The annual average reduction in domestic GHG emissions observed over the last decade (i.e. 2011-2021) has to more than double in order to achieve the 2030 target of -55% and keep up the pace beyond 2030 to reach climate neutrality by 2050. The main driver of emission reductions over the past three decades was a significative decline in energy intensity (i.e. the quantity of energy consumed to produce one unit of GDP) and to a lesser extent in emission intensity (i.e. the amount of GHG emissions per unit of energy production), with an annual average decline over 1990-2020 of 1.3% and 0.8%, respectively. However, emission intensity of power generation has decreased drastically over the last three decades. In 2020, the EU electricity sector was 54% less GHG intensive than in 1990 (an annual average decline of 1.8%). Policies promoting a more efficient energy use in different sectors of the economy, a growing deployment of renewable energy supply and the use of less carbon intensive fossil fuels have been playing a key role in driving the decarbonisation process. This has allowed the continued decoupling between emissions and economic growth with the GHG emission intensity of the economy, defined as the ratio between emissions and GDP, falling to 268 gCO2-eq/EUR in 2020, less than half the 1990 level. Table 2: Change in EU’s GHG emissions over 1990-2020: a sectoral perspective. In terms of sectors ( Table 2 ), emission reductions in the last three decades were significant in the energy industry (e.g. electricity and heat production, -47%), in the manufacturing industry and construction (e.g. iron and steel production, -54%) and in the industrial processes and product use industries (e.g. chemical industry, -67%; metal industry, -53%). Conversely, emissions in the transport sector have increased, especially in road transportation (+11%) although they have been decreasing in the last ten years. Emission reduction in the agriculture sector (excluding fuel combustion) has somewhat halted at the half-way, showing even a moderate increase since 2010. Finally, the traditional role of natural sink of CO2 of the land use, land use change, and forestry sector (LULUCF), declined at a worrying speed in the last decade.

3. GREENHOUSE GAS EMISSIONS COVERED BY THE KYOTO PROTOCOL AND THE CLIMATE AND ENERGY PACKAGE Table 3 and 4 show progress towards the EU’s 2020 targets as defined under the EU Climate and Energy Package and under the Kyoto Protocol. The main differences between the two approaches are the sectoral coverage, the geographical scope and the time period comparison. In particular, emissions from international aviation are included in the Climate and Energy Package but excluded under the Kyoto Protocol. The geographical scope of the commitment under the Kyoto protocol includes Iceland, the UK and certain regions not included in the Climate and Energy Package. The Climate and Energy package is based on a year-to-year comparison (2020 vs. 1990) whereas the Kyoto Protocol compares the average of emissions in the period 2013-2020 (second commitment period) with emissions in 1990, the base year. Under the Climate and Energy package, the EU, its Member States and the UK committed jointly to achieving a quantified economy-wide greenhouse gas emission reduction target of

-20% below the 1990 level by 2020. At UNFCCC level, this translated into ‘the Cancun pledge’. The 5th Biennial Report to be submitted by 31 December 2022 to the UNFCCC will be the basis for assessing the achievement of the Cancun pledge. The EU National Inventory Report (‘NIR’) submitted to the UNFCCC on 27 May 2022 suggests that the EU-27 overachieved its reduction target under the Convention by reducing emissions by -32% between 2020 and 1990. This means that the EU Member States and the UK have also met their emission reduction targets. Climate and energy package: Base year emissions (Mt CO2-eq.) 1990 emissions (Mt CO2-eq.) 2020 emissions (Mt CO2-eq.) 2020 emissions (% change from base year) 2020 targets (Mt CO2-eq.) 2020 target (% change from base year) Total GHG Emissions, including international aviation (EU-27, convention scope) 4 901 4 901 3 354 -32% 3 920 -20% Under the Kyoto Protocol, the EU, its Member States, the UK and Iceland committed jointly to reducing greenhouse gas emissions in the second commitment period (2013-2020) by 20% on average in comparison to 1990, the emissions’ base year. Under such framework, the EU, its Member States, the UK and Iceland were assigned Kyoto Protocol units (Assigned Amount Unit, or AAU) for the eight-year second commitment period, based on 80 per cent of its emissions in the base year. The AAUs reported in Table 4 correspond to million tonnes of CO2 equivalent. The EU NIR submitted to the UNFCCC on 27 May 2022, once reviewed, will be the basis for assessing whether the EU, its Member States, the UK and Iceland comply with their joint commitment. The EU NIR suggests that the EU, its Member States, the UK and Iceland overachieved their reduction target in the second commitment period of the Kyoto Protocol by reducing emissions by -28%. Kyoto Protocol: Base year emissions (Mt CO2-eq.) 2013 - 2020 emission reduction target (% change from base year) Assigned Amount Units in Mt CO2-eq. (2013-2020) Emissions in Mt CO2-eq. (2013 - 2020) Over (+) / Under (-) achievement 2013 - 2020 emission reduction (% change from base year) Total GHG emissions, excluding international aviation (EU-27+IS+UK, KP scope) 5 876 -20% 37 604 33 699 3 905 -28% Under the Kyoto Protocol, Member States also need to account for emissions and removals from certain activities of land use, land use change and forestry (LULUCF) by applying the accounting rules of the Kyoto Protocol. Table 4 does not include emissions and removals from LULUCF. For the EU as a whole, the LULUCF sector has been a net accounted sink in 2013-2020, thereby also contributing to achieving the commitment. The EU and its Member States have implemented mitigation policies and measures, which contributed successfully to the reduction of greenhouse gas emissions. These include the EU Emissions Trading System (EU ETS), the Effort Sharing Decision (ESD) and a wide range of policies and measures addressing all sectors of the economy. As more action is urgently needed, the EU is enhancing and extending its climate change policies and measures – to deliver on the European Green Deal, the Paris Agreement and to ensure that the EU and its Member States achieve their updated Nationally Determined Contribution (NDC) target of an economy-wide net domestic emission reduction of at least 55% by 2030 compared to 1990.



4. SUMMARY OF EU’s RESPONSES TO THE SURGE OF ENERGY PRICES AND THE RUSSIAN AGGRESSION TO UKRAINE As part of the response to the surge in energy price and the climate of uncertainty created by Russia’s invasion of Ukraine, the European Commission outlined a number of measures to address undesirable negative impacts of higher energy prices on households and businesses. In October 2021, the Commission adopted a first Communication on ‘Tackling rising energy price’, which included a toolbox that the EU and its Member State could use to address the immediate impact of price increases, and further strengthen resilience against future shocks. Short-term national measures included emergency income support to households, state aid for companies, and targeted tax reductions. Medium-term measures aimed at accelerating the transition toward a decarbonised and resilient energy system. In March 2022, the Commission adopted a second Communication proposing collective European actions to address the root causes of the problem in the gas market with a view to ensuring security of supply at reasonable prices for next winter and beyond. The Communication analysed possible options for Member States interventions in the gas and the electricity market and exceptional EU measures in case of full disruption of gas supplies. It also included the creation of a Task Force on common gas purchases at EU level, to facilitate and strengthen the EU’s international outreach to suppliers and proposed a mandatory minimum level in EU underground gas storage to protect against potential interruptions to supply. This last measure already reached political agreement between the European Parliament and EU Member States and already this year, the Member States will need to reach a minimum 80% gas storage level by 1 November. In July 2022, in light of the persisting uncertainty in the energy market and in preparation for possible further disruptions of gas supply, the Commission adopted the Communication ‘Save gas for a safe winter’, a plan for a voluntary gas demand reduction target of 15% from 1 August 2022 to 31 March 2023. To reach that target, the plan outlines various measures whereby Member States can encourage a decrease in gas demand and consumption by the public sector, by companies, but also by households, where possible. The Commission also adopted a proposal for a new Regulation on coordinated demand reduction measures for gas. The proposal also gives the Commission the possibility to declare a ‘Union alert’ on security of supply. In such a case, the Council can impose a mandatory gas demand reduction on all Member States, based on a proposal of the Commission.



