The European Commission has welcomed the provisional agreement reached with the European Parliament and Council to strengthen the EU Emissions Trading System, apply emissions trading to new sectors for effective economy-wide climate action, and establish a Social Climate Fund. This deal is a fundamental step towards reaching the EU's commitment to reduce net greenhouse gas emissions by at least 55% by 2030. At the same time the Social Climate Fund will help to ensure that the transition is fair. Against the backdrop of Russia's invasion of Ukraine, this agreement shows once again the EU's determination to become climate neutral by 2050, transform our economy and society, leave nobody behind, and ensure our energy security. To complement the substantial spending on climate in the EU budget, Member States will spend the entirety of their emissions trading revenues on climate and energy-related projects and to address social aspects of the transition. The EU ETS puts a price on CO2 and lowers the permitted level of emissions every year in sectors including power and heat generation, energy-intensive industrial sectors and commercial aviation. Today's agreement will reduce emissions from the EU ETS sectors by 62% by 2030, compared to 2005 levels. This represents a substantial increase of 19 percentage points compared to the 43% reduction under the existing legislation. The speed of annual emission reductions will also increase, from 2.2% per year under the current system to 4.3% from 2024 to 2027 and 4.4% from 2028. The Market Stability Reserve, which stabilises the carbon market by removing surplus allowances, will be strengthened. The agreement will gradually phase out free emission allowances to certain enterprises and phase in the Carbon Border Adjustment Mechanism between 2026 and 2034 for the sectors covered. This follows the provisional deal reached on CBAM by European co-legislators on 13 December. The deal also includes shipping emissions in the EU ETS, making the EU the first jurisdiction to put an explicit carbon price on emissions from the maritime sector. European Steel Association EUROFER Director General Axel Eggert has warned that “We are highly concerned by the lack of a concrete solution to counter carbon leakage risk on export markets, while a pre-defined free allocation phase-out trajectory is set at this stage. If no concrete solution is found by 2026, EUR 45 billion steel exports are at existential threat, due to the exponentially increasing carbon price in the EU that has no equivalent in the domestic markets of our major trading partners. It is essential that EU institutions revert to this issue as soon as possible in the foreseen review process to deliver an effective measure.”
The European Commission has welcomed the provisional agreement reached with the European Parliament and Council to strengthen the EU Emissions Trading System, apply emissions trading to new sectors for effective economy-wide climate action, and establish a Social Climate Fund. This deal is a fundamental step towards reaching the EU's commitment to reduce net greenhouse gas emissions by at least 55% by 2030. At the same time the Social Climate Fund will help to ensure that the transition is fair. Against the backdrop of Russia's invasion of Ukraine, this agreement shows once again the EU's determination to become climate neutral by 2050, transform our economy and society, leave nobody behind, and ensure our energy security. To complement the substantial spending on climate in the EU budget, Member States will spend the entirety of their emissions trading revenues on climate and energy-related projects and to address social aspects of the transition. The EU ETS puts a price on CO2 and lowers the permitted level of emissions every year in sectors including power and heat generation, energy-intensive industrial sectors and commercial aviation. Today's agreement will reduce emissions from the EU ETS sectors by 62% by 2030, compared to 2005 levels. This represents a substantial increase of 19 percentage points compared to the 43% reduction under the existing legislation. The speed of annual emission reductions will also increase, from 2.2% per year under the current system to 4.3% from 2024 to 2027 and 4.4% from 2028. The Market Stability Reserve, which stabilises the carbon market by removing surplus allowances, will be strengthened. The agreement will gradually phase out free emission allowances to certain enterprises and phase in the Carbon Border Adjustment Mechanism between 2026 and 2034 for the sectors covered. This follows the provisional deal reached on CBAM by European co-legislators on 13 December. The deal also includes shipping emissions in the EU ETS, making the EU the first jurisdiction to put an explicit carbon price on emissions from the maritime sector. European Steel Association EUROFER Director General Axel Eggert has warned that “We are highly concerned by the lack of a concrete solution to counter carbon leakage risk on export markets, while a pre-defined free allocation phase-out trajectory is set at this stage. If no concrete solution is found by 2026, EUR 45 billion steel exports are at existential threat, due to the exponentially increasing carbon price in the EU that has no equivalent in the domestic markets of our major trading partners. It is essential that EU institutions revert to this issue as soon as possible in the foreseen review process to deliver an effective measure.”
