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28th Jan 2023

MEPs debate crucial 'Fit for 55' laws ahead of vote

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The European Parliament will vote on a crucial set of laws on Wednesday (8 June) that form the heart of Fit for 55, the EU's landmark strategy designed to bring carbon emissions down by 55 percent by 2030. 

Files up for a vote include a ban on combustion engines by 2035; the introduction of a carbon tax on cars and vans and heating in homes; a border levy on goods imported into Europe, and a social fund to help vulnerable households pay the higher energy and fuel bills associated to the plan. 

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Plenary votes often follow the responsible committee votes, but most of the dossiers have proven controversial during negotiations the past months and many of the original EU Commission proposals have already been watered down. It remains unclear if the proposed compromises will able to get a majority. 

Social fund

The social climate fund is one of the few proposals garnering broad support across the political spectrum and is expected to pass largely as EU climate commissioner and vice-president Frans Timmerman's conceived it. 

The fund is intended as a subsidy for citizens who want to invest in solar panels, heat pumps or to help insulate their homes. It can also be used to finance part of the increased fuel and electricity bills. 

"We have to ensure people don't have to choose between paying their electricity bills and eating. That is why we are proposing a social climate fund," lead rapporteur Esther de Lange, MEP for the European People's Party, said on Tuesday. 

It is financed out of the so-called Emissions Trading System (ETS), but it is still unclear what way the vote will swing on this crucial part of Fit for 55. 

Industry in the EU has to pay for credits to be allowed to emit carbon dioxide. The commission has proposed extending this to households and vehicles, which would create a new income stream to prop up the social fund, but also lead to higher fuel and energy bills. 

Timmermans, defending his plan to MEPs on Tuesday, said wealthier homes would carry the bulk of the costs, which could be used to help poor households. 

But due to already spiking energy costs, many political groups, including the Greens and Socialists & Democrats , opposed the plan, instead pushing a compromise to limit it to commercial buildings for now. 

This would "cut the social fund in half," Timmermans said, limiting the EU's striking power to alleviate energy bills for vulnerable households.  

Banning combustion engines

Another controversial file up for a vote is the proposed ban on combustion engines by 2035 in cars and vans.

The Greens, the Social Democrats, the Left and the liberal Renew Europe group all support this, but a compromise could not be reached in the environment (ENVI) committee due to opposition from the EPP , who want to limit the ban to 90 percent of all cars. 

This would allow certain cars to continue driving on so-called replacement fuels like biofuels or hydrogen. 

Commissioner Timmermans described this proposal as "nonsense" due to the high costs associated with biofuel and hydrogen. 

"The car industry already made its choice," he said. "They are on board for electric cars and vans." 

It is unclear if a majority for the ban in 2035 will be found in parliament.

Carbon border tax

Arguably the most complex piece of legislation up for a vote on Wednesday is the so-called Carbon Border Adjustment Mechanism (CBAM), a proposed carbon tax on imported goods which is planned to come into force in 2026.

It mirrors the EU's landmark "cap-and-trade scheme" for carbon emissions (ETS). 

The current plan includes a phase-out of free allowances for industrial producers in 2030, incentivising the move to greener production modes while protecting it against unfair competition from regions with laxer environmental rules. 

Mohammed Chahim, an S&D MEP, recently led the file through the ENVI committee. Still, it is unclear if a majority will support the plan on Wednesday. 

The EPP oppose the proposal because they want the withdrawal of emission allowances to be postponed. 

That is a plan Green MEP Bas Eickhout said will undermine innovative green industries in the EU because "free allowances are a fossil fuel subsidy" and protects industries that do not want to change.  

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