5. COMMISSION’S ASSESSMENT OF NATIONAL LONG-TERM STRATEGIES Stable and reliable long-term strategies are essential to help coordinate a cost-effective move towards the long-term goal set by the Paris Agreement, as well as to promote awareness and ownership of the transformation needed. Since October 2021, three additional Member States have submitted their long-term strategies to the Commission: Luxembourg, which set a legally binding climate neutrality target by 2050, Malta and Cyprus that outlined a feasible set of trajectories and measures aimed at achieving target reductions in GHG emissions. Overall, by October 2022, 23 Member States have submitted their long-term strategies required by the Governance Regulation. Of these, 14 Member States clearly expressed their aim to achieve climate neutrality or carbon neutrality by 2050 or before. Others aim to be largely climate neutral or to achieve reductions of 80-95% by 2050. Two third of the strategies have been supported by quantitative projections based on different modelling scenarios. The national long-term strategies also provide useful information at sectoral level, which allow strengths and remaining challenges to be identified and recognised, although coverage varies significantly across Member States or lack details on the precise scope, notably the expected role of land use and removals (see Table 5 ). In this respect, it is worth mentioning that the current land use and forestry EU regulation provides that Member State may use the managed forest land flexibility only if their long-term strategy has included ongoing or planned specific measures to ensure the conservation or enhancement of forest sinks and reservoirs. The inclusion of the recommended contents also varies across Member States, with gaps in needs for research, development and innovation, estimated long-term investments, CO2 intensity of GDP and, to a lesser extent, on the expected contributions of renewable energy, energy efficiency, and agriculture-specific emission reductions (see Table 5 ). Some of the submitted projections appear not to be in line with the stated ambitions. Finally, less than half of the long-term objectives have been enshrined into national law. Whereas most of the national strategies received to date reflect the ambition to be climate neutral by 2050, they do not yet allow to conclude that the long-term strategies are adequate for the collective achievement of the objectives and targets of the Energy Union. Providing information on any remaining collective gap would have required a more complete and detailed set of strategies. This underlines the importance to continue developing policies to increase and meet ambition over time. Member States are therefore encouraged to consider updating and, where possible, to increase the ambition of their national long-term strategies.

6. EU GREENHOUSE GAS EMISSIONS BY SECTOR



The sectors used in Figure 2 and Figure 3 correspond to the following IPCC sectors: -Energy supply: 1A1, 1B and 1C, -Energy use in manufacturing industries: 1A2, -Industrial processes and product use: 2, -Transport (includes domestic aviation) : 1A3, -Other energy use: 1A4, 1A5 and 6, -Agriculture: 3, -Waste: 5, -International aviation: 1.D.1.A

7. TOTAL GHG EMISSIONS PER MEMBER STATE 1990 2005 2021 2021/1990 2021/2005 EU-27 4901 4633 3525 -28% -24% Austria 79 94 78 -1% -17% Belgium 149 149 115 -23% -23% Bulgaria 99 63 55 -45% -12% Croatia 32 30 23 -27% -22% Cyprus 6 10 9 47% -8% Czechia 200 150 120 -40% -20% Denmark 73 70 42 -42% -39% Estonia 40 19 13 -67% -32% Finland 72 71 49 -33% -32% France 553 567 427 -23% -25% Germany 1254 1010 780 -38% -23% Greece 106 139 78 -27% -44% Hungary 95 78 64 -33% -17% Ireland 55 73 62 11% -15% Italy 524 599 410 -22% -32% Latvia 26 11 11 -58% -2% Lithuania 48 23 21 -57% -9% Luxembourg 13 14 11 -14% -21% Malta 3 3 2 -16% -28% Netherlands 225 224 174 -23% -22% Poland 477 406 403 -16% -1% Portugal 60 88 59 -2% -33% Romania 250 147 115 -54% -22% Slovakia 74 51 41 -44% -19% Slovenia 19 21 16 -16% -24% Spain 295 454 298 1% -34% Sweden 73 69 49 -33% -29%





8. GREENHOUSE GAS INTENSITY IN THE EU AND ITS MEMBER STATES



9. GREENHOUSE GAS EMISSIONS PER CAPITA IN THE EU AND ITS MEMBER STATES



10. EU ETS EMISSIONS The EU Emissions Trading System (ETS) is a cornerstone of the EU’s policy to tackle climate change. It currently covers around 36% of the EU's total GHG emissions, including close to 9500 power stations and manufacturing plants (i.e. stationary installations) and flights within the European Economic Area (EEA). Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Verified total emissions from stationary installations 1 904 1 867 1 908 1 814 1 803 1 751 1 755 1 683 1 530 1 356 1 335 Change from year x-1 -2.0% 2.2% -4.9% -0.6% -2.9% 0.2% -4.1% -9.1% -11.4% 6.6% Verified emissions from electricity and heat generation 1 261 1 254 1 191 1 100 1 091 1 046 1 036 964 822 696 707 Change from year x-1 -0.5% -5.0% -7.7% -0.8% -4.1% -1.0% -7.0% -14.7% -15.3% 8.4% Verified emissions from industrial installations 643 613 717 714 712 705 719 719 708 659 631 Change from year x-1 -4.7% 17.0% -0.4% -0.3% -1.0% 2.0% 0.1% -1.6% -6.9% 4.6% *As of 2021, the UK is no longer part of the EU ETS. Verified emissions data for 2021 do not cover the UK, only power plants in Northern Ireland. To determine the year-on-year comparison, an adjusted value of 2020 verified emissions was used, with the scope reduced in the same way. Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021** Verified total emissions from aviation 84 53.5 54.8 57.1 61.5 64.4 67.5 68.2 25.2 27.9 Change from year x-1 - 2.5% 4.1% 7.7% 4.8% 4.8% 1% -63% 30% **As of 2021, the UK is no longer part of the EU ETS. Verified emissions data for 2021 cover flights within the EEA as well as the outgoing flights to Switzerland and to the UK. To determine the year-on-year comparison, an adjusted value of 2020 verified emissions was used, with the scope reduced in the same way.





