BRUSSELS: European Union negotiators on Sunday announced a new political agreement to overhaul the bloc’s carbon market, cut planet-heating emissions at a faster pace, and invest in climate-friendly technologies.
The deal aims to fasten emissions cuts, target fuel emissions from the building and road transport sectors and phase out free allowances to industries, according to a statement by the European Parliament.
Reforms to cut emissions by the industrial sector
The EU Emissions Trading System (ETS) permits electricity producers and industries having high energy demands, such as steel and cement firms, to buy “free allowances” to compensate for their carbon emissions under a “polluter pays” principle.
The quotas have been designed in a manner that they would decrease over time to encourage them to reduce emissions and invest in environment-friendly technologies as part of the European Union’s ultimate goal of achieving carbon neutrality.
Negotiators representing member states and the parliament negotiated for more than 24 hours before reaching an agreement on Saturday night that expanded the scope of the EU carbon market.
The deal implies that emissions in the ETS sectors will be reduced by 62 percent by 2030 based on 2005 levels. This is up from a previous goal of 43 percent.
The agreement also aims to accelerate the timescale for phasing out the free allowances, with around 48.5 percent of the allowances removed by 2030 and a complete phasing out by 2034.
The carbon market will be progressively expanded to the maritime sector, waste incineration sites, and intra-European flights, depending on a favorable report by the commission.
Carbon Border Tax
An agreement has been made on a “carbon border tax,” which assesses the bloc’s imports on environmental standards based on the CO2 emissions involved in their production. The tax will counterbalance the reduction of free allowances and allow industries to compete with more polluting non-EU rivals.
The deal also intends to make households pay for fuel and gas heating emissions starting in 2027, but the price will be capped until 2030.
The commission proposed a second carbon market, which targets building heating and road fuels. Still, there were concerns over the plan as European households suffered from soaring energy prices exacerbated by Russia’s invasion of Ukraine.
The application of this agreement portion will be delayed by a year if energy prices continue to spiral.
Funds from this secondary market will be added to a “Social Climate Fund” set up to help vulnerable households and businesses tackle the energy price crisis. – AFP/APP
