A deal has been achieved by European Union negotiators to revamp the bloc’s carbon market, the cornerstone of its aims to cut emissions and fund climate-friendly technologies.
According to a statement from the European Parliament, the agreement aims to speed up emissions cuts, phase out free allowances to companies, and target fuel emissions from the building and road transportation sectors.
“The agreement … will allow us to meet climate objectives within the main sectors of the economy, while making sure the most vulnerable citizens and micro-enterprises are effectively supported in the climate transition,” Czech environment minister Marian Jurecka said in a statement.
According to the “polluter pays” premise, the EU Emissions Trading System (ETS) enables power producers and sectors with high energy needs, such as steel and cement, to purchase “free permits” to cover their carbon emissions.
As part of the EU’s eventual goal of reaching carbon neutrality, the quotas are created to gradually decrease in order to encourage them to emit fewer gases and to invest in greener technologies.
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Before coming to an agreement on Saturday night that expands the EU carbon market, negotiators from member states and the European Parliament had been in in-depth negotiations for more than 24 hours.
The deal means emissions in the ETS sectors are to be cut by 62 per cent by 2030 based on 2005 levels, up from a previous goal of 43 per cent. Concerned industries must cut their emissions by that amount.
The agreement also seeks to accelerate the timetable for phasing out the free allowances, with 48.5 per cent phased out by 2030 and a complete removal by 2034, a schedule at the centre of fierce debates between MEPs and member states.
The carbon market will be progressively extended to the maritime sector, intra-European flights, and waste incineration sites depending on a favourable report by the commission.
A “carbon border tax”, which imposes environmental standards on imports into the bloc based on the carbon emissions linked to their production, will offset the reduction of free allowances and allow industries to compete with more polluting non-EU rivals.
The agreement also aims to make households pay for emissions linked to fuel and gas heating from 2027, but the price will be capped until 2030.
The commission had proposed a second carbon market targeting building heating and road fuels, but the plan raised concerns as European households grapple with soaring energy prices exacerbated by Russia’s invasion of Ukraine.
If energy prices continue to spiral, the application of this part of the agreement will be delayed by a year.
Funds from this secondary market will go to 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 achieve its target to cut net greenhouse gas emissions by 55 per cent by 2030 compared with 1990 levels.
To achieve that goal, the EU carbon market will need to be changed. Currently, around 10,000 companies and power plants are required to purchase CO2 permits when they pollute.
Story was adapted from Aljazeera.