11. EMISSIONS COVERED BY THE EFFORT SHARING LEGISLATION Emissions from sectors not included in the current EU ETS, such as emissions from buildings, road transport, agriculture, waste, domestic navigation and small industry, account for almost 60% of total domestic EU emissions. These emissions are covered by the EU effort sharing legislation that sets national targets. The Effort Sharing Decision (ESD) sets national emissions targets for 2020 compared to 2005 levels and annual emissions allocations (AEAs), which are the emission limits that Member States must stay under for the period 2013-2020. In 2021, Member States submitted projections in the context of the 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. In 2022, three Member States (Denmark, Ireland, Latvia) and Iceland updated their projections. The original data have different metrics: historical and projected emissions, ESD targets and 2005 base year emissions are expressed in the Global Warming Potential (GWP) of IPCC’s 4th Assessment Report (AR4), whereas the ESR targets and 2005 base year emissions are in GWP of the 5th Assessment Report. For comparability, the latter have been approximately converted into GWP AR4, preserving the level of ambition as expressed in Commission Implementing Decision (EU) 2020/2126 which sets the annual emission allocations (AEAs) of each Member State for each year in 2012-2030 under the ESR. For these reasons, the distances to targets for 2030 are provided here for illustrative purposes only. Due to UK’s withdrawal from the EU, and the opt-out from the ETS of certain small installations in some Member States the aggregated targets (AEAs) for the 27 Member States, as in Commission Implementing Decision (EU) 2020/2126 (which result in -28.7% for the EU), do not exactly match the current EU-level effort sharing reduction targets expressed in percent (-30%).



ESD ESR Member State 2018 2019 2020 2030

(projections WEM) 2030

(projections WAM) Austria Target -13% -14% -18% -36% -36% Emissions -11% -11% -18% -17% -27% Distance to target (pp) -3% -3% 0% -19% -9% Belgium Target -13% -14% -20% -35% -35% Emissions -9% -11% -20% -14% -38% Distance to target (pp) -4% -3% 0% -20% 3% Bulgaria Target 19% 20% 18% 0% 0% Emissions 21% 18% 18% 11% 6% Distance to target (pp) -1% 2% 0% -10% -6% Croatia Target 6% 7% -7% -7% -7% Emissions -9% -10% -7% -14% -19% Distance to target (pp) 15% 17% 0% 7% 12% Cyprus Target -2% -4% 1% -24% -24% Emissions -1% 4% 1% -7% -17% Distance to target (pp) -1% -8% 0% -17% -7% Czechia Target 3% 4% -8% -14% -14% Emissions -5% -5% -8% -22% -37% Distance to target (pp) 8% 9% 0% 8% 23% Denmark Target -15% -18% -23% -39% -39% Emissions -17% -20% -23% -37% -37% Distance to target (pp) 2% 2% 0% -2% -2% Estonia Target -3% -2% -3% -13% -13% Emissions 0% 1% -3% -12% -14% Distance to target (pp) -3% -4% 0% -1% 1% Finland Target -14% -15% -18% -39% -39% Emissions -13% -14% -18% -31% -34% Distance to target (pp) -1% -2% 0% -8% -5% France Target -11% -13% -23% -37% -37% Emissions -14% -16% -23% -31% -31% Distance to target (pp) 3% 3% 0% -6% -6% Germany Target -12% -13% -15% -38% -38% Emissions -10% -8% -15% -29% -29% Distance to target (pp) -2% -5% 0% -8% -9% Greece Target -5% -5% -32% -16% -16% Emissions -29% -29% -32% -27% -36% Distance to target (pp) 23% 24% 0% 11% 20% Hungary Target 8% 10% -7% -7% -7% Emissions -9% -5% -7% -7% -22% Distance to target (pp) 16% 15% 0% 1% 15% Ireland Target -15% -17% -5% -30% -30% Emissions -3% -3% -5% -11% -30% Distance to target (pp) -12% -15% 0% -19% 0% Italy Target -13% -14% -25% -33% -33% Emissions -18% -19% -25% -29% -40% Distance to target (pp) 5% 5% 0% -3% 7% Latvia Target 15% 16% -1% -6% -6% Emissions 7% 1% -1% -10% -15% Distance to target (pp) 8% 15% 0% 4% 9% Lithuania Target 13% 16% 9% -9% -9% Emissions 11% 11% 9% -11% -23% Distance to target (pp) 2% 4% 0% 2% 14% Luxembourg Target -15% -17% -24% -40% -40% Emissions -10% -8% -24% -14% -53% Distance to target (pp) -5% -9% 0% -26% 13% Malta Target 17% 17% 31% -19% -19% Emissions 38% 42% 31% 50% 50% Distance to target (pp) -21% -25% 0% -69% -69% Netherlands Target -12% -14% -29% -36% -36% Emissions -21% -23% -29% -31% -31% Distance to target (pp) 10% 10% 0% -5% -5% Poland Target 7% 8% 9% -7% -7% Emissions 13% 11% 9% 6% -12% Distance to target (pp) -6% -3% 0% -13% 5% Portugal Target 1% 2% -19% -17% -17% Emissions -15% -13% -19% -39% -42% Distance to target (pp) 16% 15% 0% 22% 25% Romania Target 14% 17% 2% -2% -2% Emissions 3% 0% 2% 5% 2% Distance to target (pp) 11% 17% 0% -6% -4% Slovakia Target 11% 13% -17% -12% -12% Emissions -7% -12% -17% 9% 1% Distance to target (pp) 19% 24% 0% -21% -13% Slovenia Target 5% 6% -16% -14% -14% Emissions -5% -7% -16% -9% -25% Distance to target (pp) 10% 13% 0% -5% 11% Spain Target -10% -11% -23% -26% -26% Emissions -15% -16% -23% -18% -38% Distance to target (pp) 6% 5% 0% -8% 12% Sweden Target -14% -15% -32% -40% -40% Emissions -27% -26% -32% -39% -39% Distance to target (pp) 14% 12% 0% -1% -1% EU 27 Target -8% -8% -17% -29% -29% Emissions -11% -11% -17% -22% -30% Distance to target (pp) 3% 3% 0% -6% 1% Iceland Target -29% -29% Emissions -26% -26% Distance to target (pp) -3% -3% Norway Target -40% -40% Emissions -32% -32% Distance to target (pp) -8% -8% EU-27 + IS + NO Target -29% -29% Emissions -22% -30% Distance to target (pp) -7% 1% Member state 2021

