Comparing ambition of EU companies with science-based targets to EU regulation-imposed reductions

Abstract

Companies can support countries in closing the emissions gap between current policies and the Paris goals by implementing pledged voluntary greenhouse gas (GHG) emission reduction targets that are more stringent than the national climate policy regulation requires. For this purpose, we assessed the potential impact of EU companies with 2030 emission reduction targets approved as 2/1.5 °C-consistent by the Science Based Targets initiative (SBTi) in the sectors that are regulated by the Emissions Trading System (ETS) and Effort Sharing Regulation (ESR). To verify potential additionality, company targets were compared to a current policies scenario based on ETS and ESR trends set under the then applicable 40% by 2030 reduction target, and two scenarios that include the voluntary SBTi targets excluding or including flanking measures to materialise additional reductions in ETS. Depending on the assumption of these flanking measures, EU companies with SBTi-approved targets are projected to result in a 4% or 14% reduction by 2030 relative to the EU current policies scenario. Our results illustrate that SBTi-approved companies are not significantly more ambitious than the rest of the emitters in the EU without flanking measures. However, it does show that companies regulated by ETS show higher estimated reductions by 2030 compared to those only regulated by ESR. This analysis shows that more policy detail is important in assessing the additionality of voluntary targets, resulting in zero additional emissions for ETS if a conservative estimate is required.