Strasbourg, France: On Tuesday, the European Parliament approved significant changes to the EU’s climate change policy, including an update to the bloc’s carbon market that would increase the cost of pollution throughout the continent.
Power stations and enterprises in Europe are required to purchase CO2 permits when they pollute. It has reduced emissions from those industries by 43 per cent since 2005, but it has to be revamped to meet more aggressive EU climate change objectives.
A deal reached last year between Parliament and EU negotiators to overhaul the carbon market in order to reduce emissions by 62 per cent from 2005 levels by 2030 was approved by Parliament by a big margin.
Under the upgrade, factories will lose the free CO2 permits they currently receive by 2034, and shipping emissions will be added to the CO2 market from 2024.
Lawmakers also backed the EU’s world-first plan to phase in a levy on imports of high-carbon goods from 2026, targeting imports of steel, cement, aluminium, fertilisers, electricity and hydrogen.
The carbon border levy aims to prevent EU industries from being undercut by more-polluting foreign competitors, removing the temptation for EU firms to relocate to regions with lax environmental rules.
The laws still need final approval from EU countries, who will assess them in the next few weeks.
That approval is usually a formality that waves through pre-agreed deals – but the process was upended last month when Germany lodged last-minute opposition to another policy to phase out fossil fuel-powered cars.
Peter Liese, Parliament’s lead negotiator on the emissions trading system (ETS) reform, said the success of the carbon market would make or break Europe’s CO2-cutting goals.
“For the climate, the ETS alone is more important than all the other files together,” he told Reuters.
The price of EU carbon permits has soared in recent years, boosted by anticipation of the reforms – hiking costs for polluters, but raising billions of euros that are returned to EU country governments to invest in climate measures.
EU carbon permits were trading at around 94 euros per tonne on Tuesday, having nearly quadrupled in value since the start of 2020. The price hit 100 euros for the first time in February.
Lawmakers also backed plans to launch a new EU carbon market covering emissions from fuels used in cars and buildings in 2027, plus an 86.7 billion-euro EU fund to support consumers affected by the costs.
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