Emissions (MtCO2-eq) 2021

AEAs (MtCO2-eq) Difference

(MtCO2-eq) As percent of the base-year Austria 48.4 48.7 0.3 1% Belgium 69.5 70.1 0.5 1% Bulgaria 25.5 27.1 1.6 8% Cyprus 4.6 4.0 -0.6 -14% Czechia 61.8 60.9 -0.9 -1% Germany 405.7 428.8 23.2 5% Denmark 29.4 31.7 2.3 6% Estonia 6.1 6.2 0.1 1% Spain 194.8 197.5 2.7 1% Finland 27.2 29.0 1.8 5% France 327.5 334.4 6.9 2% Greece 42.7 45.8 3.1 5% Croatia 16.2 17.5 1.2 7% Hungary 46.1 49.7 3.6 8% Ireland 45.2 42.6 -2.5 -5% Italy 271.7 266.6 -5.0 -2% Lithuania 14.6 16.0 1.3 10% Luxembourg 8.1 8.4 0.3 3% Latvia 8.6 10.7 2.0 24% Malta 1.3 2.1 0.8 76% Netherlands 92.7 98.2 5.6 4% Poland 209.7 210.4 0.7 0% Portugal 40.5 42.3 1.8 4% Romania 82.3 86.1 3.9 5% Sweden 29.3 31.2 1.9 4% Slovenia 9.9 11.1 1.1 10% Slovakia 20.0 22.8 2.8 12% Iceland 2.8 2.9 0.1 2% Norway 26.6 25.2 -1.5 -5% EU-27 2139.2 2199.9 60.6 2% Member State 2005 base year emissions 2013 2014 2015 2016 2017 2018 2019 2020 Austria AEA 52,6 52,1 51,5 51,0 49,5 48,9 48,3 47,8 Emissions 56,8 50,1 48,2 49,3 50,6 51,7 50,3 50,2 46,5 Distance to target 2,5 3,9 2,2 0,4 -2,1 -1,4 -1,9 1,2 Cumulative surplus of AEAs 2,5 6,4 8,7 9,0 6,9 5,5 3,6 4,8 Belgium AEA 78,4 76,9 75,3 73,8 72,5 71,1 69,7 68,2 Emissions 80,3 74,3 70,1 72,7 74,1 70,8 74,3 72,0 64,9 Distance to target 4,1 6,8 2,6 -0,3 1,7 -3,2 -2,4 3,3 Cumulative surplus of AEAs 4,1 10,9 13,5 13,2 14,9 11,7 9,4 12,7 Bulgaria AEA 26,9 27,2 27,5 27,7 25,9 26,1 26,3 26,5 Emissions 22,1 22,2 22,9 25,4 25,6 26,5 26,3 25,8 25,7 Distance to target 4,7 4,3 2,1 2,1 -0,6 -0,2 0,5 0,8 Cumulative surplus of AEAs 4,7 9,0 11,1 13,3 12,6 12,4 12,9 13,7 Croatia AEA 19,6 19,8 20,0 20,2 18,7 18,9 19,1 19,3 Emissions 17,4 15,1 14,7 15,6 16,0 16,7 16,2 16,1 16,5 Distance to target 4,5 5,1 4,4 4,2 2,0 2,7 3,0 2,8 Cumulative surplus of AEAs 4,5 9,6 14,1 18,2 20,3 22,9 26,0 28,8 Cyprus AEA 5,9 5,9 5,9 5,9 4,2 4,1 4,0 4,0 Emissions 4,2 3,9 3,9 4,1 4,1 4,3 4,2 4,4 4,2 Distance to target 2,0 2,0 1,9 1,8 -0,1 0,0 -0,3 -0,3 Cumulative surplus of AEAs 2,0 4,0 5,8 7,7 7,6 7,5 7,2 7,0 Czechia AEA 62,5 63,2 64,0 64,7 65,2 65,9 66,5 67,2 Emissions 61,7 61,5 57,6 61,3 62,8 62,4 60,6 60,5 58,7 Distance to target 1,0 5,6 2,7 1,9 2,8 5,3 6,0 8,6 Cumulative surplus of AEAs 1,0 6,6 9,3 11,2 14,0 19,2 25,2 33,8 Denmark AEA 36,8 35,9 35,0 34,1 34,8 33,9 33,0 32,1 Emissions 40,1 33,7 32,6 32,5 33,1 32,7 33,1 32,1 30,8 Distance to target 3,1 3,3 2,5 1,0 2,1 0,7 0,9 1,2 Cumulative surplus of AEAs 3,1 6,4 8,9 9,9 12,0 12,7 13,6 14,9 Estonia AEA 6,3 6,3 6,3 6,4 5,9 6,0 6,0 6,0 Emissions 5,4 5,8 6,1 6,1 6,2 6,2 6,1 6,2 5,9 Distance to target 0,5 0,2 0,2 0,2 -0,3 -0,2 -0,2 0,1 Cumulative surplus of AEAs 0,5 0,8 1,0 1,1 0,9 0,7 0,5 0,6 Finland AEA 31,8 31,3 30,8 30,3 30,2 29,6 29,1 28,5 Emissions 33,9 31,6 30,1 29,9 31,4 30,1 29,9 29,6 28,1 Distance to target 0,2 1,1 0,9 -1,0 0,1 -0,3 -0,6 0,4 Cumulative surplus of AEAs 0,2 1,3 2,2 1,2 1,3 1,0 0,4 0,8 France AEA 394,1 389,5 384,4 379,4 358,2 352,9 347,7 342,5 Emissions 398,2 366,1 353,5 353,0 351,9 352,8 342,2 336,4 307,8 Distance to target 28,0 35,9 31,4 27,5 5,4 10,7 11,4 34,7 Cumulative surplus of AEAs 28,0 63,9 95,3 122,8 128,2 138,9 150,3 185,0 Germany AEA 472,5 465,8 459,1 452,4 432,3 425,2 418,1 410,9 Emissions 477,8 460,2 436,8 444,1 454,2 466,9 434,0 444,3 407,4 Distance to target 12,3 29,0 15,1 -1,7 -34,5 -8,8 -26,2 3,5 Cumulative surplus of AEAs 12,3 41,4 56,4 54,7 20,2 11,3 -14,9 -11,4 Greece AEA 59,0 59,3 59,6 59,9 59,1 59,4 59,7 60,0 Emissions 62,6 44,2 44,4 45,4 44,9 45,4 44,7 44,7 42,9 Distance to target 14,8 14,9 14,2 15,0 13,7 14,7 15,0 17,2 Cumulative surplus of AEAs 14,8 29,6 43,8 58,8 72,5 87,3 102,3 119,4 Hungary AEA 50,4 51,5 52,6 53,8 50,1 51,0 51,9 52,8 Emissions 48 38,4 38,4 41,4 42,1 43,1 43,2 44,9 43,9 Distance to target 12,0 13,1 11,2 11,7 6,9 7,7 7,0 8,9 Cumulative surplus of AEAs 12,0 25,1 36,3 47,9 54,9 62,6 69,6 78,5 Ireland AEA 46,9 45,8 44,6 43,5 40,9 39,8 38,7 37,7 Emissions 47,1 42,2 41,7 43,0 43,8 43,8 45,4 45,6 44,7 Distance to target 4,7 4,1 1,6 -0,3 -2,9 -5,6 -6,9 -7,1 Cumulative surplus of AEAs 4,7 8,8 10,4 10,1 7,1 1,6 -5,3 -12,4 Italy AEA 308,2 306,2 304,2 302,3 298,3 295,8 293,4 291,0 Emissions 334,5 273,3 265,3 273,3 270,7 270,1 278,7 274,9 254,0 Distance to target 34,8 40,9 31,0 31,6 28,1 17,1 18,5 37,0 Cumulative surplus of AEAs 34,8 75,7 106,7 138,3 166,4 183,5 202,0 239,0 Latvia AEA 9,3 9,4 9,4 9,5 9,7 9,8 9,9 10,0 Emissions 8,5 8,8 9,0 9,0 9,1 9,2 9,1 8,7 8,4 Distance to target 0,5 0,3 0,4 0,4 0,5 0,7 1,3 1,6 Cumulative surplus of AEAs 0,5 0,8 1,3 1,7 2,2 2,9 4,1 5,7 Lithuania AEA 12,9 13,3 13,7 14,0 14,1 14,5 14,9 15,2 Emissions 13,3 12,4 12,9 13,3 13,9 14,1 14,3 14,3 14,0 Distance to target 0,5 0,4 0,4 0,1 0,0 0,2 0,6 1,2 Cumulative surplus of AEAs 0,5 0,9 1,3 1,4 1,4 1,6 2,1 3,3 Luxembourg AEA 9,5 9,3 9,1 8,9 8,7 8,5 8,3 8,1 Emissions 10,1 9,4 8,9 8,6 8,5 8,7 9,1 9,2 7,7 Distance to target 0,2 0,5 0,5 0,4 0,0 -0,5 -0,9 0,4 Cumulative surplus of AEAs 0,2 0,7 1,2 1,6 1,6 1,1 0,1 0,6 Malta AEA 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 Emissions 1,1 1,3 1,3 1,3 1,3 1,4 1,4 1,4 1,3 Distance to target -0,1 -0,1 -0,1 -0,2 -0,3 -0,2 -0,3 -0,1 Cumulative surplus of AEAs -0,1 -0,2 -0,3 -0,5 -0,8 -1,0 -1,2 -1,4 Netherlands AEA 122,9 120,7 118,4 116,1 114,1 111,8 109,6 107,4 Emissions 127,8 108,3 97,9 101,1 101,3 102,3 99,7 97,1 90,2 Distance to target 14,7 22,8 17,3 14,8 11,7 12,1 12,5 17,2 Cumulative surplus of AEAs 14,7 37,5 54,8 69,6 81,3 93,4 105,9 123,0 Poland AEA 193,6 194,9 196,1 197,4 200,0 201,7 203,4 205,2 Emissions 180 186,1 181,5 186,8 198,7 211,5 213,0 209,1 205,1 Distance to target 7,5 13,3 9,4 -1,3 -11,5 -11,3 -5,6 0,1 Cumulative surplus of AEAs 7,5 20,9 30,2 29,0 17,4 6,1 0,5 0,5 Portugal AEA 49,3 49,6 49,9 50,1 47,9 48,3 48,7 49,1 Emissions 48,6 38,6 38,8 40,6 41,6 40,2 40,6 41,5 38,5 Distance to target 10,7 10,8 9,2 8,6 7,7 7,7 7,2 10,5 Cumulative surplus of AEAs 10,7 21,5 30,7 39,3 47,0 54,7 61,9 72,4 Romania AEA 75,6 77,5 79,3 81,1 84,1 86,0 87,9 89,8 Emissions 75,5 72,7 72,5 74,6 73,1 75,4 77,6 75,2 77,1 Distance to target 2,9 4,9 4,7 8,0 8,7 8,3 12,7 12,7 Cumulative surplus of AEAs 2,9 7,8 12,5 20,5 29,2 37,5 50,2 62,9 Slovakia AEA 24,0 24,4 24,7 25,1 25,0 25,3 25,6 25,9 Emissions 23 21,1 19,8 20,1 19,8 21,2 21,1 20,1 18,9 Distance to target 2,9 4,6 4,7 5,3 3,8 4,3 5,6 7,1 Cumulative surplus of AEAs 2,9 7,5 12,2 17,5 21,3 25,6 31,2 38,2 Slovenia AEA 12,3 12,4 12,4 12,4 12,2 12,2 12,3 12,3 Emissions 11,8 10,9 10,5 10,7 11,2 10,9 11,0 10,8 9,8 Distance to target 1,4 1,9 1,7 1,2 1,3 1,2 1,5 2,6 Cumulative surplus of AEAs 1,4 3,3 4,9 6,1 7,4 8,6 10,1 12,7 Spain AEA 227,6 225,6 223,7 221,8 218,3 216,3 214,3 212,4 Emissions 236 200,3 199,8 196,2 198,5 201,1 203,0 201,9 184,2 Distance to target 27,3 25,9 27,6 23,3 17,2 13,3 12,5 28,2 Cumulative surplus of AEAs 27,3 53,2 80,8 104,1 121,3 134,5 147,0 175,2 Sweden AEA 41,7 41,0 40,4 39,8 37,8 37,2 36,7 36,1 Emissions 43,5 35,3 34,5 33,9 32,6 32,5 31,4 31,7 29,4 Distance to target 6,4 6,5 6,5 7,2 5,3 5,8 5,0 6,7 Cumulative surplus of AEAs 6,4 12,9 19,4 26,6 31,9 37,7 42,7 49,4 United Kingdom AEA 358,7 354,2 349,7 345,2 360,4 357,2 354,1 350,9 Emissions 417,8 339,5 324,4 326,0 333,9 332,1 329,9 329,1 298,9 Distance to target 19,3 29,8 23,7 11,3 28,4 27,4 25,0 52,0 Cumulative surplus of AEAs 19,3 49,1 72,7 84,0 112,4 139,7 164,7 216,7





