REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Implementing the Paris Agreement - Progress of the EU towards the at least -40% target (required under Article 21 of Regulation (EU) No 525/2013 of the European Parliament and of the Council of 21 May 2013 on a mechanism for monitoring and reporting greenhouse gas emissions and for reporting other information at national and Union level relevant to climate change and repealing Decision No 280/2004/EC)
Date: 2016-11-08
Institutions: Directorate-General for Climate Action, European Commission
Subjects: Kyoto Protocol, adaptation to climate change, climate change, environmental cooperation, environmental monitoring, greenhouse gas, international agreement, pollution control measures, reduction of gas emissions

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 8.11.2016  COM(2016) 707 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Implementing the Paris Agreement - Progress of the EU towards the at least -40% target  (required under Article 21 of Regulation (EU) No 525/2013 of the European Parliament and of the Council of 21 May 2013 on a mechanism for monitoring and reporting greenhouse gas emissions and for reporting other information at national and Union level relevant to climate change and repealing Decision No 280/2004/EC)   {SWD(2016) 349 final}  
 
 
1. 

2. 

3. 

4. 

5. 

6. 

General overview ......................................................................................................... 4 

Acting Domestically and Internationally through Climate Finance ............................ 7 

Mitigating  EU Emissions .......................................................................................... 10 

Adaptating to Climate Change ................................................................................... 14 

Participating in international Climate Policy ............................................................. 14 

Sharing experience ..................................................................................................... 15 

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Index of figures 

Figure 1: Progress towards meeting Europe 2020 targets .......................................................... 4 

Figure 2: Changes in GDP (in real terms), greenhouse gas emissions, and emissions intensity 
of the economy (ratio between emissions and GDP) Index (1990 = 100) ................................. 5 

Figure  3  Estimated  (2015)  and  projected  (2020)  relative  gap  between  emissions  and  ESD 
targets (in % of 2005 base year emissions). Negative and positive values respectively indicate 
over delivery and shortfall. ......................................................................................................... 6 

Figure 4: Use of auctioning revenues in the Member States by sectors (EU weighted average) 
in 2015 ........................................................................................................................................ 8 

Figure  5:  Ex-post  evaluation  of  the  impact  of  the  EU-ETS,  Renewable,  Taxation  and  other 
policies on CO2 emissions from combustion ........................................................................... 16 

3 

 
 
 
 
 
 
1. 

GENERAL OVERVIEW 

1.1. 

Ratification of the Paris Agreement 

On 4 October 2016, the EU ratified the Paris agreement on climate change, thus enabling its entry into 
force on 4 November 2016. On 5 October 2015, the EU deposited its ratification instruments together 
with  eight  Member  States  which  already  completed  their  national  ratification  procedures:  Hungary, 
France, Austria, Malta, Germany, Portugal, Poland and Slovakia. Greece and Sweden deposited their 
ratification  instuments  later  in  October  2016.  The  remaining  Member  States  will  continue  their 
domestic  ratification  processes  with  a  view  to  depositing  their  ratification  instruments  as  soon  as 
possible.  

The Paris Agreement is a global milestone for enhancing collective action and accelerating the global 
transformation to a low-carbon and climate resilient society. The Commission presented its assessment 
of the Paris Agreement in March 2016. Based on this communication, European leaders underlined the 
EU's  commitment  to  reduce  greenhouse  gas  emissions  domestically  and  to  increase  the  share  of 
renewable energies and improve energy efficiency as agreed in October 2014. Adapting the legislation 
in order to implement this framework remains a priority for the EU.  

The  Paris  Agreement  will  replace  the  approach  taken  under  the  1997  Kyoto  Protocol,  that  contains 
commitments until the end of 2020. The second phase of the Kyoto Protocol serves as a bridge towards 
the  post-2020  global  climate  change  agreement.  The  EU  is  already  delivering  results  of  its  2020 
legislation  (Effort  Sharing  Decision,  EU  Emission  Trading  System,  Monitoring  Mechanism 
Regulation)  and  the  EU  and  its  Member  States  are  well  on  track  to  jointly  meet  their  target  for  the 
second commitment period of the Kyoto Protocol.  

1.2. 

Progress towards the at least -40 % 2030 target  

As seen in Figure 1 below, in 2015, the EU greenhouse gas emissions were 22 % below the 1990 level. 
The EU's share of global emissions has also been declining over time. According to the latest available 
EDGAR database, this share stood at 8.8 % in 2012.  

Figure 1: Progress towards meeting Europe 2020 targets 

4 

vs 1990vs 2005-20%-14%2015*/20142015*/19900,7%-22%      EU 2020 target     EU 2030 targetvs 1990-40%EU current situation3.0003.5004.0004.5005.0005.5006.000199019952000200520102015202020252030Mt CO2 equivalentHistoric emissionsProjections with existing measures -WEM- (based on MS submissions)Indicative Policy TrajectoryAt least 40%reductioncompared to 199020%reductioncompared to 1990-22% in 2015*-22% in 2015*-22% in 2015*-22% in 2015**proxy2015 
 
 
Emissions slightly increased (by 0.7 %) in 2015 after a significant drop of 4 % in 2014. Although it is 
widely  acknowledged  that  the  year  2015  was  the  warmest  ever  globally,  the  weather  in  Europe  was 
colder in 2015 than in 2014 with an increase of 'heating degree days' of 4 %. Furthermore, the price of 
fossil  fuels,  notably  propellant,  also  decreased  in  2015  contributing  to  an  increase  in  purchases 
compared to 2014. In the medium to long run, however, emissions are following a decreasing trend.  

