The three largest groups in the European Parliament have finally reached an agreement on the limitation of the Emissions Trading System (ETS), but spread out over a longer period. This paves the way for agreement on two other important new Climate Laws from the European Commission.
In that case, the European Parliament, European Commission, and the 27 EU countries can start the trilogue (three-party) negotiations on the Climate Laws of Commissioner Frans Timmermans. The abolition of the âfree permitsâ will now be spread out over a longer period, but over fewer years than initially proposed by the Commission.
A linkage has also been made to the newly introduced customs adjustment factor (CBAM) for imports of cheap, environmentally polluting products from low-wage countries. If 'mirror clauses' in trade agreements prove ineffective (and cheap imports still come in), European companies will retain their ETS rights.
The agreement between the center-right European Peopleâs Party (EPP), the Social Democrats (S&D), and the liberal Renew Europe (RE) is also supported by the Greens. Until last month, the left and green groups wanted free ETS permits abolished as soon as possible, while Christian Democrats and conservatives sought to limit and spread out additional taxes on businesses as much as possible.
In the compromise now reached, it is legally established that within ten years, air pollution from ETS permits must be reduced by nearly two-thirds. The maximum pollution allowance will also be reduced by millions of tons. The compromise will be put to a plenary vote in the European Parliament on 22 June.
EPP negotiator Esther de Lange expressed satisfaction with the compromise to Euractiv. âFirst and foremost, we wanted to achieve the targets to reduce CO2 emissions by 55% before the end of this decade,â she said.
The second goal was to provide âbreathing spaceâ to European industries, which âare operating in a very difficult economic situation,â caused by inflation and rising energy prices, fueled by the war in Ukraine.
âI hope that next week we can get this through Parliament, so that we can start negotiating with the Council of Ministers, because it is very important that we finalize this piece of legislation as soon as possible,â said PvdA negotiator Mohammed Chahim.
This week in Strasbourg, a decision will also be made on another important part of Commission von der Leyenâs climate plans. A majority of the ENVI environmental committee refuses to classify natural gas and nuclear energy as âsustainable energyâ, as currently proposed by the European Commission.
The decision to include gas and nuclear energy on the list of subsidizable sustainable investments (âtaxonomyâ) is a so-called delegated act which the European Parliament can block by an absolute majority (353 of 705 votes). If blocked this week, the European Commission will have to come up with a new proposal.
Reportedly, Climate Commissioner Frans Timmermans agrees in substance with the objections of his opponents against including gas and nuclear energy in the taxonomy list, but last year the majority of the European Commission agreed under pressure from Germany and France.
France wanted to keep its own nuclear energy sector eligible for subsidies, and Germany at the time wanted to protect the (Russian) Nord Stream 2 gas pipeline. Meanwhile, the new German âtraffic lightâ coalition is against the gas taxonomy.