12. USE OF REVENUES FROM AUCTIONING OF ETS ALLOWANCES The vast majority of revenue from auctioning ETS allowances accrue to Member States, who should spend at least 50% on climate and energy purposes. Figure 6 shows how the reported revenues have been spent in 2021 and indicates that renewables support, decarbonisation of transport and other GHG reduction, were the areas where most of the revenues were spent. Compared to previous years, the increasing share of “other” spending appears partly linked to new national measures using ETS revenues to compensate for rising energy prices and mitigate their social impacts. Auctions of EU ETS emission allowances for both stationary installations and aircraft operators have provided the EU-27 countries with revenues listed in the Table 11 . Member States report annually on the use of auctioning revenues for climate change and energy purposes, under Article 17 of Regulation (EU) No 525/2013. It should be noted that annual reporting does not necessarily cover how the revenues of that year are spent, but the spending of revenues during that year, i.e. it can include revenues from earlier years. Member States only report on spending for the purposes of addressing climate change and energy, but this does not mean that the amount not covered in the report is necessarily spent for other purposes: it is also possible that revenues are spent later, or used to fund many projects/activities, only part of which are linked to climate change and energy, or that a certain amount has been set aside for climate and energy but not all of it has yet been formally attributed to specific projects. In the latter case, and when Member States have reported having a national minimum set aside for climate and energy, this has been reflected in the “% spent on climate and energy” row. Additionally, multiple Member States do not earmark their auction revenues for a specific purpose, but instead attribute part or all of their revenues to a broad budget such as the general budget, that is funded by more than just auctioning revenues, and can be spent on both climate change and energy and other purposes. Often, in such cases example projects funded by the broad budget are reported, but a direct link to auctioning revenues cannot be made. Such country specific contexts are described below. Reported spending can also be higher than the revenues of that year, if either it includes spending of previous years’ revenues or if the reported projects were co-funded with other funds.