According to Member States' projections based on existing measures, in 2030, the total EU emissions 
are estimated to be 26 % below 1990 levels. New mitigation policies are being put in place so that the 
EU target at least a 40 % domestic reduction in greenhouse gas emissions by 2030 compared to 1990, 
agreed  in  Paris,  is  reached.  As  these  policies  are  being  implemented,  EU  emissions  will  follow  the 
trajectory  indicated  on  Figure  1  in  green.  A  description  of  these  legislative  and  non-legislative 
instruments is available in the following sections. 

The EU continues to successfully decouple its economic growth from its emissions. During the 1990-
2015  period,  the  EU’s  combined  GDP  grew  by  50 %,  while  total  emissions  (excluding  LULUCF  but 
including  international  aviation)  decreased  by  22 %.  The  EU’s  greenhouse  gas  emissions  intensity  of 
the economy, defined as the ratio between emissions and GDP, decreased by almost half between 1990 
and 2015. 

Figure 2: Changes in GDP (in real terms), greenhouse gas (GHG) emissions, and emissions intensity of the economy 
(ratio between emissions and GDP) Index (1990 = 100) 

1.3. 

Progress towards the 2020 targets 

According  to  the  projections  based  on  existing  measures  provided  by  Member  States  in  2015, 
emissions are expected to be 24 % lower in 2020 compared to 1990. As part of its 2020 Strategy, the 
EU  committed  to  cut  greenhouse  gas  emissions  in  2020  by  20 %  from  1990  levels.  The  EU  is 
consequently on track to meet this domestic target.  

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The EU Emissions Trading System is a cornerstone of the EU's climate policy. It applies mainly to the 
industrial  and  power  sectors.  Between  2005  and  2015,  emissions  covered  by  the  EU  ETS,  which 
represent slightly less than half of the total emissions in the EU, decreased by 24 %. During this period 
of time, the emissions outside the EU ETS decreased by 12 %. In 2015, greenhouse gas emissions from 
installations  participating  in  the  EU  ETS  are  estimated  to  have  decreased  by  just  under  0.4 %.  This 
confirms  the  decreasing  trend  over  the  last  five  years.  Moreover,  the  surplus  of  emission  allowances 
that has built up in the system since 2009 fell significantly to around 1.78 billion allowances as a result 
of  the  implementation  of  back-loading.  The  surplus  is  thus  at  the  lowest  level  since  the  start  of  the 
current trading period in 2013. The back-loading postponed the auctioning of 400 million allowances in 
2014, 300 million in 2015 and 200 million in 2016. These allowances will be transferred to the Market 
Stability  Reserve  (MSR)  which  will  start  operating  as  of  January  2019  and  will  address  the  current 
surplus  of  allowances.  A  report  on  the  functioning  of  the  carbon  market  will  be  published  later  this 
year.  

According  to  the  Effort  Sharing  Decision  (ESD),  Member  States  need  to  meet  binding  annual 
greenhouse  gas  emission  targets  for  the  period  2013–2020  in  sectors  not  covered  by  the  ETS,  for 
instance building, transport, waste and agriculture. According to the inventory for 2013 and 2014 and 
to the approximated inventory for 2015 (see Figure 2), 27 Member States have achieved their targets 
for the three-year 2013-2015 period. Only Malta's emissions have exceeded the target for each of these 
three years. Malta's emissions are consequently higher than originaly estimated in national projections. 
Therefore,  the  country  needs  to  use  flexibility  provisions  under  the  Effort  Sharing  Decision  (for 
example buying units from other Member States) and may also have to update its projections for 2020 
based on recent emissions data.   

Figure 3 Estimated (2015) and projected (2020) relative gap between emissions and ESD targets (in % of 2005 base 
year emissions). Negative and positive values respectively indicate over-delivery and shortfall.  

Furthermore,  in  2020  most  Member  States  are  expected  to  reach  their  ESD  targets,  according  to 
national projections based on policies already implemented. According to their own projections, a few 
Member States still need to put in place additional measures or make use of flexibilities in 2020: 

6 

 
 
 

In  Ireland,  emissions  are  expected  to  remain  stable  until  2020,  with  transport  emissions 
expected  to  significantly  increase  by  then.  In  June  2016,  in  the  context  of  the  European 
Semester (an annual cycle of macro-economic, budgetary and structural policy coordination in 
the EU), EU leaders  recommended  Ireland to  further mitigate emissions by investing  more in 
public transport. 

