Wednesday

31st May 2023

EU Parliament adopts 'holy trinity' of climate laws

  • MEP Peter Liese said he was 'extremely proud' everybody in his EPP party (bar two members) voted for the revamped law (Photo: Wikimedia)
Listen to article

The European Parliament has approved three climate laws that form the heart of EU efforts to reduce greenhouse gas emissions by at least 55 percent by 2030.

"We have now finally agreed on the holy trinity," said MEP for the conservative European People's Party (EPP) Peter Liese on Tuesday (18 April) following the vote in Strasbourg. "Everybody will benefit from this."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The first law up for adoption was the updated version of the Emission Trading System (ETS) on industry, increasing industry emission-reduction targets to 62 percent by 2030.

"This law is as much about energy security as the energy transition," parliament president Roberta Metsola said, when explaining the need to increase the target. "We're not going green for the sake of going green. The more incentive we give to go green, the more independent we will be."

To protect heavy polluters against companies outside Europe that do not have the extra cost, a system of free allowances was built into ETS when it was first launched in 2005. Under the updated rules, these free allowances will be phased out between 2026 and 2034, increasing the cost of emitting carbon.

To keep EU industries competitive a carbon border levy (CBAM) directed at goods coming into Europe was also adopted by a broad majority in parliament, making up the second leg of the so-called holy trinity.

The levy will apply to imported steel, fertiliser, aluminium, cement, electricity generation, and hydrogen. It will be phased in from 2026 until 2034 at the same speed as the free allowances for ETS are being phased out. "This is the future of climate policy and keeping industry competitive, because you need to create a level playing field," said Socialist and Democrats (S&D) MEP and rapporteur of the file Mohammed Chahim.

MEPs also approved extending ETS to the maritime sector for the first time, and phasing out free allowances for aviation by 2026 — a year sooner than proposed by the EU Commission. Half the available allowances will be scrapped in the preceding two years.

A separate carbon trading system (ETS II) will also be introduced for homes and cars in 2027 (or 2028 if energy prices are still historically high). This will increase the cost of heating, cooling and driving for consumers and businesses, incentivising a shift to electric vehicles, electrified heat pumps and renovation.

To protect vulnerable households, small businesses and drivers against costs associated with this part of the legislation, MEPs have also approved a Social Climate Fund of €87bn, which will come into effect in 2026, constituting the third and final part of the sweeping set of market-based climate rules at the heart of EU climate ambitions.

The fund will be financed from auctioning off emission allowances for ETS II (transport and heating) worth up to €65bn, with an additional 25 percent covered by member states, although the income depends on the carbon price.

According to Liese, ETS I and II will yield €700bn in government revenue across the bloc, which member states must reinvest in the shift to a green economy.

'Should' vs 'Shall'

Previously this requirement to use ETS funds to clean up the economy was loosely worded ("should"), resulting in only half of ETS funds being reinvested in climate efforts. The new rules have changed this wording to the stricter "shall," indicating countries no longer have a choice.

"Governments are not allowed to spend it on whatever they like but have to spend it on the transition," said Liese, who fought for "three to four years" to change the wording.

Although this may seem like a small detail, the rules have already had an effect. Since the EU first reached a political agreement on the updated ETS rules in December, carbon prices surged to €100 a tonne for the first time in its history in February, a level it has stayed on since, which is a fivefold increase in three years. Tuesday's adoption by a broad majority in parliament lessens uncertainty about the trajectory of the legislation even more, solidifying market prices further.

"I'm very grateful that we have reached an agreement on ETS," Liese said on the sidelines of Tuesday's vote. "ETS is the most important climate legislation that we have."

EU negotiators agree on historic carbon tariff

After 10 gruelling hours of overnight negotiations that lasted until five in the morning EU negotiators reached a deal on a border tariff for carbon-intensive goods, ending 20 years of discussions.

MEPs raise ambition on EU carbon market reform

MEPs on the environment committee agreed on reform of the European carbon market — including expanding it to buildings and transport. They also want to extend the scope of the carbon border tax, and phase out free permits by 2030.

Opinion

'Clean hydrogen' is the fossil-fuel industry in disguise

The fossil fuel industry knows that the days of outright denying climate change are over. Polluting companies have since shifted their focus to hyping new technologies that promise to reduce emissions without affecting their business model.

ECB: eurozone home prices could see 'disorderly' fall

The European Central Bank in its Financial Stability Review warned EU home prices could see a 'disorderly' fall as high mortgage rates are making houses unaffordable for households and unattractive for investors.

Adapting to Southern Europe's 'new normal' — from droughts to floods

Extreme weather events in recent months have worsened agricultural production in southern Europe, prompting concerns for authorities in Portugal, Spain, France and Italy. As countries will likely face dryer conditions, experts urge adaptation measures for the 'new normal'.

PFAS 'forever chemicals' cost society €16 trillion a year

Researchers found that global societal costs of the so-called forever chemicals or PFAS amount to €16 trillion per year. Meanwhile, the bigger producers of these chemicals are also among the ones spending the most to lobby EU policies.

EU: national energy price-spike measures should end this year

"If energy prices increase again and support cannot be fully discontinued, targeted policies to support vulnerable households and companies — rather than wide and less effective support policies — will remain crucial," the commission said in its assessment.

Opinion

EU export credits insure decades of fossil-fuel in Mozambique

European governments are phasing out fossil fuels at home, but continuing their financial support for fossil mega-projects abroad. This is despite the EU agreeing last year to decarbonise export credits — insurance on risky non-EU projects provided with public money.

Latest News

  1. Europe's TV union wooing Lavrov for splashy interview
  2. ECB: eurozone home prices could see 'disorderly' fall
  3. Adapting to Southern Europe's 'new normal' — from droughts to floods
  4. Want to stop forced migration from West Africa? Start by banning bottom trawling
  5. Germany unsure if Orbán fit to be 'EU president'
  6. EU Parliament chief given report on MEP abuse 30 weeks before sanction
  7. EU clashes over protection of workers exposed to asbestos
  8. EU to blacklist nine Russians over jailing of dissident

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us