Member State 2013 2014 2015 2016 2017 2018 2019 2020 2021 Austria Revenues from auctioning 55.8 53.6 78.6 59.5 79.4 210.4 183.8 184.2 311.0 Reported as spent on climate etc. 36.9 54.8 79.8 59.9 79.2 0 0 986.4 311.0 % spent on climate and energy >100% >100% >100% >100% >100% >100% >100% >100% >100% Revenues are not earmarked. National spending on climate and energy is >100% of auctioning revenues. In several years, climate and energy projects financed from the national budget were reported, even though their funding cannot be directly linked to the auctioning revenues. Belgium Revenues from auctioning 115 97.1 141.6 107.9 144.3 381.5 356.8 356.1 533.2 Reported as spent on climate etc. 0 0 0 37.5 133.1 213.7 357.8 162.6 76.1 % spent on climate and energy N/A N/A N/A 35% 92% 56% 99% 46% 14% The policy is that 100% of auctioning revenues are spent on energy and climate projects. The revenues for the years 2013-2020 have been divided over the regions and the federal government in shares determined by a cooperation agreement. Work on such an agreement for 2021-2030 is still ongoing. Until completed, revenues are carried over. The amount spent in 2021 came from both 2020 revenues and anticipated 2021 revenues. Bulgaria Revenues from auctioning 52.6 36.4 121.8 85.3 130.4 368.2 440.3 448.6 832.9 Reported as spent on climate etc. 51.3 36.2 103.5 94.1 138.2 368.2 440.3 448.6 832.9 % spent on climate and energy 97% 99% 85% >100% >100% 100% 100% 100% 100% Unspent revenues are carried over to later years, therefore in some years spending is higher than the revenues. Croatia Revenues from auctioning N/A N/A 86.9 20.3 27.2 71.5 72.7 72.2 112.2 Reported as spent on climate etc. N/A N/A 77.5 46.1 18.9 29 13.4 44 12.3 % spent on climate and energy N/A N/A 100% >100% 100% 100% 100% 100% 100% Cyprus (*) Revenues from auctioning 0.3 0.7 1.4 0.4 6.6 26 26.1 40.1 78.4 Reported as spent on climate etc. 1.9 0.7 2.8 0.3 0.8 6.4 57.5 57.6 75.3 % spent on climate and energy >100% 100% >100% 100% 100% 100% >100% >100% 100% The auctioning revenues go to a fund, which different ministries can use for climate and energy projects. This fund also receives money from the general budget, so in practice a higher amount than 100% of revenues is spent on climate and energy overall. Czechia * Revenues from auctioning 80.7 55.7 111.5 118 199.8 584.4 630.4 719.4 604.0 Reported as spent on climate etc. 73.2 26.9 111.5 118 199.8 367.3 408.4 309.7 296.5 % spent on climate and energy 91% 48% 100% 100% 100% 63% 65% 43% 49% Revenues are not earmarked. Reported spending represents the amounts allocated for climate change and energy projects in the national budget of each year (if this allocation is higher than 100%, it is reported as 100% of revenues). Denmark * Revenues from auctioning 56.1 48.1 71.3 53.7 71.7 189.8 166.1 166.5 292.9 Reported as spent on climate etc. 56 48.1 71.3 53.7 71.7 189.8 166.1 166.5 292.9 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenues are not earmarked, example projects have been reported up to 100% of revenues each year. Estonia (*) Revenues from auctioning 18.1 7.4 21.3 23.6 39.4 140 142.8 142.4 248.6 Reported as spent on climate etc. 9 3.6 9.5 12.2 15.9 53.3 64.5 30 43.6 % spent on climate and energy 50% 49% 44% 52% 40% 38% 45% ≥50% ≥50% 50% of the auctioning revenues are earmarked and directed through the four-year State Budget Strategy and spent on climate and energy projects and measures, which may take multiple years. Unspent revenues are carried over to later years and always used for climate and energy projects. The remaining 50% goes to the general budget, which, among others, covers climate and energy investment (not included here). Finland * Revenues from auctioning 67 63.5 93.8 71.2 95.3 251.8 219.9 220.6 409.0 Reported as spent on climate etc. 2 31.1 93.8 71.2 9.5 251.8 219.9 220.6 409.0 % spent on climate and energy 3% 49% 100% 100% 10% 100% 100% 100% 100% Revenues are not earmarked. National spending on climate and energy is >100% of auctioning revenues. Only a part of actual spending has been reported, in some years covering specific projects, in other years up to 100% of revenues, even though this funding cannot be directly linked to the auctioning revenues. France (*) Revenues from auctioning 219.2 215.3 312.1 234.7 313.4 829.6 726.5 728.1 1469.1 Reported as spent on climate etc. 219.2 215.3 312.1 234.7 313.4 550 420 728.1 1469.1 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% The auctioning revenues co-fund energy efficiency improvements of low-income housing, up to a ceiling of EUR 420 million per year. The remainder is not earmarked but goes to the general budget, which, among others, covers climate and energy investments (not included here). Germany Revenues from auctioning 791.3 750 1110.2 850.4 1146.8 2581.7 3164 2662.4 5306.2 Reported as spent on climate etc. 790.9 750 1110.2 845.6 1130.8 2563 3147.2 2662.4 5306.2 % spent on climate and energy 100% 100% 100% 98% 99% 99% 99% 100% 100% 100% of revenues is spent on energy and climate projects. All revenues go to a fund for climate and energy projects, which is additionally co-funded from the general budget. Greece Revenues from auctioning 147.6 131.1 195.2 148.1 198 523.5 509.5 506.7 1014.6 Reported as spent on climate etc. 147.6 131.1 195.2 148.1 198 523.5 509.5 506.7 1014.6 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenues are earmarked and fully spent on domestic climate change and energy projects. Hungary (*) Revenues from auctioning 34.6 56.5 83.3 63.7 85.2 225.4 228 226.3 288.2 Reported as spent on climate etc. 17.3 13.1 32.8 18.5 68.7 65.9 74 71.8 232.9 % spent on climate and energy 50% 50% 39% 29% 81% 50% 50% 50% 81% 50% of the revenues are spent on climate and energy (any revenues not spent are carried over to future years) and the remainder goes to the national general budget. Amounts included in the latter can be spent on climate change and energy are not covered here. Ireland * Revenues from auctioning 41.7 36 53.5 40.1 53.6 142.1 124.3 124.5 149.2 Reported as spent on climate etc. 41.7 36 53.5 40.1 53.6 142.1 124.3 124.5 149.2 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% While ETS auction revenues are not earmarked for specific purposes, amounts spent are equivalent to 100% of these revenue (less ETS administration costs for the Environmental Protection Agency) and are attributed to emission reduction activities in line with the purposes specified in the ETS Directive. Italy (*) Revenues from auctioning 386 366.5 542.4 411.2 549.7 1453.3 1289 1290.5 2520.9 Reported as spent on climate etc. N/A 192.8 237.7 118.1 383.7 148.4 148.1 506.6 1260.5 % spent on climate and energy 50% 53% 44% 29% 70% 50% 50% 50% 50% Italian law guarantees that, 50% of the revenues are used for climate and energy but only after the year has ended, which can cause underreported spending. The remaining 50% was initially used to compensate for the depleted phase 2 of the New Entrants Reserve, and later it was allocated to the general budget, which funds, among others, climate and energy projects (not included here). Latvia Revenues from auctioning 10.8 10.2 15.3 11.5 15.4 40.7 42.6 42.3 62.4 Reported as spent on climate etc. 0 0.1 0.1 7.4 3.8 12.3 11.4 5.8 62.4 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% of revenues go to the EAAI, a national green investment scheme aimed at tackling global climate change. Reported spending shows actually disbursed amounts per year, all leftovers are carried over to future years. Lithuania Revenues from auctioning 20 17.3 28.4 20.8 31.5 80.4 84 86.6 86.2 Reported as spent on climate etc. 20 17.3 28.4 20.8 31.5 80.4 83.7 86.6 86.2 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenues are put in a Climate Change fund that is only for climate action and only funded by auctioning revenues, and spent on climate and energy projects Luxembourg * Revenues from auctioning 5 5.2 6.8 5.1 6.9 18.3 17.1 17 8.1 Reported as spent on climate etc. 2.5 2.9 3.5 2.6 3.5 9.2 17.1 17 8.1 % spent on climate and energy 50% 56% 52% 51% 50% 51% 100% 100% 100% Revenues are not earmarked, example projects have been reported up to 100% of revenues each year. Malta * Revenues from auctioning 4.5 3.9 6.2 4.5 6 15.7 15.9 15.8 30.7 Reported as spent on climate etc. 2.9 5.7 12 9.7 6.9 4.9 9.1 47.2 30.7 % spent on climate and energy 100% 100% >100% >100% >100% 100% 100% >100% 100% All revenues go to a fund for climate and energy projects, which is additionally co-funded from the general budget. Netherlands * Revenues from auctioning 134.2 131.1 187.3 142.6 190.7 504.2 440.1 441.4 894.0 Reported as spent on climate etc. 134.2 131.1 187.3 142.6 190.7 504.2 440.1 441.4 0.0 % spent on climate and energy >100% >100% >100% >100% >100% >100% >100% >100% >100% Auctioning revenues go to the national general budget which is used to finance among others climate and energy projects. Amounts spent are higher than 100% of revenues, but it is not possible to link auctioning revenues to specific projects funded. Poland* Revenues from auctioning 244 78 132.8 136.1 506 1211.6 2548.8 3157.6 5593.6 Reported as spent on climate etc. 128.7 39 68.5 68.1 290.4 609.9 1274.4 1564 2768.3 % spent on climate and energy 53% 50% 52% 50% 57% 50% 50% 50% 49% Revenues are not earmarked, example projects have been reported for around 50% of revenues each year. Portugal Revenues from auctioning 72.8 67.1 99.2 75.1 100.3 265.6 257.1 255.8 513.9 Reported as spent on climate etc. 71.4 64.8 83.7 72.8 95.1 201.2 235.3 251.3 513.9 % spent on climate and energy 98% 97% 84% 97% 95% 76% 92% 98% 100% All revenues from auctioning are channelled to the Environment Fund (alongside other revenues) which is financing environmental projects that may or may not be directly related to climate objectives. The amounts reported as spent represent climate change and energy projects paid by the Environmental Fund. Romania (*) Revenues from auctioning 122.7 97.9 195.2 194 260.8 719.1 749.8 803.1 483.9 Reported as spent on climate etc. 91.2 97.9 195.2 194 0 160 42.7 165.9 226.6 % spent on climate and energy 74% 100% 100% 100% 0% 22% 6% 17% 47% 50% of revenues is earmarked for climate change and energy purposes and an additional 6% is earmarked for GHG reduction projects (and 15% goes to indirect carbon cost compensation and 29% to the general budget). Part of unspent revenues are carried over to later years. Slovakia Revenues from auctioning 61.7 57.6 84.5 65 87.1 229.9 244.7 242.1 276.2 Reported as spent on climate etc. 0.1 15.1 30 35.6 40.9 55.6 44.6 27.4 50.9 % spent on climate and energy 0% 26% 36% 55% 47% 24% 18% 11% 18% All auctioning revenues are earmarked and go to the Environmental Fund, which also receives money from other sources. The values reported as spent represent the funding of climate change and energy projects known at the time of reporting. Part of unspent revenues are carried over to later years. Slovenia Revenues from auctioning 17.7 16.6 24.4 18.7 25.1 66.3 65.3 65.0 130.1 Reported as spent on climate etc. 4.6 4.0 12.6 25.2 5.4 14.2 40.8 40.4 79.9 % spent on climate and energy 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% of the auctioning revenues are used for climate and energy projects. Some projects receive funding later than in the year in which the auctioning revenues were generated. About EUR 185 million in already received auction revenues will still be spent on climate and energy. Spain (*) Revenues from auctioning 346.1 330.1 489.5 369.5 493.6 1306 1245.2 1240.3 2482.9 Reported as spent on climate etc. 346.1 370.2 387.8 390.8 445.5 788.6 1054.1 1081.5 2035.0 % spent on climate and energy 100% >100% 79% >100% 90% 60% 85% 87% 82% Estimated revenues are earmarked for energy and climate project ahead of each year (up to a cap, which was EUR 500 million up to 2018 and EUR 1100 million after). The remainder goes to the general budget, part of which also funds climate projects, but are not included here (2013 spending includes phase 3 allowances auctioned in 2012). Sweden * Revenues from auctioning 35.7 34.4 52.4 38.6 51.5 136.3 128.5 127.9 222.2 Reported as spent on climate etc. 35.7 18.9 52.4 21.7 28.8 76.5 73.9 65 222.2 % spent on climate and energy 100% 55% 100% 56% 56% 56% 58% 51% 100% Revenues are not earmarked, example projects have been reported for at least the minimum required spending on energy and climate. 13. EXAMPLES OF FUNDING OF CLIMATE RELATED PROJECTS Example 1: Stimulating investment The Swedish Hydrogen Breakthrough Ironmaking Technology (HYBRIT) financed by the Innovation Fund, aims to create a fossil-free value chain for iron and steel production using fossil-free electricity and hydrogen. The HYBRIT technology involves replacing the blast furnace process, which typically uses coal and coke to remove the oxygen from iron ore, with a direct reduction process using green hydrogen. Example 2: Stimulating investment In the chemical industry, the Kairos@C project has received funding from the ETS Innovation Fund. This project aims to create the first and largest cross-border Carbon Capture and Storage (CCS) value chain to capture, liquefy, ship and permanently store CO2 underground that would otherwise be emitted. This new technology and infrastructure will be located in the port of Antwerp and is expected to become the cornerstone of Belgium’s decarbonisation roadmap. Example 3: Just transition Fund, from plans to territories