  According  to  the  most  recent  national  projections,  Luxembourg's  emissions  will  exceed  the 

national target by 5 % by 2020.  

  Belgium  is  also  expected  to  miss  the  2020  target  by  5 %.  Further  investment  in  transport 
infrastructure and energy generation capacity could however contribute to reducing emissions. 
The  continued  favourable  treatment  of  company  cars  contributes  to  pollution,  congestion  and 
greenhouse gas emissions. 

  According to their projections, Austria, Denmark and Finland could also fail to meet their 2020 
emissions  targets,  but  by  a  margin  of  less  than  5 %.  If  their  planned  additional  measures  are 
implemented, however, Austria and Finland could still meet their targets.  

1.4. 

Compliance with the Kyoto target for the first commitment period and progress towards 
the target for the second commitment period  

On 2 August 2016, the UNFCCC published the final reports of the Parties of the Kyoto Protocol for the 
first commitment period ('CP1') which corresponds to the 2008-2012 period. 26 Member States and the 
EU as party made a commitment for this period. During CP1, the EU's emissions were 23.5 Gt CO2 eq. 
against a cumulative target of 26.7 Gt CO2 eq. This target was consequently met with a margin of 12 % 
as is explained in more details in Table 7 of the staff working document.  

The EU as a whole used 21.8 billion Assigned Amount Units (AAU), 818 million Certified Emission 
Reduction  (CERs),  1.6  million  temporary  CER,  508  million  Emission  Reduction  Units  (ERUs),  and 
390 million Removal Units (RMUs) for compliance. It carried over 4 billion AAUs, 1.5 billion CERs 
and  1.7  billion  ERUs.  Carried  over  units  can  be  used  for  compliance  with  the  second  commitment 
period  ('CP2')  subject  to  the  rules  set  out  by  the  Doha  amendment  to  the  Kyoto  Protocol.  However, 
carried over AAUs cannot be used for compliance with the targets set by the EU climate and energy 
legislation and the use of CERs and ERUs is limited by quality and quantity.  

In the second commitment period (2013-2020), all 28 Member States jointly committed to an EU wide 
target.  According  to  Member  States'  projections,  the  EU  and  its  28  Member  States  are  on  track  to 
overachieve this target.   

2. 

ACTING DOMESTICALLY AND INTERNATIONALLY THROUGH CLIMATE FINANCE 

2.1.  Mobilising the revenue from the auctioning of EU ETS allowances 

Member States’ use of auctioning revenues 

In 2015, the auctioning of ETS allowances generated € 4.9 billion of revenues for the Member States, 
of  which  98 %  came  from  fixed  installations  and  2 %  from  aviation.  According  to  the  information 
submitted to the Commission, the Member States spent or planned to spend 77 % of these revenues on 
climate related purposes.  

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As seen in Figure 4, these revenues have been spent based on Member States' priorities. For instance, 
Hungary recently decided to invest part of these revenues in e-mobility. France and the Czech Republic 
spend most of the revenues on energy efficiency. Spain's priority is still the development of renewable 
energy. More information on the use of auctioning revenues will be available in the next State of the 
Energy Union.  

Figure 4: Use of the auctioning revenues spent in climate and energy in the Member States by sectors (EU weighted 
average) in 2015 

NER 300   

NER  300  is  one  of  the  world's  largest  funding  programmes  for  innovative  low-carbon  energy 
demonstration projects funded by the auctionning of 300 million ETS allowances. Under the NER 300 
programme,  37  renewable  energy  projects  and  one  Carbon  Capture  Storage  (CCS)  project  were 
selected  for  funding  in  19  Member  States.  Three  of  these  are  already  operational  and  are  producing 
clean energy. Total NER 300 funding awarded comes to  € 2.1 billion, which is expected to leverage an 
additional € 2.7 billion of private investment. 

2.2.  Mainstreaming climate policies into the EU budget 

On  average  over  the  2014-2020  period,  at  least  20 %  of  the  EU  budget  is  expected  to  be  climate 
relevant  expenditure.  This  is  expected  to  be  approximately  €  200  billion.  The  situation  varies  across 
instruments: 

-  The  European  structural  and  investments  funds  (ESIFs)  constitute  more  than  43 %  of  the  EU 
budget. 28 partnership agreements and more than 530 fund-specific programmes contribute to 
financing climate  policies. A common  methodology  has  been  set up to determine the  level  of 
support  for  climate  change  objectives.  More  than  €  115  billion  will  support  climate  action 
objectives, corresponding to about 25 % of the total funds. 

-  Common agricultural policy (CAP). The European agricultural guarantee fund (EAGF) and the 
European agricultural fund for rural development (EAFRD) represent together 39 % of the EU 

8 

SustainableTransport; 3%Energy efficiency(excl. Transport); 19%Renewableenergy; 33%Adaptation; 0,3%Management of ETS; 1%Research; 7%Mitigation (no specific use provided or use other than transport, energy efficiency, renewable, management of the ETS and research); 37% 
 
 
budget. Since 1990, agriculture-related non-CO2 emissions have decreased by 24 % in the EU. 
Support  for  climate-friendly  agriculture  through  the  CAP  has  contributed  to  this  decoupling. 
The  CAP  rural  development  policy,  for  instance,  supports  farm  modernisation  in  order  to  cut 
energy consumption, produce renewable energy, improve input efficiency, and thereby reduce 
emissions. In 2015, it is estimated that €13.6 billion of the CAP budget was climate relevant.  

