Launched in 2005, the Emissions Trading Scheme (ETS) is the European Union’s main tool for reducing greenhouse gases, which it does by forcing power stations and factories to buy permits of CO2 when they pollute and by capping the supply of permits.
The system has reduced emissions from these sectors by 43% since its launch, but needs revamping as the EU strives to meet the target of a 55% reduction in net emissions from 1990 levels by 2030.
“There is no room for sweetening up,” said European Parliament negotiator Jytte Guteland. “We need to maintain ambition to make sure we comply with climate law,” she added, referring to legally binding climate targets.
Diplomats and lawmakers are each divided, particularly over plans to launch a new emissions trading system in 2026 that would impose CO2 costs on suppliers of fuels used in vehicles and to heat homes.
This overhaul, proposed by the European Commission last year, is seen as essential because emissions from transport are on the rise and most buildings in Europe are heated by fossil fuels, which accounts for around a third of total emissions from transport. EU.
But it has been fiercely opposed by some member states, who, in the face of record high gas prices, fear it will further increase energy bills and harm local citizens. poorer.
These concerns have led countries to consider compromises this week, including postponing the extension of the ETS 2027 or 2028, or the gradual introduction of CO2 costs.
The EU could thus miss its climate targets because, according to a Commission obligation seen by Reuters, the new EU ETS would achieve 45% of the additional CO2 reductions needed in these sectors to reach the 2030 target.
Dropping the EU proposal would mean replacing it with much stricter national policies, with corresponding investments, the Commission said.
SOCIAL FUNDS
Negotiators have said they expect the new emissions trading scheme to eventually go ahead, if policymakers can agree on measures to compensate households for the costs potentials.
The Commission has proposed that billions of euros in revenue from the system should be redirected to a fund to help people pay their bills, subsidize electric cars and energy-efficient home renovations.
Parliament’s chief negotiator, Peter Liese, said lawmakers’ position was that the fund should be launched before the new ETS, which would force the 27-nation bloc’s budget to fund it.
Some EU countries want to avoid this route because changes to the budget must be approved unanimously by all member states.
Negotiators are also tackling a long list of issues around the existing EU ETS, which is being overhauled to cut emissions faster, cut free CO2 permits for industry and add shipping to the system. .
For a law to be put in place this year, the European Parliament and EU countries will have to agree on positions in the coming weeks in order to give themselves time to negotiate the final rules.