Negotiators of the EU’s parliament, council of heads of government and commission over the weekend reached an agreement on a widening of the bloc’s emission trading system (ETS) and the phasing in of a carbon border mechanism – both aimed at speeding up climate protection.
Under the deal, which still needs formal approval by the council and parliament, the EU from 2027 on will extend emission trading also to the heating and transport sectors. So far, only industrial companies have to buy emission certificates, although some countries, such as Germany, already have enacted their own CO2 price for heating and transport.
To soften the blow for poorer consumers, the ETS price for heating and transport will be capped at €45 per tonne of CO2 emitted. The EU will also set up a €86.7bn ($92.11bn) social fund, financed by revenues from the ETS, to help households and companies with higher energy costs.
“The EU is leading the way in climate protection and is showing determination – despite all the crises,” German economics and climate minister Robert Habeck said.
“European climate policy ensures that we in the EU walk the path to climate neutrality together, and it sets standards for the implementation of climate policy globally.”
EU energy ministers will discuss the ETS reform proposal at a meeting in Brussels today, together with another proposal agreed last week by the three EU bodies in the so-called ‘trilogue’ talks to create the world’s first carbon border levy.
Starting already next year, the EU would gradually introduce a so-called Carbon Border Adjustment Mechanism (CBAM) that could slap a CO2 price on imports of emission-intensive products such as steel or aluminium from third countries that have laxer rules to limit greenhouse gas emissions.
The mechanism aims at making sure EU manufacturers won’t be pushed out of business by competition from world regions with lower environmental standards and thus lower production costs.
The trilogue agreement also includes an agreement to gradually lower free emission certificates for companies, which is likely to drive up prices for manufacturers that haven’t made enough efforts to lower their emissions.
