Dramatic vote sees MEPs adopt key emissions trading update

"Today we adopted the biggest climate law ever with a huge majority," centre-right MEP Peter Liese, lead negotiator of the ETS file, told a cheering parliament.

The plan will see emissions go down by 63 percent; slightly more ambitious than the original commission proposal.

"Anybody saying we are watering down the climate agenda is simply ignoring the figures," he said on Wednesday morning.

Political parties had already reached an agreement two weeks ago, but in a last-minute upset following intense pressure from industry groups, the law was rejected in a plenary vote in the most recent plenary in Strasbourg..

Liese's own European People's Party (EPP) unexpectedly teamed up with the right-wing European Conservatives & Reformists (ECR) and the hard-right Identity (ID) group to postpone the end of so-called free allowances to 2034 — two years later than was agreed.

This removed all hopes for a majority because the Greens and S&D would not accept this new date, also derailing the proposed border levy on goods imported into Europe and a social fund to help vulnerable households pay the higher energy and fuel bills.

Liese, who negotiated for two weeks until late Tuesday night, got the three big parties — the centre-right EPP, the Socialists & Democrats and the liberal Renew — to agree on a compromise.

Carbon allowances will still end by 2032, but with slower reductions at the start of the phase-out in 2027 and 2028.

"To be honest, I did not expect my group to say yes to this," he said. "Even our Romanian and Bulgarian representatives have supported the report."

The social climate fund was quickly approved, garnering broad support.

The Carbon Border Tax, a complex piece of legislation that mirrors the ETS system but is aimed at imports, was also passed.

Next Tuesday, the 27 members of the European Council, composed of heads of state or government, will negotiate the results with parliament and the commission.