-  Horizon 2020. This EU funding programme for research, represents € 79 billion for the period 
2014-2020 (which is 7 % of the total EU budget). At least 35 % of this funding is expected to be 
invested  in  climate-related  projects.  The  latest  data  show  that  the  research  targeting  societal 
challenges (i.e. energy, transport or food) are close to delivering this 35 % target. However, the 
bottom-up parts of Horizon 2020 (i.e. thematically open calls for proposals) are lagging behind. 
A  higher  level  of  ambition  and  corrective  action  will  therefore  be  needed  to  reach  the  35 % 
mainstreaming target.  

The  industry  and  the  European  authorities  have  also  launched  several  public  private 
partnerships  (PPP),  such  as  'Sustainable  Process  Industry  through  Resource  and  Energy 
Efficiency', to improve resource efficiency and reduce CO2 emissions in industry and buildings. 
Recent  analysis  show  that  these  PPPs  provide  significant  reductions  in  energy  use  and  CO2 
emissions. 

The results of COP21 and the innovation dimension of the Paris Agreement help to address the 
gap  in  upcoming  work  programmes  covering  the  2018-2020  period.  Moreover,  the  integrated 
strategic energy technology (SET) plan is the very first research & innovation deliverable under 
the  Energy  Union,  giving  a  new  impetus  to  the  development  and  deployment  of  low-carbon 
technologies  by  better  coordinating  and  prioritising  work.  It  focuses  on  ten  key  action  lines 
aimed at delivering the Energy Union research & innovation priorities based on an assessment 
of  the  energy  system  needs,  their  importance  for  the  energy  system  transformation  and  the 
potential to create growth and jobs in the EU. These actions address the whole innovation chain, 
from  basic  research  to  market  uptake,  both  in  terms  of  financing  as  well  as  in  terms  of 
regulatory  framework  It  also  proposes  a  new  financial  product,  the  "Energy  Demo  Projects 
facility"  developed  with  the  European  Investment  Bank  (EIB)  to  target  first-of-a-kind  large-
scale commercial demonstration projects.  

-  European fund for strategic investments (EFSI) is a € 16 billion guarantee from the EU budget, 
complemented  by  a  € 5 billion  allocation  of  the  EIB’s  own  resources.  This  fund  supports 
strategic investment in key areas such as infrastructure, education, research, innovation and risk 
finance  for  small  businesses.  It  is  capable  of  leveraging  € 315 billion.  The  EFSI  has  already 
financed  renewable  energy  demonstration  projects,  including  RES-related  transport,  industry 
and energy storage. On 16 September 2016, the Commission proposed an extension of the fund 
to  focus  further  on  innovative,  low-carbon  projects  for  the  2018-2020  period.  This  proposal 
reinforces  the  concept  of  "additionality"  to  ensure  that  only  projects  that  would  not  have 
happened without the EFSI are chosen. In view of their importance for the single market, cross-
border infrastructure projects, including services, have been specifically identified as providing 
additionality. The proposal should deliver a total of at least half a trillion euro of investment by 

9 

 
 
 
 
2020.  The  Commission  called  on  the  co-legislators  to  consider  its  proposal  as  a  matter  of 
priority. 

-  The LIFE sub-programme for climate action, which in 2015 contributed to the implementation 
and  development  of  climate  policy  and  legislation  through  action  grants  and  financial 
instruments.  Under  it,  the  Commission  awarded  €  56  million  to  40  projects  with  European 
added value in terms of climate mitigation, adaptation or governance & information. Some 30 
NGOs primarily  active in  the field of environment  and climate action received funding  in the 
order  of  €  10  million  from  operating  grants.  Progress  was  also  made  on  the  two  Financial 
Instruments.  Three  PF4EE  operations  have  been  signed  (Spain,  France,  the  Czech  Republic). 
Under NCFF a due diligence appraisal of two operations which could be signed in the autumn 
of 2016 was conducted. 

-  External action instruments. To follow up on the Paris Agreement and support developing and 
neighbouring  countries  in  implementing  their  climate  action  plans,  the  EU  aid  budgets  also 
integrate climate. 

2.3. 

Supporting developing countries  

Following the conclusion of the Paris Agreement, support for developing countries to implement their 
nationally determined contributions (NDCs) plays an important role in achieving the transformation to 
low emissions economies.  

