The European Parliament on Tuesday approved sweeping reforms to make EU climate change policies more ambitious, including an upgrade of the bloc’s carbon market that is set to hike the cost of polluting in Europe.
Europe’s carbon market forces power plants and factories to buy CO2 permits when they pollute. It has slashed those sectors’ emissions by 43% since 2005, but is facing a revamp to hit more ambitious EU climate change targets.
Parliament voted to approve, with a large majority, a deal agreed last year by negotiators from EU countries and Parliament, to reform the carbon market to cut emissions by 62% from 2005 levels by 2030.
Under the upgrade, factories will lose the free CO2 permits they currently receive by 2034, and shipping emissions will be added to the CO2 market from 2024.
Lawmakers also backed the EU’s world-first plan to phase in a levy on imports of high-carbon goods from 2026, targeting imports of steel, cement, aluminium, fertilisers, electricity and hydrogen.
The carbon border levy aims to prevent EU industries being undercut by more-polluting foreign competitors, removing the temptation for EU firms to relocate to regions with lax environmental rules.
Peter Liese, Parliament’s lead negotiator on the emissions trading system (ETS) reform, said the success of the carbon market would make or break Europe’s CO2-cutting goals.
EU carbon permits were trading at around 94 euros per tonne on Tuesday, having nearly quadrupled in value since the start of 2020. The price hit 100 euros for the first time in February