What is at stake?

The difference between a properly designed ESD or a system full of loopholes and poor governance is equivalent to an EU that takes the Paris climate-agreement seriously or an EU that undermines its climate commitments through fine print. A functioning and ambitious ESD will require measures, both at an EU and national level, in order to achieve the targets. If the ESD is a weak instrument, sectorial measures will not be needed, and the EU will be postponing its decarbonisation by one more decade.

The ESD has the potential to be a game-changer. A reduction of 30% in these sectors requires real change and long-term thinking, at European as well as at national level. If implemented seriously, each country will have to set up a carbon budget and take action to meet it. A legally binding and annual carbon budget forces governments to integrate climate into mainstream decision-making. It also helps create investment certainty for businesses, as they can confidently start developing the technologies, services and solutions needed to hit the targets. A Europe that delivers a strong ESD will be a continent with cleaner vehicles, less congestion, super energy-efficient houses, more sustainable farming, lower energy bills, and more jobs through future-oriented industries. It is also a major opportunity to save billions on oil and gas imports and safeguard the old continent’s energy security. This isn’t just about climate policy but also about smart economic policy, security, innovation and quality of life improvement. All of this, of course, assumes that the ESD will be strong.

How can we make it so?

Protecting the ESD

EU leaders called for enhanced flexibilities within the new ESD, and specified some of the things that were reflected in the new proposal. T&E firmly supports flexibilities in the ESD that do not compromise the real delivery of at least 30% GHG reductions within the ESD sectors. However, flexibilities should not be confused with what can constitute serious loopholes that would undermine the overall target and the efforts needed from surface transport, buildings and agriculture. We explain which flexibilities should be enhanced and which references could become loopholes and therefore should be avoided to ensure that 30% remains at least 30% in the link below.

More than just an accounting mechanism

The ESD requires proper governance and enforcement. The EU needs to ensure countries take measures to respect their carbon budgets, which means making it (financially) more attractive to comply than not. It also needs to ensure that targets are met – through comprehensive compliance checks – and penalise those member states that are not compliant. The review of the ESD provides a unique opportunity to lay the foundation of a climate governance regime that is robust enough to accommodate the increased ambition the Paris agreement requires.