Thanks to the first Just Transition Fund (JTF) Programme adopted by the Commission on 16 June 2022, Greece will mobilise a total investment of EUR 1.63 billion to alleviate the impact of the climate transition on the local economy and society. Greece has engaged in a complete de-lignitisation process by 2028 with a drastic reduction and complete removal of lignite from the electricity mix. The Greek programme, which will benefit from grants amounting to EUR 1.38 billion from the JTF, includes three TJTPs. These focus on the phase-out of lignite in Western Macedonia and in Megalopolis, and on the closure of fossil-fuel power stations in the islands of North Aegean, South Aegean and Crete. Just over half of the funds will support entrepreneurship through the financing of existing and new enterprises, of business infrastructure, and of stronger links between companies and research and innovation. Another large part of the funds (20.4% of the total) will strengthen human resources and the skills of the workforce in the affected areas (skilling-upskilling-reskilling) and promote employment. The JTF support will also target energy transition, land use adaptation and the circular economy (i.e. energy upgrades, strengthening self-production through energy communities, renewable energy sources, e-mobility, and energy storage systems). Example 4: New European Bauhaus The New European Bauhaus initiative connects the European Green Deal to our daily lives and living spaces. It calls on all Europeans to imagine and build together a sustainable and inclusive future that is beautiful for our eyes, minds, and souls. By creating bridges between different backgrounds, cutting across disciplines, and building on participation at all levels, the New European Bauhaus inspires a movement to facilitate and steer the transformation of our societies along three inseparable values: sustainability, aesthetics, and inclusion. From 9 to 12 June 2022, Brussels hosted the first Festival of the New European Bauhaus. Designed around three pillars, Forum, Fair and Fest, the Festival was built with the NEB community to showcase, celebrate, and develop the movement. Next to the rich programme in Brussels, the Festival is also spreading throughout Europe, with more than 200 co-created side events independently organised by partners. Example 5: Sustainable land use activities in the Republic of Congo, in the framework of the Central African Forest Initiative (CAFI) The Central African rainforest is the second largest in the world, with an area the size of Western Europe. It represents 30% of the vegetation cover of the African continent. The conservation and sustainable use of the Congo basin forest represents a major component of global climate action. In the Republic of Congo, the forest covers about two thirds of the national territory and stores the equivalent of 10 billion tonnes of carbon dioxide. This project, funded under the new Neighbourhood, Development and International Cooperation Instrument (NDICI-Global Europe), aims to operationalize multi-sector, inclusive, concerted, and integrated spatial planning for land management, with a view to ensure sustainable management of natural resources and preserve the exceptional natural heritage of the Republic of the Congo, in accordance with reforms initiated under national legislation. Starting this year, the project will specifically contribute to (1) develop the production of deforestation-free and sustainable agricultural commodities, (2) reduce deforestation and forest degradation resulting from uncontrolled wood-energy supply to large urban centres, and (3) mobilise finance to develop renewable energy sources., e-mobility, and energy storage systems). Example 6: Horizon Europe Mission for Adaptation to Climate Change The Horizon Europe Mission for Adaptation to Climate Change engages actively with communities to meet their unique needs in accelerating adaptation. A key cross-cutting element is working with nature and with ecosystems to make cities, regions, coastlines, river basins, or forests more resilient. The Mission also aims to deliver at least 75 large-scale demonstrators of systemic transformations on the ground. The knowledge and tools developed under the Mission’s aegis and the insights from the funded projects will be made openly available, to support the scaling-up of adaptation solutions beyond the active partners. To identify interested parties, the Mission launched a Mission Charter for regional and local authorities. Signatories declare their willingness to cooperate, mobilise resources and develop activities in their respective region and communities to reach their adaptation goals, and will receive targeted support via the Mission Implementation Platform. The first 118 regions and local authorities that will sign the Charter were announced on 7 June 2022 during the Mission Forum. Example 7: Alliance for Zero-Emission Aviation To prepare for the advent of hydrogen-powered and electric aircraft the Commission on 24 June 2022 launched the Alliance for Zero-Emission Aviation and invited actors from across aviation to join. The European aeronautical industry is working on a new generation of aircraft in the commuter, regional and medium-haul segments that will fly on hydrogen or battery-electric power, and these aircraft are expected to enter into service in the coming decade. The Alliance for Zero-Emission Aviation will pin-point what action needs to be taken where and by when. It will also help attract the required investments.

