In a Nutshell
As part of the European Green Deal, the EU has set out legally binding climate objectives to (1) cut domestic net greenhouse gas (GHG) emissions by at least 55% compared to 1990 levels by 2030 and to (2) reach climate neutrality by 2050. The European Climate Law provides the legal framework to support these objectives. The law also requires the European Commission to propose a 2040 climate target for the EU in the first half of 2024, accompanied by an indicative EU GHG budget for the period 2030-2050.
The Commission is at the early stages of this process and has opened a public consultation to guide its assessment of a suitable 2040 climate target, inform the analysis of the sectoral transformations needed to meet this target, and provide input on the possible evolution of climate policy instruments beyond 2030. It will also lay out preferences between establishing separate or joint targets for emissions reductions and carbon removal – the two central components of net zero.
Carbon Gap advocates for the EU to set an explicit 2040 net emission reduction target of 95% compared to 1990, in line with advice by the European Scientific Advisory Board on Climate Change. This target will be the key milestone that the Union commits to reaching on the path to climate neutrality by or before 2050.
Deadline to submit feedback to the call for evidence for an impact assessment, which will inform the new Communication on the EU climate target for 2040
Planned Commission adoption of the Communication, which will lay the foundation for a draft law setting the 2040 target
- Call for evidence for an impact assessment on the new EU climate target for 2040
- Letter from academics and climate experts urging European legislators to adopt separate targets for carbon removals
- 2023 — the Year of Shaping EU’s 2040 Climate Target, by Eve Tamme
- Scientific advice for the determination of an EU-wide 2040 climate target and a greenhouse gas budget for 2030–2050
- Carbon removal: the key to getting the 2040 climate target right
Key Institutional Stakeholders
European CommissionDG Climate Action (CLIMA), Unit A.2: Foresight, Economic Analysis & Modelling DG Climate Action (CLIMA), Unit A.1: Strategic Coordination, Legal & Institutional DG Energy (ENER), Unit A.4: Chief Economist Team DG Energy (ENER), Unit A.1: Interinstitutional, policy coordination and planning
Additional StakeholdersThe European Scientific Advisory Board on Climate Change will inform the Commission’s assessment of a suitable 2040 climate target
In a Nutshell
The Directive for the substantiation of explicit environmental claims (Green Claims Directive) is a legislative proposal that aims to address and reduce greenwashing in consumer-facing commercial practices. It establishes minimum requirements on the substantiation and communication of voluntary environmental claims and labels that are not otherwise banned under the Directive on Empowering Consumers.
To make green claims (including climate-related claims) about the environmental footprint of their products, services, and operations, companies will need to comprehensively demonstrate environmental impact and performance by submitting recognised scientific evidence and the latest technical knowledge. The Directive establishes specific requirements for distinguishing claims on environmental performance from common practice, legal obligations, and from other traders or products.
Environmental claims and labelling schemes will be verified by independent accredited bodies before being put on the market. Member states will nominate a competent national authority to supervise this process, monitor and verify the claims and substantiations on a regular basis. This monitoring will help the Commission to evaluate where more specific requirements are needed and to implement delegated acts accordingly.
Climate-related claims such as net zero or carbon neutrality claims based on offsetting or carbon removal fall under the remit of this Directive. To substantiate such claims companies must report offsetting and emissions data separately, specify whether offsetting relates to emissions reductions or carbon removals, and explain accurately the accounting methodology applied. Once approved and when communicating to consumers, climate-related claims must be accompanied by additional information detailing the extent of reliance on offsetting and whether it is based on emissions reductions or removals.
What's on the Horizon?
The Green Claims proposal by the European Commission will now enter ordinary legislative procedure with the goal of reaching a formal adoption by the European Parliament and the Council.
2023-2024: The European Parliament and the Council will develop their positions separately.
- The Council adopted its negotiating mandate regarding the Directive on Empowering Consumers for the Green Transition on 3 May. The mandate outlines the Council’s position on this Directive which would lay the foundation for the Green Claims Directive.
- The European Parliament on 11 May adopted its position which sets stricter conditions than the Commission proposal and adds a definition of carbon offsetting.
