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’)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 192(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinions of the European Economic and Social Committee (1),

Having regard to the opinion of the Committee of the Regions (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) The existential threat posed by climate change requires enhanced ambition and increased climate action by the Union and the Member States. The Union is committed to stepping up efforts to tackle climate change and to delivering on the implementation of the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (the ‘Paris Agreement’) (4), guided by its principles and on the basis of the best available scientific knowledge, in the context of the long-term temperature goal of the Paris Agreement.

(2) The Commission has, in its communication of 11 December 2019 entitled ‘The European Green Deal’ (the ‘European Green Deal’), set out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use. The European Green Deal also aims to protect, conserve and enhance the Union’s natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. At the same time, this transition must be just and inclusive, leaving no one behind.

(3) The Intergovernmental Panel on Climate Change (IPCC) provides in its 2018 Special Report on the impacts of global warming of 1,5 °C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, a strong scientific basis for tackling climate change and illustrates the need to rapidly step up climate action and to continue the transition to a climate-neutral economy. That report confirms that greenhouse gas emissions need to be urgently reduced, and that climate change needs to be limited to 1,5 °C, in particular to reduce the likelihood of extreme weather events and of reaching tipping points. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) has shown in its 2019 Global Assessment Report on Biodiversity and Ecosystem Services a worldwide erosion of biodiversity, with climate change as the third most important driver of biodiversity loss.

(4) A fixed long-term objective is crucial to contribute to economic and societal transformation, high-quality jobs, sustainable growth, and the achievement of the United Nations Sustainable Development Goals, as well as to reach in a just, socially balanced, fair and cost-effective manner the long-term temperature goal of the Paris Agreement.

(5) It is necessary to address the growing climate-related risks to health, including more frequent and intense heatwaves, wildfires and floods, food and water safety and security threats, and the emergence and spread of infectious diseases. As announced in its communication of 24 February 2021 entitled ‘Forging a climate-resilient Europe – the new EU Strategy on Adaptation to Climate Change’, the Commission has launched a European climate and health observatory under the European Climate Adaptation Platform Climate-ADAPT, to better understand, anticipate and minimise the health threats caused by climate change.

(6) This Regulation respects the fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union, in particular Article 37 thereof which seeks to promote the integration into the policies of the Union of a high level of environmental protection and the improvement of the quality of the environment in accordance with the principle of sustainable development.

(7) Climate action should be an opportunity for all sectors of the economy in the Union to help secure industry leadership in global innovation. Driven by the Union’s regulatory framework and efforts made by industry, it is possible to decouple economic growth from greenhouse gas emissions. For example, Union greenhouse gas emissions were reduced by 24 % between 1990 and 2019, while the economy grew by 60 % over the same period. Without prejudice to binding legislation and other initiatives adopted at Union level, all sectors of the economy – including energy, industry, transport, heating and cooling and buildings, agriculture, waste and land use, land-use change and forestry, irrespective of whether those sectors are covered by the system for greenhouse gas emission allowance trading within the Union (‘EU ETS’) – should play a role in contributing to the achievement of climate neutrality within the Union by 2050. In order to enhance involvement of all economic actors, the Commission should facilitate sector-specific climate dialogues and partnerships by bringing together key stakeholders in an inclusive and representative manner, so as to encourage sectors themselves to draw up indicative voluntary roadmaps and to plan their transition towards achieving the Union’s climate-neutrality objective by 2050. Such roadmaps could make a valuable contribution in assisting sectors in planning the necessary investments towards the transition to a climate-neutral economy and could also serve to strengthen sectoral engagement in the pursuit of climate-neutral solutions. Such roadmaps could also complement existing initiatives, including the European Battery Alliance and the European Clean Hydrogen Alliance, which foster industrial collaboration in the transition to climate neutrality.

(8) The Paris Agreement sets out a long-term temperature goal in point (a) of Article 2(1) thereof, and aims to strengthen the global response to the threat of climate change by increasing the ability to adapt to the adverse impacts of climate change as set out in point (b) of Article 2(1) thereof and by making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development as set out in point (c) of Article 2(1) thereof. As the overall framework for the Union’s contribution to the Paris Agreement, this Regulation should ensure that both the Union and the Member States contribute to the global response to climate change as referred to in the Paris Agreement.