At the 2009 Climate Change Conference in Copenhagen, developed countries committed to a long-term 
goal of jointly mobilising USD 100 billion per year as from 2020 for meaningful mitigation actions and 
transparency  of  implementation.  This  funding  will  come  from  a  wide  variety  of  sources,  including 
public  and  private,  bilateral  and  multilateral,  and  alternative  sources  of  finance.  At  the  2015  Paris 
Climate  Change  Conference,  developed  country  parties  agreed  to  continue  their  existing  collective 
mobilisation goal  through to  2025 and  set a new collective quantified goal from a floor of  USD 100 
billion per year. 

The  USD 100  billion  pledge  has  helped  to  significantly  scale  up  climate  finance  in  the  context  of 
development  cooperation  and  through  multilateral  and  development  banks.  The  EU  and  its  Member 
States are the biggest providers of official development assistance to developing countries, delivering 
€ 68 billion  in  2014.  In  2015,  the  EU,  EIB  and  Member  States  provided  €  17.6  billion  to  help 
developing countries tackle climate change.  

3. 

MITIGATING  EU EMISSIONS 

In  October  2014,  the  EU  leaders  reached  an  agreement  on  the  main  building  blocks  of  the  EU  2030 
Climate and Energy Framework. The EU set a binding, economy-wide emissions reduction target of at 
least 40 % by 2030, compared to 1990 levels. This commitment is in line with a cost-effective pathway 
to  reach  the  EU's  long-term  climate  objective  and  became  the  basis  for  the  EU's  international 
commitment under the Paris Agreement on climate change and will be delivered by all Member States 
collectively. 

To start implementing that commitment, in July 2015, the Commission presented a proposal to reform 
the EU Emissions Trading System (see section 3.1). In July 2016, the Commission presented measures 

10 

 
to address the other main elements of the economy that will contribute to climate action: the sectors of 
buildings, transport, waste, agriculture, as well as land-use and forestry (see section 3.2).  

The Commission is also rolling out the initiatives foreseen in the context of the Framework Strategy for 
a Resilient Energy Union with a Forward-Looking Climate Policy, to address renewable energy, energy 
efficiency,  transport  and  research  and  development  and  to  develop  the  governance  of  the  Energy 
Union. 

3.1. 

Revision of the EU ETS - phase 4 (2021-2030)  

The Commission's legislative proposal of July 2015 on revising the EU ETS for phase 4 is now under 
consideration  by  the  Council  and  the  European  Parliament.  The  proposal  aims  to  achieve  a  43 % 
reduction in EU ETS emissions by 2030, compared to 2005 levels. 

3.2. 

Legislative proposals for an Effort Sharing Regulation and on Land Use for 2021-2030 

In  October  2014,  EU  leaders  made  a  political  commitment  to  reduce  the  emission  of  sectors  of  the 
economy not  covered by the EU ETS by 30 % by 2030 compared to 2005. They also  agreed that all 
sectors, including land use, should contribute to the EU's commitments under the Paris Agreement on 
climate change. 

The current Effort Sharing Decision, which obliges Member States to meet binding annual greenhouse 
gas  emission  targets  in  sectors  outside  the  ETS  except  for  land  use,  is  applicable  for  the  2013-2020 
period. On 20 July 2016, the Commission presented a package of measures to accelerate the transition 
to low-carbon in all sectors of the economy in Europe for the 2021–2030 period in response to the 2014 
political commitment. The first legislative proposal sets Member States binding annual greenhouse gas 
emission  targets  for  2021–2030  for  sectors  not  regulated  under  the  EU  ETS  including  building, 
agriculture, waste management, transport and certain industrial activities.  

The  setting  of  national  emissions  reduction  targets  is  based  on  fairness,  solidarity,  cost-effectiveness 
and environmental integrity. The proposal recognises Member States' varying capacities to take action 
by  differentiating  targets  based  on  GDP  per  capita.  This  ensures  fairness  because  higher  income 
Member  States  take  on  more  ambitious  targets  than  lower  income  Member  States.  The  2030  targets 
range from 0 % to -40 % compared to 2005 levels. 

EU leaders also recognised that an approach based solely on relative GDP per capita would result in 
relatively  high  compliance  costs  for  certain  high  income  Member  States.  The  targets  of  high  income 
Member  States  are  consequently  adjusted  in  the  proposal  to  reflect  cost-effectiveness.  Two  strictly 
limited new flexibilities are also proposed – eligible Member States could access allowances from the 
EU ETS, and all Member States are allowed to use enhanced action in the land use sectors to meet their 
binding targets.  

The second legislative proposal concerns CO₂ emissions and removals from agricultural land use and 
forestry  (LULUCF),  and  sets  out  a  binding  commitment  for  each  Member  State  and  the  accounting 
rules  to  determine  compliance.  The  proposal  requires  each  Member  State  to  ensure  that  accounted 
greenhouse  gas  emissions  from  land  use  are  entirely  compensated  by  an  equivalent  removal  of  CO₂ 
from  the  atmosphere  through  action  in  the  sector.  For  example,  if  a  Member  State  cuts  down  their 
forests  (deforestation),  it  must  compensate  for  the  resulting  emissions  by  planting  new  forest 
(afforestation),  by  improving  the  sustainable  management  of  their  existing  forests,  croplands  and 
grasslands, or alternatively by further reductions in the Effort Sharing sectors. 

