The European Union is reforming its carbon market, an important step to accelerate the climate ambition of the Twenty-Seven

This is the centerpiece of its climate plan. The European Union (EU) reached an agreement on Sunday, December 18, after long negotiations, on a vast reform of its carbon market. This step marks an important step in accelerating the climate ambition of the Twenty-Seven. It is part of the major legislative package presented by the Commission in July 2021 in order to reduce European emissions by at least 55% by 2030 compared to 1990 and to achieve carbon neutrality by the horizon. 2050.

The agreement reached on Sunday in trilogue, between the Commission, the European Parliament and the Member States, must still be confirmed by a vote by the Council in December and by MEPs in January or February 2023.

First of all, it highlights the ambition of the European carbon market, the largest in the world. Since 2005, the most polluting industries (power generation, steel, cement, etc.), which account for 40% of CO₂ of the EU, must buy “pollution permits” on this system of exchange of quotas of emissions (ETS in English). The idea is to encourage decarbonization and create income for the energy transition. But this polluter-pays principle has not enabled heavy industry to reduce its carbon emissions. It benefits from millions of free quotas, set up to avoid relocations, and the price per ton of CO₂ remained too low for a long time to be an incentive.

In order to put the market under pressure, the number of rights to pollute will be gradually reduced. So that the sectors covered by the carbon market will have to reduce their emissions by 62% by 2030 compared to 2005, against a previous objective of -43%. The price of carbon – today around 85 euros per ton of CO₂ – “will settle around 100 euros for these industries. No other continent in the world has such an ambitious carbon price”welcomes Pascal Canfin, Renew MEP and President of the Environment Committee of the European Parliament, who describes the new European agreement as ” major “ for the climate. The NGOs of the Climate Action Network Europe point out, for their part, that a 70% reduction in these emissions would have been necessary for the EU to do its “fair share” in limiting global warming to 1.5°C.

This carbon market will be extended for the first time to the maritime sector and to intra-European air flights. Waste incineration sites should also be subject to it from 2028, or 2030 at the latest, after a study by the Commission.

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