(9) The Union’s and Member States’ climate action aims to protect people and the planet, welfare, prosperity, the economy, health, food systems, the integrity of eco-systems and biodiversity against the threat of climate change, in the context of the United Nations 2030 agenda for sustainable development and in pursuit of the objectives of the Paris Agreement, and to maximise prosperity within the planetary boundaries and to increase resilience and reduce vulnerability of society to climate change. In light of this, the Union’s and Member States’ actions should be guided by the precautionary and ‘polluter pays’ principles established in the Treaty on the Functioning of the European Union, and should also take into account the ‘energy efficiency first’ principle of the Energy Union and the ‘do no harm’ principle of the European Green Deal.

(10) Achieving climate neutrality should require a contribution from all economic sectors for which emissions or removals of greenhouse gases are regulated in Union law.

(11) In light of the importance of energy production and consumption for the level of greenhouse gas emissions, it is essential to ensure a transition to a safe, sustainable, affordable and secure energy system relying on the deployment of renewables, a well-functioning internal energy market and the improvement of energy efficiency, while reducing energy poverty. Digital transformation, technological innovation, and research and development are also important drivers for achieving the climate-neutrality objective.

(12) The Union has in place a regulatory framework to achieve the 2030 greenhouse gas emission reduction target agreed in 2014, before the entry into force of the Paris Agreement. The legislation implementing that target consists, inter alia, of Directive 2003/87/EC of the European Parliament and of the Council (5), which establishes the EU ETS, Regulation (EU) 2018/842 of the European Parliament and of the Council (6), which introduced national targets for reduction of greenhouse gas emissions by 2030, and Regulation (EU) 2018/841 of the European Parliament and of the Council (7), which requires Member States to balance greenhouse gas emissions and removals from land use, land use change and forestry.

(13) The EU ETS is a cornerstone of the Union’s climate policy and constitutes its key tool for reducing greenhouse gas emissions in a cost-effective way.

(14) The Commission has, in its communication of 28 November 2018 entitled ‘A Clean Planet for all – A European strategic long-term vision for a prosperous, modern, competitive and climate-neutral economy’, presented a vision for achieving net-zero greenhouse gas emissions in the Union by 2050 through a socially-fair and cost-efficient transition.

(15) Through the ‘Clean Energy for All Europeans’ package of 30 November 2016 the Union has been pursuing an ambitious decarbonisation agenda, in particular by constructing a robust Energy Union, which includes the 2030 goals for energy efficiency and deployment of renewable energy in Directives 2012/27/EU (8) and (EU) 2018/2001 (9) of the European Parliament and of the Council, and by reinforcing relevant legislation, including Directive 2010/31/EU of the European Parliament and of the Council (10).

(16) The Union is a global leader in the transition towards climate neutrality, and it is determined to help raise global ambition and to strengthen the global response to climate change, using all tools at its disposal, including climate diplomacy.

(17) The Union should continue its climate action and international climate leadership after 2050, in order to protect people and the planet against the threat of dangerous climate change, in pursuit of the long-term temperature goal set out in the Paris Agreement and following the scientific assessments of the IPCC, IPBES, and the European Scientific Advisory Board on Climate Change, as well as the assessments of other international bodies.

(18) The risk of carbon leakage remains in respect of those international partners that do not share the same standards of climate protection as those of the Union. The Commission therefore intends to propose a carbon border adjustment mechanism for selected sectors, to reduce such risks in a way which is compatible with the rules of the World Trade Organization. Furthermore, it is important to maintain effective policy incentives in support of technological solutions and innovations which enable the transition to a competitive climate-neutral Union economy, while providing investment certainty.

(19) The European Parliament called, in its resolution of 15 January 2020 on the European Green Deal, for the necessary transition to a climate-neutral society by 2050 at the latest and for this to be made into a European success story and has, in its resolution of 28 November 2019 on the climate and environment emergency, declared a climate and environment emergency. It has also repeatedly called on the Union to increase its 2030 climate target, and for that increased target to be part of this Regulation. The European Council, in its conclusions of 12 December 2019, has agreed on the objective of achieving a climate-neutral Union by 2050, in line with the objectives of the Paris Agreement, while also recognising that it is necessary to put in place an enabling framework that benefits all Member States and encompasses adequate instruments, incentives, support and investments to ensure a cost-efficient, just, as well as socially balanced and fair transition, taking into account different national circumstances in terms of starting points. It also noted that the transition will require significant public and private investment. On 6 March 2020, the Union submitted its long-term low greenhouse gas emission development strategy and, on 17 December 2020, its nationally determined contribution, to the United Nations Framework Convention on Climate Change (UNFCCC), following their approval by the Council.