11 

 
The Commission's proposal is based on a careful balance between more incentives to capture carbon in 
soil and forests, and the need to maintain the environmental integrity of the EU climate framework, so 
as to incentivise emission reductions in the buildings, transport and agriculture sectors. It also includes 
the possibility for Member States to trade LULUCF credits.    

Land  use  and  forestry  include  use  of  soils,  trees,  plants,  biomass  and  timber,  and  are  in  a  unique 
position  to  contribute  to  an  effective  climate  policy.  This  is  because  the  sector  not  only  emits 
greenhouse gases but can also remove CO₂ from the atmosphere.   

3.3. 

Road transport sector  

On  July  2016,  the  Commission  adopted  a  European  strategy  for  low-emission  mobility,  as  part  of  a 
package  of  measures  to  accelerate  the  transition  to  a  low-carbon  economy  in  Europe.  Transport 
accounts  for  almost  a  quarter  of  Europe's  greenhouse  gas  emissions  and  is  the  main  cause  of  air 
pollution in cities.  

The strategy sets a clear ambition: by mid-century greenhouse gas emissions from transport will need 
to  be  at  least  60 %  lower  than  in  1990  and  be  firmly  on  the  path  towards  zero.  Emissions  of  air 
pollutants from transport are harmful to human health and need to be drastically reduced without delay. 
Facing these challenges will offer opportunities to modernise the European economy and strengthen its 
internal market. 

The  strategy  frames  the  actions  that  the  Commission  is  planning  in  the  coming  years,  focusing 
especially on road transport, which accounts for over 70 % of transport emissions and much of the air 
pollution.  These  actions  address  three  key  areas:  (i)  improved  efficiency  of  the  transport  system,  (ii) 
low-emission  alternative  energy  for  transport,  and  (iii)  low-  and  zero-emission  vehicles.  In  addition, 
horizontal  enablers  such  as  the  Energy  Union  strategy,  research  and  innovation,  industrial  and 
investment  policy,  the  digital  single  market  strategies  and  the  skills  agenda  will  support  this 
transformation.  

3.4. 

The monitoring, reporting and verification (MRV) system for EU shipping  

The  EU  has  been  supporting  a  global  approach  to  reducing  emissions  from  international  shipping, 
which is a large and growing source of emissions. In April 2015, it adopted a Regulation that set up an 
EU-wide MRV system for shipping as the first step in the EU strategy towards cutting emissions in this 
sector. This Regulation requires that large ships over 5 000 gross tons using EU ports after 1 January 
2018 monitor and later report their annual verified CO2 emissions and other energy related data. 

The  EU’s  MRV  system  for  shipping  emissions  is  designed  to  contribute  to  building  an  international 
system  in  the  shipping  sector.  Discussions  on  this  are  ongoing  at  the  International  Maritime 
Organisation. The EU-shipping MRV system will also provide new opportunities to agree on efficiency 
standards  for  existing  ships.  Once  a  global  system  is  adopted,  the  EU  MRV  legislation  requires  the 
Commission to make an assessment of it with a view of alignment of the EU system where appropriate. 

3.5. 

Carbon Capture Storage 

In  the  reports  submitted  to  the  Commission  on  the  implementation  of  the  CCS  Directive,  Member 
States have indicated that, despite the lack of positive assessment for technical and economic feasibility 
for CCS retrofitting, newly built power plants are generally going beyond the legal requirements and 
are  setting  aside  land  for  possible  retrofitting  with  CCS  should  the  conditions  change  in  the  future. 

12 

 
More  information  will  follow  in  the  Commission's  second  report  on  the  implementation  of  the 
Directive on the geological storage of carbon dioxide planned to be published later this year. The report 
will  also  provide  an  overview  of  the  latest  developments  related  to  the  preparation  of  storage  sites, 
exploration and permits, operation licences of large power plants, national plans to develop storage and 
CO2 transport infrastructure and research projects with relevance to the Directive. 

3.6. 

F-gases 

The  new  European  Regulation  to  control  gases  from  fluorinated  greenhouse  gases  (F-gases)  applies 
since 1st January 2015. It strengthens existing measures (i.e. containment of gases through the detection 
of leaks, installation of equipment by trained personnel, recovery of used gases, etc.) and introduces a 
phasing-out of hydrofluorocarbons (HFCs) that will help cut total EU emissions from F-gases by two-
thirds by 2030 compared to 2014 levels. In 2016, the quotas needed for legally placing HFCs on the EU 
market were reduced to 93 % of 2015 levels. The F-gas Regulation also prohibits the placing of F-gases 
on the market in certain circumstances where alternatives are available. For instance, since 1st January 
2016 a prohibition on fire equipment that uses HFC-23 is in force. 

3.7. 

Governance  

The  Energy  Union  Framework  Strategy,  adopted  by  the  EU  Heads  of  State  in  February  2015,  will 
ensure that Europe has secure, affordable and climate-friendly energy. It will require major investments 
in  generation,  networks  and  energy  efficiency,  estimated  at  some  € 200  billion  annually  in  the  next 
decade. The objectives of this Strategy can only be achieved if national policies are coherent with those 
of other Member States and complement the EU energy and climate legislation.  

