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Climate Action Regulation 2.0

Climate Action Regulation 2.0

EU Framework for Making Non-ETS Sectors Climate Neutral

The Climate Action Regulation (CAR aka Effort Sharing Regulation) regulates 57 % of the EU's greenhouse gas emissions. Consequently, the EU cannot achieve its new climate targets without major contributions from the sectors regulated by the CAR. This makes reforming the CAR one of the EU's most important legislative processes in 2021. For achieving EU climate targets, it is a dealmaker or deal breaker. There are various ideas about how to turn the CAR into a strong driver for achieving the EU's climate targets. Ideas range from strengthening the current system to almost completely replacing it by an extended emission trading scheme.

This Ecologic Institute paper discusses these ideas, and makes proposals for reform.


Meyer-Ohlendorf, Nils; István Bart 2020: Climate Action Regulation 2.0 - EU Framework for Making Non-ETS Sectors Climate Neutral. Ecologic Institute. Berlin.

István Bart
25 pp.
Project ID
Table of Contents

1. Introduction
2. What has the Effort Sharing Decision achieved?
3. Is the Climate Action Regulation fit to deliver reductions of 55% or 60%?
4. Is ETS extension the right strategy for supporting climate neutrality?
4.1 Risks of extending ETS
4.2 Criteria for extending emission trading to new sectors
5. What reforms are necessary to make the Climate Action Regulation an effective tool for climate neutrality?
5.1 Targets
5.2 Emission budget
5.3 Distribution of targets and / or emission budget to Member States
5.4 What are the right flexibilities to support climate neutrality costeffectively?
5.5 Compliance
6. References