In a Nutshell
The European Climate Law (ECL) sets a Union-wide, legally binding obligation to reach net zero greenhouse gas emissions by 2050. The EU Institutions and member states are bound to adopt the necessary measures to meet the target; the Law provides a solid foundation on which to anchor future EU climate policy.
The Climate Law addresses the necessary steps to reach the end goal of net zero greenhouse gas emissions by 2050. The Law sets a more ambitious target of at least 55% emissions reductions by 2030 compared to 1990s levels, up from the previous 40% target. The 2030 targets are one part. The Law also includes a process for setting EU climate targets for 2040, which are currently in the making. The Law is a central element in achieving the European Green Deal and was the starting point of a set of proposals by the EU Commission set out in the Fit-for-55 package.
Carbon dioxide removal (CDR) is explicitly and implicitly referred to throughout the text. It introduces a distinction between emission reductions and removals within the EU 2030 emissions reduction target, capping the contribution of land-based CDR through natural sinks based on the Land-Use, Land-Use Change, and Forestry (LULUCF) Regulation. Additionally, the ECL acknowledges the urge to enhance carbon sinks whether through natural or technological solutions. A commitment to achieving negative emissions after 2050 is also included in the Law.
What's on the Horizon?
By 30 September 2023, and every five years thereafter, in line with the Paris Agreement stocktake exercise, the European Commission will assess the collective and individual progress of Member States towards achieving the 2050 climate neutrality objective and assess progress on climate adaptation.
Looking ahead, since the EU climate law gives legal teeth to the principle of net negative emissions, the need to reflect this objective in parallel EU climate legislation such as the EU Emissions Trading System (EU-ETS) carbon pricing mechanism is starting to gain traction. The Commission is expected to produce a report by 2026 regarding the feasibility of integrating removals within the system.
Additionally, since the climate negativity target binds Member States on a collective basis, the distributional question of how to operationalize the effort sharing deriving from this target will also have to be addressed in future policy developments.
Separate targets for emissions reductions and removals
The climate law formally enshrines the objective to increase the EU’s interim 2030 emissions reduction target from 40% to at least 55% compared to 1990 levels.
When the European Commission first came up with this proposal to step up ambition, moving from 40% gross to 55% net emission reductions, it was criticised for creating a net target that did not differentiate between reductions and removals. Academic voices and campaigners responded by initiating a campaign calling for separate targets, which the European Parliament took on board as part of its own negotiating mandate. Campaigners indeed voiced the fear that an overreliance on carbon removal risked distracting from or delaying action on emissions reduction, leading to the so-called “moral hazard” or “mitigation deterrence” effect.
The recommendation to account separately for carbon sinks was finally mirrored in the ECL, as the 2030 target included a capped contribution of 225 million tonnes of carbon dioxide removal through natural sinks, linking to the pre-existing commitment made under the LULUCF Regulation. Since then, the LULUCF Regulation has been revised and the nature-based target was increased to 330 million tonnes by 2030, de facto increasing the ambition of the 2030 targets. However, the capped contribution of 225 million tonnes remains.
No definition of carbon removal nor hard-to-abate emissions
Despite formally acknowledging the need to balance emissions with removals, the ECL does not introduce a definition of what constitutes carbon dioxide removal. The Law mostly refers to removals as natural sinks, de facto looking at the CDR contribution mainly through the lenses of land use and forestry.
However, this gap in the definition could be expected to be addressed in the proposal for a carbon removal certification framework, which the ECL mentions in the context of enhancing carbon sinks and supporting carbon farming.
Finally, the Law acknowledges the role of “removals of greenhouse gases” as a necessary second step to avoiding emissions at source and compensating for residual emissions from “sectors where decarbonisation is the most challenging”, without further elaborating on what constitutes a hard-to-abate emission or sector. Hard to abate emissions should be explicitly defined.
Some acknowledgements of technology-based solutions
The role of more engineered forms of removals, including those enabled by carbon capture and storage technology, is not expanded upon in the Law. One reference is however made in the legislation to the “sinks” that will be needed to balance anthropogenic emissions including both “natural and technological solutions.”
The climate law also includes a recital on the need to promote investment certainty and to introduce policy incentives for technological innovations that can fast-track the transition to a climate-neutral economy, providing an indirect legal hook for the scale-up of CDR solutions.
Lastly, whilst the quantified contribution of natural sinks is specified in the ECL, no target is given for other forms of removal methods.
An aspirational, non-binding target for technological solutions was however subsequently proposed as part of the European Commission’s communication on sustainable carbon cycles, which calls for a 5 million tonnes objective by 2030, thereby giving a strong signal to investors and formally recognising the need to increase research and deployment for these types of solutions.
New Scientific Advisory Body
The law officially establishes the launch of an independent scientific body to provide unbiased advice on the EU’s climate neutrality pathway and encourages Member States to set up their own entities to do so.
Interestingly, the ECL specifically mandates the advisory body to provide scientific knowledge on climate modelling and monitoring but also on “promising research and innovation” which contribute to increasing removals, indirectly mandating the advisory body to assess the potential of more emerging types of carbon removal methods.
Right-sizing the EU carbon budget for the 2040 climate target
The climate law enshrines the objective for the European Commission to propose an intermediate 2040 climate target within six months of the first global stocktake exercise of the Paris Agreement. For transparency and accountability purposes, the law notes that the European Commission will in parallel publish an indicative greenhouse gas budget for the period spanning 2030-2050 defined as the total net greenhouse gas emissions (expressed as CO2 equivalent and providing separate information on emissions and removals) that are expected to be emitted without compromising the Paris Agreement. The law specifies that here too, the recommendations of the Advisory Board will be solicited and that the Commission will publish the underlying methodology used.
EU Parliament declares climate emergency and urges EU Member States to commit to net zero GHG emissions by 2050
European Commission presents its European Green Deal flagship plan to make Europe the first climate-neutral continent by 2050
European Parliament adopts its negotiating mandate, notably calling for a 60% emissions reduction target and a separate accounting of removals and emissions
Council adopts general approach endorsing the -55% net emission reduction target for 2030
The three EU institutions reach a political agreement
The EU Climate Law enters into force, formally enshrining the climate neutrality target into binding legislation
Deal reached on increasing the carbon sink capacity of the EU through land use and forestry sector
EU Commission to deliver its first report, and every five years thereafter, in line with the Paris stock taking exercise
EU Climate Law (ECL)
Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’)