The EU agrees with the news about the reform of the carbon market. Last Minute EUROPE, CURRENT headlines and events


The European Union has agreed on carbon market reform, which is the most important part of the climate target plan and one of the major reforms of the Ready 55 Act.

The reform is identified as one of the most important pillars of the European Green Deal’s ’55 Ready’ Act, which aims to cut greenhouse gas emissions by at least 55 percent by 2030 from 1990 levels and to eliminate them completely by 2050. .

The EU Council, Commission and Parliament have finally agreed on an amendment that has long divided the Union and called for a comprehensive reform of carbon markets.

The reform is phasing out the “right to be free from pollution” for manufacturers, and also agrees to tax emissions related to heating and cars.

The law will enter into force after approval by the European Council and Parliament.

With the reform agreed by the EU institutions, the “polluter pays” mentality is introduced and the “right to pollute for free” comes to an end.

The targets were raised in the EU Emissions Trading Scheme, known as the ETS. New rules were adopted, such as greater reductions in carbon emissions, the introduction of a special system for road transport and buildings, the creation of a social fund for the transition period.

With this new step, the 3 EU Institutions make it possible to raise the targets set by the European Commission in July 2021.

Accordingly, by 2030, the quotas of sectors that are the source of 40 percent of their emissions in the EU will be reduced by 62 percent. The Commission recommended that this rate be set at 61 percent.

Since the rate was adopted at 43 percent 5 years ago, this regulation is considered the most important point of the reform.

To achieve this goal, quotas will be gradually reduced by 4.3 percent per year from 2024 to 2027 and then by 4.4 percent per year until 2030.

With these quota limits, carbon dioxide emissions will be reduced by 90 million tons in 2024 and by 27 million tons in 2026. The price of carbon, which today is about 85 euros per tonne of carbon dioxide, will cost these industries about 100 euros.

At the urging of the European Parliament, the ETS reform will be gradually added first to maritime transport, and by 2028 to incinerators.

Second carbon market

Members of the European Parliament and representatives of Member States also agreed to the Commission’s highly controversial proposal for a second carbon market (ETS2) that would price emissions from road fuels and building heating.

In an effort to protect households that would face the social impacts of such a mechanism, the proposal added the option to delay implementation by one year in 2027, implement it if energy prices are low, and postpone it until 2028 otherwise.

This reform will be accompanied by a “stabilization mechanism” with the issuance of additional surcharges to avoid excessive price changes. This mechanism will be activated when the energy price exceeds 45 euros per ton.

Social Climate Fund

In this new ETS2 market, a €86.7 billion “Social Climate Fund” will be created, the proceeds of which will be fully used to finance the ecological transition.

This fund aims to help vulnerable households and businesses transition to energy from 2026, in particular through national “social climate plans”.

The existing “Innovation Fund” and “Modernization Fund” will be strengthened.

End the right to pollute for free

The ETS reform is phasing out the “non-polluting” quotas previously allocated to manufacturing, which still account for about one-third of total quotas.

According to the plan, 2.5 percent of these free allowances will be eliminated in 2026, almost half in 2030, and all in 2036.

In aviation, Parliament and the EU Council already agreed last week to eliminate free quotas for intra-European flights by a quarter in 2024, by half by 2026, and then completely. Flights using “sustainable aviation fuel” have also been excluded here.

“The polluter will pay big money”

Summing up this complex and technical law, Peter Lize, MP from the right wing of the European Parliament (PPE), said: “Until 2026, there is room to maneuver to invest in low-carbon energy sources and improve energy efficiency.

Then comes the moment to face reality. Until then, we will have to reduce our emissions. “Otherwise, we will pay a lot of money for this,” he said.

Pascal Canfin, chairman of the parliamentary committee on the environment and MP for the liberal group, congratulated the consensus, saying: “With this new carbon market regulation, the price of carbon for industry will be around 100 euros per tonne. No other continent has such an ambitious carbon market. price.”

The Climate Action Network (CAN), the leading coordinating organization for environmental associations, criticizes the law for still bringing big benefits to polluters, saying: “This is an agreement that allows major polluters to continue to receive billions of euros in 10 years. What is planned to be given to households is only crumbs,” he said.

Civil society organizations of the European Climate Action Network argue that a 70 per cent reduction in these emissions is necessary for the EU to meet its share of limiting global warming to its most ambitious target of 1.5 degrees Celsius.

One NGO closely following the reform, WWF European climate specialist Romain Laugier, said earmarking revenues from polluter payments “totally for climate action” is an important step.

However, Laugier said that the fact that these costs are under the control of national governments carries the risk that “the decision will be left to the states, and that governments will continue to use this money to subsidize coal and fossil gases, as before. . ‘, Laugier said.

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