- Negotiations between the Parliament and member states to find a middle ground are expected to start shortly. Complementing the Directive on Empowering Consumers, the Green Claims Directive will provide further guidance on the conditions to make substantiated environmental claims.
2024: Following trilogues between EU institutions, the Directive is expected to pass into EU law.
The Green Claims Directive complements the Empowering Consumers Directive published by the European Commission on 30 March 2022 within the EU Together, they aim to improve the circularity of the EU’s economy and achieve climate neutrality. They respectively set requirements to substantiate environmental claims made to consumers and and other commercial practices.
Apart from the French ministerial decree n°2022-538, the Green Claims Directive is a first of its kind in the specificity with which it regulates environmental claims and addresses climate-neutrality claims. The French decree regulates advertising claims based on emission compensation projects. It has different requirements surrounding emissions reporting, compensation data, and net zero plans.
The Green Claims Directive proposal addresses the issue of greenwashing, increasingly prevalent in recent years. It seeks to standardise environmental claims and labels to improve transparency and credibility for consumers. The proposal aims to use delegated and implementing acts in the future to address substantiation methodologies for specific product groups and evolving commercial practices.
The preamble of the proposal states that climate-related claims are prone to being unclear and misleading, as they are often based on offsetting greenhouse gas (GHG) emissions through carbon credits of low environmental integrity and credibility, generated outside the company’s value chain and calculated based on methodologies that vary widely in transparency, accuracy, and consistency. Offsetting can also deter traders from reducing emissions in their own operations and value chains.
However, credible net zero claims have the potential to incentivise and drive the development of safe, just and sustainable carbon removals to transition towards real climate neutrality. Claims based on offsetting must be regulated through a robust and science-based system to prevent greenwashing.
Room for improvement
Unfortunately, the Green Claims Directive as it currently stands does not establish the necessary measures to do so:
- The Directive does not align with scientific consensus as it allows offsetting through emissions reductions and avoidance to substantiate carbon neutrality claims. The IPCC’s definition of net zero is clear: balancing emissions with physical removals. Accordingly, offsetting projects that avoid emissions, but do not physically remove and store carbon, must be barred from use in substantiating claims about net climate impacts.
- The proposal rightly requires companies to report GHG emissions separately from offsetting data, to disclose the share of their total emissions that are addressed through offsetting and whether these come from emission reductions or removals. This isn’t enough to monitor whether the claimed climate impacts are real There is a need for more extensive disclosure on the types of carbon credits companies are purchasing (avoidance, reduction, removals), which emissions they are claiming compensation for, and the methodologies used to ensure integrity and correct accounting.
- The proposal allows all types of offsetting without any clear criteria for which emissions they can compensate for, nor which climate claims they can substantiate. However, not all carbon storage is equal in terms of capacity, duration or reversal risk. This means that long-lived fossil fuel emissions otherwise impossible to abate can only be balanced by removals with high-durability storage in the geosphere where the carbon came from. Lower-durability removal and storage of carbon into the biosphere must be accelerated for its own sake, to halt and reverse the loss of ecosystems and natural carbon stocks but cannot be eligible to compensate for fossil fuel emissions. Failing to enshrine this non-fungibility principle in EU law would allow companies to continue offsetting their long-lived emissions through shorter-term carbon storage with higher risks of reversal.
- Although the Directive encourages companies to use offsetting only for residual emissions, it provides no robust definition for what constitutes these residual or ‘hard-to-abate’ emissions. Without a sector-specific and measurable definition, companies can weaken emission cutting efforts by manipulating the boundary between ‘emissions that must be reduced’ and ‘emissions that physical removals can offset’. The EU will need to establish a transparent process for classifying emissions as difficult-to-decarbonise.
- The proposal excludes from its scope environmental claims and labels substantiated by rules in the Carbon Removal Certification Framework (CRCF). However, the proposal for the CRCF has no rules for claim substantiation. Instead, the Green Claims Directive could establish guardrails for legitimate net zero claims, which could be substantiated through the purchase of high-quality carbon removal credits certified under the CRCF.