(20) The Union should aim to achieve a balance between anthropogenic economy-wide emissions by sources and removals by sinks of greenhouse gases domestically within the Union by 2050 and, as appropriate, achieve negative emissions thereafter. That objective should encompass Union-wide greenhouse gas emissions and removals regulated in Union law. It should be possible to address such emissions and removals in the context of the review of the relevant climate and energy legislation. Sinks include natural and technological solutions, as reported in the Union’s greenhouse gas inventories to the UNFCCC. Solutions that are based on carbon capture and storage (CCS) and carbon capture and use (CCU) technologies can play a role in decarbonisation, especially for the mitigation of process emissions in industry, for the Member States that choose this technology. The Union-wide 2050 climate-neutrality objective should be pursued by all Member States collectively, and Member States, the European Parliament, the Council and the Commission should take the necessary measures to enable its achievement. Measures at Union level will constitute an important part of the measures needed to achieve the objective.

(21) In its conclusions of 8 and 9 March 2007 and of 23 and 24 October 2014, the European Council endorsed the Union’s greenhouse gas emission reduction target for 2020 and the 2030 climate and energy policy framework, respectively. The provisions of this Regulation on the determination of the Union’s climate target for 2040 are without prejudice to the role of the European Council, as set out in the Treaties, in defining the Union’s general political direction and priorities for the development of the Union’s climate policy.

(22) Carbon sinks play an essential role in the transition to climate neutrality in the Union, and in particular the agriculture, forestry and land use sectors make an important contribution in that context. As announced in its communication of 20 May 2020 entitled ‘A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system’, the Commission will promote a new green business model to reward land managers for greenhouse gas emission reductions and carbon removals in the upcoming carbon farming initiative. Furthermore, in its communication of 11 March 2020 entitled ‘A new Circular Economy Action Plan for a cleaner and more competitive Europe’, the Commission has committed itself to developing a regulatory framework for certification of carbon removals based on robust and transparent carbon accounting to monitor and verify the authenticity of carbon removals, while ensuring that there are no negative impacts on the environment, in particular biodiversity, on public health or on social or economic objectives.

(23) The restoration of ecosystems would assist in maintaining, managing and enhancing natural sinks and promote biodiversity while fighting climate change. Furthermore, the ‘triple role’ of forests, namely, as carbon sinks, storage and substitution, contributes to the reduction of greenhouse gases in the atmosphere, while ensuring that forests continue to grow and provide many other services.

(24) Scientific expertise and the best available, up-to-date evidence, together with information on climate change that is both factual and transparent, are imperative and need to underpin the Union’s climate action and efforts to reach climate neutrality by 2050. A European Scientific Advisory Board on Climate Change (the ‘Advisory Board’) should be established to serve as a point of reference on scientific knowledge relating to climate change by virtue of its independence and scientific and technical expertise. The Advisory Board should complement the work of the European Environment Agency (EEA) while acting independently in discharging its tasks. Its mission should avoid any overlap with the mission of the IPCC at international level. Regulation (EC) No 401/2009 of the European Parliament and of the Council (11) should therefore be amended in order to establish the Advisory Board. National climate advisory bodies can play an important role in, inter alia, providing expert scientific advice on climate policy to the relevant national authorities as prescribed by the Member State concerned in those Member States where they exist. Therefore, Member States that have not already done so are invited to establish a national climate advisory body.

(25) The transition to climate neutrality requires changes across the entire policy spectrum and a collective effort of all sectors of the economy and society, as highlighted in the European Green Deal. The European Council, in its conclusions of 12 December 2019, stated that all relevant Union legislation and policies need to be consistent with, and contribute to, the fulfilment of the climate-neutrality objective while respecting a level playing field, and invited the Commission to examine whether this requires an adjustment of the existing rules.