For  these  reasons,  EU  leaders  agreed  that  a  reliable  and  transparent  governance  system  without 
unnecessary  administrative  burden  will  be  developed  at  the  level  of  the  EU.  It  further  specified  that 
such  governance  system  will  integrate  strategic  planning  and  reporting  on  the  implementation  of 
climate  and  energy  policies.  Before  the  end  of  2016,  the  Commission  will  present  a  proposal  for 
streamlining  existing  planning,  reporting  and  monitoring  obligations  as  well  as  on  an  Energy  Union 
governance  process.  It  is  foreseen  that  from  2021  onwards,  the  report  on  the  implementation  of  the 
Paris  agreement    will  form  part  of  the  regular  Commission  monitoring  report  under  the  upcoming 
proposal for a Regulation on Energy Union Governance. 

3.8. 

Carbon market initiatives and Partnership for Market Readiness (PMR) 

The EU continues to support the implementation of market based instruments, such as the ETS, as key 
tools to drive cost effective domestic emission reductions. This is achieved through bilateral technical 
support  and  exchange, principally  in  China  and  South  Korea,  but  also  through  multilateral initiatives 
undertaken by the World Bank such as the Partnership for Market Readiness (PMR) to which the EU is 
the main contributor. This  year  saw an extension  of bilateral support to China,  and a reorientation  of 
funding  within  the  PMR  towards  support  to  upfront  policy  analysis  of  carbon  pricing  to  support 
implementation of commitments under the Paris Agreement. A focus on domestic action remains key 
objectives of international engagement on markets.  

4. 

ADAPTATING TO CLIMATE CHANGE  

The 2013 EU Strategy on adaptation to climate change aims to prepare the EU for current and future 
impacts of climate change. It promotes adaptation action throughout the EU, ensuring that adaptation is 

13 

 
mainstreamed  across  all  relevant  EU  policies  and  securing  greater  coordination,  coherence  and 
information  sharing  across  Member-States.  The  Commission  will  report  to  the  European  Parliament 
and Council on the implementation of the adaptation strategy and will carry  out  an evaluation of the 
implementation. 

The general trends include the following:   

  Many  Member  States  are  addressing  adaptation  planning  and  are  identifying  the  risks  and 
vulnerabilities  to  climate  change.  National  adaptation  strategies  have  been  adopted  by  21 
Member  States  and  are  under  preparation  in  most  of  the  remaining  ones.  However  most 
Member States have yet to define and implement adaptation action plans.  

  The  most  commonly  identified  sectors  for  the  mainstreaming  of  adaptation  are  water 
management and water resources, forests and forestry, agriculture, biodiversity and ecosystems 
and human health. As mentioned in the global strategy on foreign policy and security presented 
to the European Council this summer, climate change amplifies situations of conflict in the EU.    

  Less than half of the Member States are implementing adaptation in key sectors. 

  Development  and  implementation  of  monitoring  and  evaluation  systems  remains  in  the  early 

stages in most Member States.  

  Work at city level and urban policies on climate change adaptation intensified. Within the new 
Covenant  of  Mayors,  adaptation  has  been  merged  with  mitigation  efforts  in  a  European 
initiative  involving  nearly  7,000  cities  around  the  world.  Climate  policy  in  cities  has  been 
supported by the Paris Agreement recognition of cities as key actors in implementation. 

5. 

PARTICIPATING IN INTERNATIONAL CLIMATE POLICY 

5.1. 

Aviation  

Aviation policy 

The  EU  has  been  supporting  and  involved  in  the  development  of  a  global  measure  to  address  CO2 
emissions from international aviation. Since the agreement made at the 38th ICAO Assembly in 2013 to 
develop  a  global  market-based  measure,  ICAO  has  been  actively  working  on  the  design  of  such  a 
measure together with its Member states. The ICAO has opted for a carbon offsetting scheme with the 
objective  to  stabilise  the  international  aviation's  emissions  at  2020  levels.  A  Resolution  on  such  a 
measure to be implemented as of 2020 was adopted at the 39th ICAO Assembly in early October 2016. 
Based on the level of participation in the first voluntary phase of the scheme running until 2027, the 
emission coverage is around 80 % of what is needed to achieve carbon neutrality from 2020. This first 
step will need to be complemented by other key design elements of the scheme, notably rules on the 
monitoring, reporting and verification of emissions and eligibility criteria for emissions units, as well as 
the set-up of a registry. These are key elements in terms of effectiveness and integrity, and they will all 
need to be in place ahead of 2020 for the scheme to start operating as planned.  

Following  the  decision  of  the  Assembly  on  a  global  market-based  measure  for  aviation,  the 
Commission will report to the European Parliament and to the Council on the Assembly's outcome and 
will propose, if appropriate, a proposal to review the scope of the EU ETS for aviation. 