The EU Circular Economy Action Plan sets out the plan to support the EU’s transition to a circular economy, including by protecting consumers
Impact assessment and public consultation on substantiating green claims
European Parliament resolution ‘Towards a more sustainable single market for business and consumers’
European Commission proposal for a Directive on Empowering Consumers for the Green Transition
European Commission proposal for Green Claims Directive
European Parliament adopts its position on the Directive on Empowering Consumers for the Green Transition
Deadline to provide feedback to the Commission on the Green Claims legislative proposal
- The EU Circular Economy Action Plan, European Commission
- Annual ‘sweep’: Screening of websites for ‘greenwashing’, European Commission
- Impact Assessment Report on Empowering Consumers, European Commission
- Recommendation on the use of the Environmental Footprint method, European Commission
- Strengthening climate-related claims: Carbon Gap response to the Green Claims proposal
- Corporate Climate Responsibility Monitor 2022, NewClimate Institute and Carbon Market Watch
- Greenwashing Factsheet, BEUC
- Sustainable consumption briefing, EPRS
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on substantiation and communication of explicit environmental claims (Green Claims Directive)
Key Institutional Stakeholders
European CommissionDG Environment (ENV), Unit B.1: Circular Economy, Sustainable Production & Consumption
European ParliamentCommittee co-responsible: IMCO Co-Rapporteur: Andrus Ansip (Renew, EE) Shadow Rapporteur: Arba Kokalari (EPP, SE) Shadow Rapporteur: Laura Ballarín Cereza (S&D, ES) Shadow Rapporteur: Kim van Sparrentak (Greens, NL) Shadow Rapporteur: Carlo Fidanza (ECR, IT) Shadow Rapporteur: Anne-Sophie Pelletier (GUE/NGL, FR) Committee co-responsible: ENVI Co-Rapporteur: Cyrus Engerer (S&D, Malta) Shadow Rapporteur: Pernille Weiss (EPP, Denmark) Shadow Rapporteur: Emma Wiesner (Renew, SE) Shadow Rapporteur: Annalisa Tardino (ID, Italy Shadow Rapporteur: Petros Kokkalis (GUE/NGL, GR)
Council of the European UnionCouncil formation: ENV
In a Nutshell
The Directive on the geological storage of CO2 (CCS Directive) establishes a regulatory framework for the safe and responsible development and operation of geological carbon dioxide (CO2) storage in the EU. It applies to commercial scale facilities with a capacity of 100 kilotonnes per year (ktCO2/yr) or more.
One of the key elements of the Directive is a permit regime for CO2 storage. The rules set out minimum requirements for selecting CO2 storage sites to ensure there is no significant risk of reversal or damage to health or the environment. Operators are required to demonstrate financial security prior to injecting CO2 to cover potential liabilities and must closely monitor the sites during the operational phase to ensure long-term integrity and containment of stored CO2.
The Directive also introduces a liability mechanism in case of a reversal of CO2 out of storage, where the operator must take corrective measures. It also integrates CO2 storage into existing EU legislation. Environmental Liability Directive provides liability rules for environmental damage; and operators are included in the Emission Trading Scheme (ETS). If emissions are captured, transported, and stored in compliance with the CCS Directive, they are considered as not emitted under the ETS. In the case of reversal, ETS allowances must be surrendered. Liability for damage to health and property is left for regulation at Member State level.
The entire lifetime of storage sites is another key element. The Directive prescribes the decommissioning requirements for sites at and after closure and provides for the transfer of liabilities from the storage operator to the Member State 20 years after closure of sites.
While the CCS Directive was introduced to provide an enabling framework for carbon capture and storage (CCS), it governs any instance of geological storage of CO2. This includes the storage portion of any carbon dioxide removal (CDR) activities which store pure gaseous/supercritical CO2, e.g., bioenergy with carbon capture and storage (BECCS) and direct air capture with carbon storage (DACCS).
What's on the Horizon?
2023: The Commission is reviewing the CCS Directive’s implementation guidance documents to address the latest technical and market developments and remove the ambiguities identified during the implementation of the first CCS deployments.
