New Report Reveals: Urgent Action Needed to Meet EU Climate Targets by 2030

A recent analysis of national climate plans reveals that twelve EU countries are set to miss their climate targets under the Effort Sharing Regulation (ESR), with an additional seven countries at risk. Germany and Italy are the poorest performers, while France is just on track but could falter with any policy changes or an unusually harsh winter. According to Transport & Environment (T&E), there is still time to adjust policies to meet the 2030 goals.

The study shows that Germany and Italy will significantly fall short of their climate targets by 10 and 7.7 percentage points, respectively. This shortfall may force these countries to consume nearly all the available carbon credits, leaving other countries without allowances to purchase and potentially facing legal challenges. Germany alone could need 70% of the available credits.

Sofie Defour, T&E’ss climate director, highlights that Germany’s and Italy’s high demand for carbon credits could leave their neighbors stranded and facing legal actions. This situation will exacerbateGermany’ss budget crisis, as the government might need to find additional funds to cover their deficits.

Countries failing to meet their targets can buy carbon credits from those that do. However, T&E warns that a lack of immediate action will create a scarcity of credits, potentially leading to a bidding war in 2030 and driving up prices.T&E’ss analysis of the draft NECPs and recent projections suggests that emissions in the ESR sectors will only decrease by 35.5% by 2030, falling 4.5 percentage points short of theEU’ss -40% target.

Defour further stresses that the potential penalties countries might face in 2030 are staggering. Nations must choose between paying billions for carbon credits or implementing policies that benefit their citizens, such as better home insulation. There is still a six-year window to make necessary changes. T&E urges the new Commission to form an action group to propose measures like electrification targets for company cars and provide guidance to lagging countries.

The analysis also shows that Spain, Greece, and Poland are expected to accumulate the most surplus credits. Spain, for instance, could exceed its 2030 target by seven percentage points, potentially earning €10 billion from underperforming countries. Five countries, including France and the Netherlands, have plans that are just adequate to meet their goals but could fall short with any policy rollbacks, leading to the need to purchase carbon credits.

The Effort Sharing Regulation requires EU Member States to achieve climate targets in five sectors: road transport, buildings, small industry, waste, and agriculture. Targets are based on each country’s GDP, and wealthier nations are required to meet higher emissions reduction targets. The EU aims for a 40% reduction in emissions by 2030 compared to 2005 levels across these sectors. Countries must submit National Energy and Climate Plans (NECPs) detailing how they will meet the target by June 30.

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