On 18 April 2023, the European Parliament definitively approved five new laws, the result of agreements reached with EU countries at the end of 2022, which are part of the 55% Ready by 2030 package, the EU's strategy to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, according to the provisions of the European Climate Law .
Reform of the emissions trading system
The reform of the Emissions Trading System (ETS) was approved with 413 votes in favor, 167 against and 57 abstentions. This reform boosts the EU's climate ambition as it provides for 62% reductions in emissions in ETS sectors compared to 2005 levels by 2030. It also foresees the phasing out of free allowances for companies between 2026 and 2034 . A new ETS II will be created for road transport fuels and buildings, to determine the price of emissions in these sectors as well from 2027 (or from 2028 if energy prices are exceptionally high).For more information on the reform of the ETS system, consult the document published after the agreement with the EU countries .
Parliament also adopted the inclusion, for the first time, of greenhouse gas emissions from the maritime sector in the ETS system (500 votes to 131, 11 abstentions), and the revision of the emissions trading scheme for aviation (463 to 117, 64 abstentions). This will phase out free allowances for the aviation sector by 2026, thus promoting the use of sustainable fuels.
The new CBAM
By 487 votes to 81, with 75 abstentions, Parliament approved the rules governing the new Carbon Border Adjustment Mechanism ( CBAM ), the aim of which is to incentivize third countries to step up their climate ambitions and ensure that global and EU climate efforts are not jeopardized by the relocation of production to non-EU countries with less ambitious climate policies.The new mechanism includes iron, steel, concrete, aluminum, fertilizers, electricity, hydrogen and indirect emissions under certain conditions. The legislation will require companies importing products covered by the ETS into the EU to report the amount of emissions contained in the goods at the border, and then buy carbon certificates corresponding to the price they would have paid to produce the goods within the EU.
CBAM will be phased in from 2026 to 2034, to coincide with the phasing out of free allowances in the ETS.
The document published after the agreement with EU countries contains more information on the CBAM system.
A Social Fund for the climate to fight energy poverty
The agreement with EU governments to establish a Union Social Fund for the Climate (SCF) in 2026 to ensure a just and socially inclusive climate transition was adopted by 521 votes to 75, with 43 abstentions. This will benefit vulnerable households, micro-enterprises and transport users particularly affected by energy poverty . Once fully operational, the Social Climate Fund will be financed by revenues from the auctioning of ETS II allowances up to €65 billion, with an additional 25% covered by national resources (equal to an estimated total of €86.7 billion).The document published after the agreement with the EU countries provides additional information on the Fund.
Next steps
The texts will now also have to be formally approved by the Council. They will then be published in the Official Journal of the EU and enter into force 20 days later .By adopting these legislative texts, Parliament is responding to citizens' expectations for the EU to deliver and accelerate the green transition. (Source: https://www.foodandtec.com/ )