2023: The Commission is expected to share the results of two studies on CO2 infrastructure, one analysing an outline of the CO2 transport and storage infrastructure in 2030 and 2040, and the other analysing the regulatory environment, which will inform the upcoming Communication on industrial carbon management.
June 2023: National Energy and Climate Plans (NECP) expected. The Commission has requested that Member States include a dedicated chapter on geological storage of CO2, addressing the need for CO2 capture in hard-to-abate industrial sectors, but also considering ongoing or planned biogenic carbon and direct air capture projects.
Q3-Q4 2023: Member States need to report to the European Commission on the implementation of the Directive by April 2023, which will be followed by the Commission’s fourth Implementation Report.
Q4 2023: A Communication on industrial carbon management is expected from the Commission in Q4, preceded by a public consultation (timing tbd). The strategy will address the prevailing lack of CO2 infrastructure development in Europe, and as such may intersect with the CCS Directive.
The CCS Directive was originally designed to assist the EU in meeting its CO2 reduction obligations through capture and geological storage of CO2. It is an essential tool to enable the activities for CO2 management and, as such, an important tool in the CDR regulatory toolkit.
The CCS Directive governs the geological formations in which carbon can be stored. Member States are required to cooperate with the Commission to establish maps of existing, potential, and closed geological storage sites. The Directive also requires operators and competent authorities to establish 3D dynamic models of storage complexes, including protected natural areas. These data offer a critical resource for developing Europe’s carbon management plans, including CDR.
Transborder CO2 movement
The Directive also includes provisions for the transport of CO2 across borders and for storage reservoirs which span multiple countries. This is an important base on which to develop a modular CDR ecosystem where facilities employing CO2 capture and storage sites might be located across Europe with CO2 transported across national borders.
The recent revision (2022) of the Trans-European Networks for Energy (TEN-E) Regulation, which identifies priority corridors and priority thematic areas to develop and interconnect, updated the infrastructure categories eligible for support allowing CO2 transport infrastructure to qualify as a Project of Common Interest (PCI). 14 such projects have already been submitted to the PCI selection.
The implementation of the Directive varies across Europe. In addition to the restrictions allowing CO2 storage only in geological formations which are permanently unsuitable for other purposes (see the EU’s Water Policy), Member States retain the right to not allow geological storage in parts or all of their territory (for example, Germany currently limits the amount of CO2 that can be geologically stored annually to 4 million tonnes and does not allow new demonstration projects to be approved, meaning there is no underground geological storage of CO2 taking place). CDR operators dependent on geological storage will have to navigate this fragmented regulatory landscape.
The information on the practical application of the Directive is limited, despite it being in force for more than 10 years. The uptake of CCS in Europe has been slower than predicted and the rules have not had the chance to demonstrate their effectiveness. The lack of CCS projects has largely been due to the low carbon price and absence of policy support measures to enable the deployment of CCS. Still, the Directive requires a rigorous reviewing process prior to permitting, which makes for intensive work on both storage applicants’ and the national authorities’ side. In any event, the European Commission’s upcoming strategic vision for CCS and CCU might yet provide the necessary fuel to jumpstart the industry and stress test the CCS Directive.
CCS Directive signed into law
Decision 2018/853 empowers the Commission to amend the Annexes of the CCS Directive via delegated acts to adapt to technical and scientific progress
Revision of the CCS Directive implementation guidance documents
Results expected from two studies on the CO2 transport and storage infrastructure and the regulatory environment, to inform the upcoming Communication on CCS and CCU
Member States will report to the Commission on the implementation of the CCS Directive
Member States will update National Energy and Climate Plans (NECP), with a dedicated chapter on geological storage of CO2
Fourth CCS Directive Implementation Report from the Commission
Expected publication of the Communication on CCS and CCU
- Carbon Capture and Storage, European Commission
- Implementation report of the CCS Directive, European Commission, 2019
- Identification and analysis of promising carbon capture and utilisation technologies, including their regulatory aspects, study for the European Commission, 2019
Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (Text with EEA relevance)