Abstract:

The European Union (EU) has continuously explored how to reduce greenhouse gas emissions through the combination of carbon pricing and mandatory regulation since 1997. It has gradually established a relatively mature policy framework which includes Emission Trading System (ETS) and Effort Sharing Regulation (ESR). Over the last decade, China has made significant progress in controlling greenhouse gas emissions through ETS. It is reported that China’s national-wide carbon market was launched in 2021, while regulations that aim to bind emissions from non-traded sectors are still absent. Therefore, learning the EU’s experience in setting and assigning emissions targets would be helpful for China in establishing a coherent framework for limiting the greenhouse gas emissions across all economic sectors. This paper primarily focuses on explaining and analyzing the updated EU-wide reduction target of the ESR sectors and how target would be distributed to specific member states, with the aim of summarizing the EU’s experience in controlling greenhouse gas emissions of non-ETS sectors. The coordination between ESR and other existing policies, namely the flexibility of ETS and Land Use, Land Use Change and Forestry (LULUCF) should also be demonstrated. Suggestions such as gradually establishing an overarching system which involves ETS as well as legally-binding emissions targets, for controlling the aggregate carbon emissions would be proposed in the end.

Key words: European Union climate policy, Effort Sharing Regulation (ESR), Absolute carbon emissions control, Emission target allocation