14 

 
 
Aviation's overall impact on climate change 

Total  reported  aviation  emissions  represented  approximately  3.6 %  of  the  EU's  total  greenhouse  gas 
emissions in 2015. Most of these emissions come from international flights. Although the average burnt 
fuel  per  passenger  kilometre  flown  went  down  by  19 %  between  2005  and  2014,  CO2  emissions 
increased by 5 % over this same period.  

Emissions of nitrogen oxides (NOx), aerosols and aerosol precursors (soot and sulphate) and increased 
cloudiness are also contributing to climate change. The EU's Flightpath 2050 recognises such non-CO2 
factors and calls for a 90 % reduction of NOx emissions by 2050, relative to 2000 levels. Efforts have 
been  ongoing  in  recent  years  to  assess  the  impacts  of  non-CO2  factors  on  climate  change.  A  study 
partly financed by the EU research funding programme called 'QUANTIFY' attempted to estimate the 
overall aviation impacts. It concluded that in 2005 aviation represented around a 3.5 % share of total 
anthropogenic forcing (i.e. change in the Earth’s energy balance due to human economical activity). 

5.2. 

Phasing down hydrofluorocarbons under the Montreal Protocol 

The EU was very active in the negotiations of an ambitious global goal under the Montreal Protocol to 
limit the global production and use of hydrofluorocarbons (HFCs). Science suggests that an ambitious 
phase-down of HFCs could prevent up to 0.5°C of global warming by the end of the century. The entry 
into  force  of  the  EU  Regulation  on  fluorinated  gases  in  2015  and  the  EU  amendment  proposal 
submitted in 2015 helped building consensus on the Kigali Amendment, adopted on 15 October 2016, 
which is a significant step forward in implementing the Paris Agreement. 

To facilitate early action on HFCs in Latin American and Caribbean countries, Africa, Southeast Asia 
and the Pacific, the European Commission continues to provide financial support for specific projects 
in these regions. 

6. 

SHARING EXPERIENCE 

European  Commission  regularly  carries  out  ex-post  evaluations  of  climate  policies  in  order  to  better 
understand the main drivers behind emission reductions and to quantify the impact of climate policies 
on  emissions.  A  first  study  based  on  decomposition  analysis  shows  that  the  emission  reductions 
observed since 1990 and the progress in terms of emission intensity of the economy (see Figure 2) have 
been  mainly  driven  by  technological  change  and  innovation.  The  relative  shift  between  economic 
sectors, including from industry to services, had a marginal effect across the EU on average. Hence, the 
decoupling seen in Figure 2 is predominantly explained by the technological developments which make 
it possible to increase GDP while emitting fewer greenhouse gases.  

Two  econometrics-based  models  were  developed  in  2016  to  show  how  climate  policy  contributes  to 
reducing  emissions.  Due  to  the  constraints  of  the  methodologies  used,  only  CO2  emissions  from 
combustion  in  1990-2012  could  be  analysed.  The  first  model  provides  a  quantitative  estimate  of  the 
impact of the EU-ETS on emissions. The second model, based on a different approach, quantifies the 
impact  on  emissions  of  national  policies  including  energy  and  transportation  taxes  and  renewable 
energy policies.  

Figure 5 aims to provide a simplified illustration of the results of the above analysis over the 1990  - 
2012 period. In this representation, the ETS abatement is shown in red. The abatement from energy and 
transportation  taxes  and  renewable  energy  policies  is  also  represented.  These  are  compared  with  the 

15 

 
 
actual  emissions,  shown  at  the  bottom  in  blue.  The  total  refers  to  the  emissions  that  would  have 
occurred in the absence of these policies.  

For reasons of methodological simplicity, it is assumed in the graph that the ETS had no effect on the 
use of renewable energy or on the other policies. A more detailed description of the methodologies and 
of their limits is provided on the website of DG Climate Action. 

Figure 5: Ex-post evaluation of the impact of the EU-ETS, Renewable, Taxation and other policies on CO2 emissions 
from combustion 

Figure  5  above  shows  that  without  the  climate  policies  listed  above,  in  2012,  CO2  emissions  would 
have  been  30 %  higher  than  what  has  been  observed.  Furthermore,  it  is  clear  that  renewable  energy  
development  is  a  decisive  factor  in  reducing  emissions  and  that  taxation  and  the  ETS  also  have  an 
impact  on  emissions.  These  ex-post  evaluations  conclude  that  climate  policy  works  as  it  reduces 
emissions and stimulates the uptake of clean technologies.  

In July 2016, the Commission also published an evaluation of the implementation of the Effort Sharing 
Decision until 2015. The evaluation concluded that, although the Decision was still in the early stages 
of  implementation,  commitments  under  the  Decision  have  contributed  to  stimulating  new  national 
policies  aimed  at  reducing  greenhouse  gas  emissions.  The  Decision  also  improved  the  coordination 
between  national,  regional  and  local  governments.  Policies  which  were  part  of  the  2020  climate  and 
energy package, in particular on energy efficiency and renewable energy, have also played a part.  

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