Foreword
The Paris Agreement sets ambitious global targets, aiming to limit global average temperature rise to 1.5oC. Achieving this requires considerable climate policy ambition, with countries needing to reach net-zero emissions by mid-century, as recognised by the Intergovernmental Panel on Climate Change (IPCC). At COP26 in Glasgow in 2021, countries reaffirmed their commitment to reaching these temperature targets, submitting updated, more ambitious, Nationally Determined Contributions and thus making progress towards reaching announced net-zero targets.
In 2022, the European Union (EU) set more ambitious emissions reduction targets as part of the European Green Deal, aiming to reduce emissions by 55% by 2030 (up from 40%) and reach net-zero emissions by 2050. Reaching these targets will require member-states to review their current climate policies in order to accelerate decarbonisation pathways.
The European Commission has proposed a Fit for 55 policy package that aims to ratchet-up member states’ domestic climate policy ambition in order to meet the EU’s 2030 emissions reduction target. The package, put forward in 2021, includes proposals to increase emissions reductions under, and widen the scope of, the Emissions Trading Scheme (EU ETS) and to increase member-state commitments in non-ETS sectors under the Effort Sharing Regulation (ESR).
Lithuania has increased its domestic climate policy ambitions. The National Climate Change Management Agenda (NCCMA) adopted in June 2021 sets ambitious emission reduction targets with a view to reaching net-zero emissions by 2050. Lithuania aims to reduce emissions by 30% by 2030 compared with 2005 levels, targeting a 50% reduction the EU ETS sectors, and a further 25% reduction in non-ETS sectors. This is a significant increase from the previous target of a 9% emissions reduction in non-ETS sectors, and even surpasses the 21% reduction proposed by the European Commission’s under the Fit for 55 package.
In order to meet these targets, Lithuania is planning to update its National Energy and Climate Plan (NECP) by 2023, in line with EU regulations. To support these efforts, the Directorate General for Structural Reform Support (DG Reform) of the European Commission and the OECD have agreed to provide technical support to Lithuania in the adjustment of its NECP and the development of pathways towards decarbonisation by 2050.
The technical support initiative aims to:
Provide recommendations to Lithuania on updating its NECP with a view to achieving ambitious and efficient emissions reductions by 2030, in line with national targets, European Green Deal objectives and the Paris Agreement.
Provide longer-term policy options with recommendations for possible emissions reduction targets for 2040 with a view to efficiently achieving carbon neutrality by 2050.
This report presents the results of this technical support initiative. Pooling the expertise of four OECD directorates, the report takes stock of current policy plans in Lithuania, models potential climate policy pathways, and provides concrete policy advice across tax, finance and investment and distributional concerns.