Effort sharing of EU climate targets – fair, flexible and realistic?

Tellervo Kylä-Harakka-Ruonala acts as the EESC Rapporteur on the Effort Sharing and LULUCF.

The European Commission recently launched a proposal for the effort sharing by the Member States, regarding the greenhouse gas emissions reductions in sectors outside the emissions trading scheme. These sectors cover transport, agriculture, buildings and waste management. The aim is to implement the common target of reducing emissions in these sectors by 30% by 2030 compared to 2005 levels. In addition, requirements were set for the LULUCF activities (Land Use, Land Use Change and Forestry).

Some countries already argued that it is impossible to fulfil the proposed targets, while Climate and Energy Commissioner Canete announced the proposal to be “fair, flexible and realistic”. It is therefore useful to evaluate the content of these adjectives more thoroughly.

Fairness has many faces

On what basis can you consider the targets to be fair? In fact, the visual illustration of the effort sharing looks quite unfair if you just compare the percentages of the reduction targets varying from 40% for Sweden to 0% for Bulgaria. But there is no objective criterion on what is fair. The Commission has used the per capita GDP as a measure of fairness. Another approach would be to base the targets on the potential of emissions reductions of each country. This has actually been taken partly into account in the proposal, mainly with the aim of increasing the cost-effectiveness of the effort sharing. A still more sophisticated approach to fairness would be to find a solution where the relative cost burden of the efforts would be the same for each member state.

Are the targets realistic then? It depends on what you consider to be realistic. Realism is generally linked with technical and economic feasibility. On the other hand, it may be related to the “political realism”. You can ask if it is realistic to expect the poorer countries to do the same as the richer ones. Or you can ask if it is realistic to demand more and more from those who have already done a lot. Here, realism seems to relate to the sense of fairness.

Flexibility increases effectiveness

How about flexibility? Even though the political decision-makers try their best, the outcome is seldom optimal. In addition to the fairness of the effort-sharing between member states, one can question whether the 30% target is fair in relation to the target of 43% for the emissions trading sectors. Furthermore, one can ask whether the national targets will be shared in a fair and effective way between the different sectors. This is why it is good – to my mind – to have flexibility instruments. Some NGOs, however, have been upset and claimed that flexibility dilutes the obligations.

Flexibility is closely linked with economic effectiveness. Accordingly, the Commission’s proposal provides member states with the opportunity to trade their emission allocation with each other, as well as bank and borrow them over time. Member states are also allowed to transfer emissions allowances from the emissions trading sector to the other sectors. Moreover, it is possible to compensate emissions by measures in the LULUCF sector, even though flexibility accounting for sustainable forest management still has to wait for the development of calculation methods.

Country-wise or joined-up solutions?

The climate effort sharing faces in principle the same challenges as for instance the management of the refugee problem. It is difficult to decide on a proper key to be used as the basis of sharing the efforts or allocating the burden. It seems to be difficult to show solidarity even though the impacts would touch every country. European effort sharing is a typical game theoretic situation: Everyone wants to maximize one’s own benefit. But one should also remember that it is better to win together than to lose alone.

During the current times when the EU faces strong criticism, it seems to be wise to stick to solutions that deliver decision-power to the member states. The problem, however, is that national decisions tend to be sub-optimal compared to integrated and joined-up approaches. In an economically ideal situation, measures would be optimized on the basis of the overall costs and benefits across the EU. This is how the emissions trading sectors are treated. To this end, the approach of a country-wise effort sharing should rather be replaced by a sector-wise approach at the EU level. But on the other hand, giving room to and making use of the diversity of the manifold strengths and potentials of various member states may result in the best results in practice – provided that everyone strives for the shared goal.

To elaborate this interesting but somewhat wicked topic further, I’d like to challenge you to share your views on the above questions.