Negotiators were confused about how quickly the EU grants free CO2 permits to protect industries from foreign competition.
EU negotiators have reached an agreement on repairing the group’s carbon market, a central issue to its ambitions to reduce emissions and invest in climate-friendly technologies.
The deal aims to accelerate emissions cuts, end free allowances to industries and target fuel emissions from the building and road transport sectors, according to a statement by the European Parliament.
Czech Environment Minister Marion Jurecka said in a statement, “The agreement … will allow us to meet climate objectives within core sectors of the economy, while ensuring that the citizens and micro-enterprises most vulnerable to climate change are effectively protected.” be supported.”
The European Union Emissions Trading System (ETS) allows electricity producers and industries with high energy demands such as steel and cement to buy “free allowances” to cover their carbon emissions under the “polluter pays” principle.
The quotas are designed to reduce over time to encourage them to emit less and invest in green technologies as part of the EU’s ultimate aim of achieving carbon neutrality.
Negotiators representing member states and the European Parliament held intense talks for more than 24 hours before reaching an agreement on Saturday night that widens the scope of the EU carbon market.
The deal means emissions in ETS areas are to be cut by 62 percent by 2030 based on 2005 levels, up from a previous target of 43 percent. The industries concerned must cut their emissions by that amount.
The agreement also seeks to accelerate the timetable for phasing out free allowances, with a 48.5 per cent phase-out by 2030 and complete removal by 2034, a program at the center of fierce debate between MEPs and member states.
Based on a favorable report by the Commission, the carbon market will be progressively expanded to maritime zones, intra-European flights and waste incineration sites.
A “carbon border tax”, which imposes environmental standards on imports into the bloc based on the carbon emissions associated with their production, would make up for the lack of free allowances and allow industries to compete with more polluting non-EU rivals. will allow.
The agreement aims to make households pay for emissions associated with fuel and gas heating from 2027, but the price will be capped until 2030.
The commission proposed a second carbon market targeting the manufacture of heating and road fuels, but the plan has raised concerns as European households grapple with rising energy prices fueled by Russia’s invasion of Ukraine.
If energy prices continue to rise, the implementation of this part of the agreement will be delayed by one year.
Money from this second market will go into a “Social Climate Fund”, designed to help vulnerable households and businesses weather the energy price crisis.
At stake was the EU’s ability to contribute to global efforts to fight climate change and to achieve its goal to cut net greenhouse gas emissions by 55 percent by 2030 compared to 1990 levels.
Cutting emissions sharply to meet that target would require reform of the EU carbon market, which requires about 10,000 power plants and factories to buy CO2 permits if they pollute.
Negotiators were indecisive about how quickly to end free CO2 permits given to industry by the EU. Those permits will be phased out as the EU phases in carbon border tariffs designed to prevent domestic companies from being undercut by foreign competitors.
