Fairly sharing the effort in the EU’s Green Deal

Just today we’ve learned that the European Council agreed on a number of issues in the Fit for 55 Package; a proposal to reach the goal of reducing emissions by 55% compared to 1990 by the year 2030. We developed a tool to be used in negotiations and reflect on the fairness of the current proposal.
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One major aspect of the EU’s Green Deal negotiations has been how to deal with reductions in sectors not covered by the EU’s emissions trading. While there’s an EU-wide target of 40% reductions (compared to 2005) for these sectors, such as agriculture, waste, and small industries, this target isn’t applied equally to all member states. Instead, in 2021 the Commission proposed differentiated national targets, similarly to previous effort sharing regulation established in 2018.

In the run up to these negotiations, my colleagues and I were asked by an Austrian ministry to help identify the possible ways that the 40% EU target could be distributed among all 27 EU states. The previous regulation (and the current Fit for 55 proposal) was allocated mainly based on GDP per capita; you could interpret this as reflecting countries’ ability to pay to reduce emissions. But there’s much more that could be included, if one thinks about how we could fairly distribute this effort among states, and we wanted to show the range of outcomes if we argue based on different interpretations of fairness. Below I sketch out our approach, but for all the details, our paper can be found here.

Beyond the ability of a country to bear the costs of reductions (what we call a capacity interpretation in our paper), states could reasonably argue from two other major fairness concerns. The first is responsibility, in that it doesn’t seem fair e.g. that countries who didn’t contribute much to emissions in the past to have to take up more mitigation now; it’s reasonable to argue that those who contributed most to the problem have the most responsibility to fix it.

Secondly, countries could argue from a standpoint of equality. When thinking about emissions in the future, it again seems reasonable to say that allowing each country to have equal per capita emissions is fair, or that each state should be given at least the emissions it needs to allow all its citizens to enjoy a life above some basic thresholds of well-being.

But even within these three major fairness concerns – capability, responsibility and equality – we can think of any number of ways to interpret them and thus allocate future emissions. As an example, in terms of capability, we could break from the EC’s use of GDP per capita and argue that other measurements, such as indexes which measure the effectiveness of governance, might be more appropriate.

To get a full picture of what these range of principles and interpretations could mean for an effort-sharing allocation, we developed a simple tool to be used in negotiations, showing the effects of arguing based on a given interpretation. But we quickly realized two things:

  • negotiations would likely lead to some compromise solution with a weighted outcome of interpretations, and
  • such agreement would be hard to reach, given that countries would be motivated to argue for different principles based on their situations. A responsibility interpretation based on historical emissions would lead to steep reductions for high emitters, while leaving those on the other end of the spectrum with little work to be done.

Since negotiations would likely lead to a compromise between interpretations, we tried to identify combinations that would require the least work, in terms of making countries shift from a starting preference. For any set of capability, responsibility and equality interpretations, we find a combination of the three that lead to the least change (over all countries) from a certain starting point.

We see two options for such a point. The first is the idea that countries have made plans based on previous agreement and they want to stick as closely as possible to the 2018 regulation. Alternatively, they could try to negotiate with the goal of having to do the least amount of work (reductions) while keeping an equity-compatible position.

Taking these likely preferences of all 27 EU countries and determining a set of possible negotiation points, we calculate the possible emissions reductions resulting from the points (Figure 1 below) – assuming that countries either want to stay close to their previous agreement or have low reduction targets. The inset triangle chart shows where these negotiation points would lie in terms of how you combine different interpretations. As an example, we see that most blue dots fall on the right leg of the triangle, with a concentration towards the top. We read this as being a combination of mainly a capability and equality interpretation, with little emphasis on responsibility.

Box and whisker chart showing range of emissions reductions per country given different interpretations used to derive negotiation points
Range of emission reductions resulting from the 60 negotiation points derived in our analysis, and weighted combinations of interpretations for all points (inset triangle chart). The blue box and whiskers (and inset points) reflect country preferences to stay close to their 2018 targets, and orange to do as little as possible while remaining equity-compatible. The black line is the reductions contained in the current Fit for 55 proposal, and the dotted line an equal 42% reduction. 

This makes sense, considering that blue points indicate agreement when the goal is minimizing the change compared to the previous 2018 regulation, which was focused on countries’ different capabilities. The orange points which focus instead on minimizing effort but maintaining ethical consistency allow for more inclusion of responsibility.

But what is most striking, and probably the most important result given today’s Council decision, is the difference between our results and the current Fit for 55 proposal. Shown in the main chart as a black line, the proposal by and large asks for considerably less effort from wealthy or high-emitting countries (as seen on the right side of the chart) and comparably more from less wealthy countries with less historical responsibility (left of chart). That’s not to say that the Fit for 55 proposal is wrong or unfair; for the vast majority of EU states it lies somewhere within the range of possible reductions, but on the whole, we find that most interpretations of fairness would result in compromise solutions placing greater burden on wealthy, high-emitting countries as compared to the proposed agreement, with the converse true for less wealthy and lower-emitting states.

While today marks a big step in finalizing the next effort sharing regulation, the process is not yet complete. Next, the proposal will head to the European Parliament, where it will be debated, but it is remains to be seen the degree to which the proposed distribution of effort-sharing emissions reductions will change.

If you'd like to find out more...

We developed an online tool allowing users to interactively choose equity interpretations and see their implications in terms of effort sharing reductions. A link to the tool can be found on our website.