Example 9: TANGO project funded by the Innovation Fund Located in Catania, the 3Sun factory is one of the largest solar panel production plants in Europe. It’s the first of its kind in Europe to mass produce bifacial panels with heterojunction technology (HJT). Bifacial panels can capture sunlight from their back surface too, which means they are far more efficient than traditional ones because more clean energy is produced without major additional cost. They are also stronger and last longer, which lowers the consumption of raw materials. The TANGO project will be carried out by ENEL Green Power, one of the largest operators in the renewable energy sector in the world. TANGO aims to expand the 3Sun factory and turn it into the GigaFactory, the first European industrial-scale manufacturing plant for highly innovative solar panels. The production capacity will reach 3 GW per year. What does this mean in practice? ·3 GW of panels can generate around 5,5 GWh of renewable electricity per year, roughly the annual consumption of two million Italian households. ·The panels produced during the project’s first ten years of operation will avoid the equivalent of 25 million tonnes of CO2, amounting to more than 30% of all GHG emissions from public electricity and heat production in Italy in 2019. Additionally, the future GigaFactory will create around 1000 jobs by 2024. Example 10: LIFE-IP PAF Wild Atlantic Nature project - Protecting and restoring Ireland's blanket bog The project (2020-2028) aims to address the identified obstacles, gaps and shortcomings that currently prevent the full implementation of the Prioritised Action Framework (PAF) for Natura 2000 on 24 sites with respect to Ireland’s blanket bogs in the Northern and Western Region covering an area of over 200 000 hectares. The overall status of conservation of the blanket bog has been declining mainly due to inappropriate agricultural practices, peat cutting, forestry plantations and invasive species. To address this trend, this project has facilitated the development of a Results-Based Agri-environment Payment Scheme in the Northwest of Ireland, involving c.750 farmers and over 40 agricultural advisors, to reward high quality peatland habitats and incentivise the improvement of poorer quality habitats. This approach forms the basis of the new Cooperation Approach of Ireland’s CAP Strategic Plan, which will be rolled out to over 300 000 hectares from 2023. Example 12: LIFE CLIMARK – Promoting sustainable forest management Sustainable forest management is a key tool to maintain and enhance the mitigation capacity of forests. The LIFE CLIMARK project (2016-2022), located in Catalonia (Spain) and replicated in Veneto (Italy), designed a local market of ‘climatic credits’ to promote multifunctional forest management in a rural abandonment context. Climatic credits are defined by assessing the impact of locally identified forestry practices on climate mitigation, water flow regulation and biodiversity. CLIMARK applied climatic credits on almost 88 hectares of diverse Mediterranean forest typologies and developed tools to facilitate their replication in other European regions. Example 13: LIFE HEATLAND – An innovative pavement to mitigate the urban heat island effect LIFE HEATLAND (2017-2021) demonstrated the effectiveness of an innovative cool pavement technology that increases the resilience to climate change in urban areas by reducing the urban heat island (UHI) effect. The cool pavement was installed in an urban area of Murcia, reducing the ambient temperature by 1.5ºC and the surface temperature of the pavement by 7-11ºC. In addition, this technology helped reduce the noise level and energy consumption for street lighting thanks to its higher reflection properties. In November 2021, the Barcelona City Council decided to join this initiative, carrying out an additional test of the cool pavement. Example 14: LIFE PASTORALP – Making alpine pasture agriculture resilient to climate change LIFE PASTORALP (2017-2022) aimed to reduce the vulnerability and increase the resilience of alpine pasture agriculture in the areas of the Parc National des Ecrins in France and the Parco Nazionale Gran Paradiso in Italy by assessing and testing adaptation measures, increasing capacity building and developing improved management strategies for climate change adaptation. PASTORALP deployed platform tools to facilitate the adoption of adaptation strategies in the Western Alps and their replication in other pastoral areas, including maps of pastoral resources, data on the impact of climate change and monitoring of biodiversity. Moreover, two pastoral areas, purchased by the Gran Paradiso National Park, will be used to demonstrate management strategies against climate change. Policy recommendations could also contribute to the definition of eco-schemes in the future common agricultural policy (CAP).