A major overhaul of the bloc’s flagship carbon market and a new fund to protect the vulnerable from rising CO2 costs Agreed by EU negotiators in the early hours of Sunday as part of a “jumbo” trilogue that began on Friday morning.
“After 30 hours of (net!) negotiating time we have an agreement about the creation of a new ETS and a Social Climate Fund (SCF),” Tweeted Esther de Lange, Vice President of the European People’s Party and a leading climate legislator.
Regarded as a cornerstone of Europe’s climate efforts, the reform Emission Trading System (ETS) This is key to achieving the target of reducing CO2 emissions by 55 percent from 1990 levels by 2030.
“We’ve got an agreement on the biggest climate law ever in Europe,” Said German MEP Peter Lise, who led the negotiations on the bill.
As part of the hard-fought agreement, EU brokers stipulated that power generators and heavy polluters covered by the ETS would have to reduce their pollution by 62 percent by the end of the decade, more than what the European Commission initially proposed. 1 percent more than it did.
The waste will be covered by the plan from 2028, with a possible outage until 2030.
The deal also mandates that all revenue generated by the carbon market be “spent” on climate action.
“It is one of the biggest victories of the Parliament,” Lise told a briefing held shortly after the talks ended.
Free CO2 certificates given to industry to remain competitive against rivals from outside the bloc are to be completely phased out by 2034, according to a plan. Carbon Limit Adjustment Mechanism It is due to come into force from 2026 at the end of a three-year transition period. The Commission and Council sought an end date of 2036, while Parliament fought for a faster phasing out until 2032.
The customs duty covers cement, aluminium, fertilisers, electric power generation, hydrogen, iron and steel.
However, negotiators stopped short of introducing exemptions to protect exports, arguing that they would prove inconsistent with World Trade Organization rules. Instead, the 27 EU countries will be given the right to ring-fence revenue to support companies at risk of losing out on a phased-out of free permits.
The deal also calls for a parallel carbon market to cover fossil fuels used to power cars and heat buildings from 2027 – easily one of the most controversial elements due to concerns that it will lead to energy poverty. could escalate and spark political upheaval if not designed properly. ,
To reach a deal, Parliament dropped its call for a split between commercial users and private owners – which the Commission and Council had said was impractical.
But to make it more palatable, policymakers agreed that the so-called ETS2 would come with an emergency brake, which would be triggered if the carbon price exceeds €90 per tonne – which would lead to a year’s delay in the start . The treaty also envisages that prices will be capped at €45 until at least 2030.
To help low-income households move faster to cleaner forms of transport and heating so they are not unfairly affected by the measure, EU policymakers signed up social climate fund Value €86.7 billion running from 2026 to 2032.
This is much larger than the €59 billion fund supported by the Council; 25 percent will be raised through co-financing by EU governments, while a so-called “all fuel approach” covering process emissions means more CO2 permits will be sold under the scheme.
Several negotiators said that Germany’s foot-dragging had made the talks particularly difficult.
“Germany wanted a second carbon market and inclusion of other fuels. They got it and they should celebrate,” Leese said.
The agreement also confirmed that the ETS would be extended shipping Sector.