Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Wrangle over EU carbon market revamp threatens climate targets

Commodities May 06, 2022 12:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Smoke billows from the chimneys of Belchatow Power Station, Europe's biggest coal-fired power plant, in this May 7, 2009 file photo. REUTERS/Peter Andrews

By Kate Abnett

BRUSSELS (Reuters) - Officials and lawmakers negotiating an overhaul of the EU carbon market are struggling to reach a compromise over plans to levy CO2 costs on suppliers of polluting fuels, potentially putting the bloc's climate change targets at risk.

Launched in 2005, the emissions trading system (ETS) is the European Union's main tool for cutting greenhouse gases, which it does by forcing power plants and factories to buy CO2 permits when they pollute and capping the supply of permits.

The scheme has slashed emissions in those sectors by 43% since its launch, but is facing a revamp as the EU strives to hit a target of a 55% cut in net emissions from 1990 levels by 2030.

"There's no room for watering down," said European Parliament negotiator Jytte Guteland. "We need to preserve the ambition to make sure we obey the climate law," she added, referring to the legally-binding climate targets.

Diplomats and lawmakers are each divided, in particular over plans to launch a new ETS in 2026 that would impose CO2 costs on suppliers of fuels used in vehicles and to heat homes.

The revamp, proposed by the European Commission last year, is seen as critical because transport emissions are rising, and most buildings in Europe are heated by fossil fuels, churning out roughly a third of total EU emissions.

But it has faced fierce opposition from some member states, which - with an eye on gas prices soaring to record levels - fear it would raise energy bills further and hurt poorer citizens.

Such concerns led countries to this week consider compromises, including delaying the extension of the ETS to 2027 or 2028, or gradually phasing in the CO2 costs.

That could mean the EU misses it climate targets because, according to a Commission note seen by Reuters, the new ETS would deliver 45% of the extra CO2 cuts needed from those sectors to hit the 2030 goal.

Scrapping the EU proposal would mean replacing it with far tougher national policies, and the investments to match, the Commission said.


Negotiators said they expect the new ETS will ultimately go ahead, if policymakers can agree on measures to compensate households for potential costs.

The Commission has proposed that billions of euros of proceeds from the scheme are redirected into a fund to help citizens pay bills, subsidise electric cars and energy-saving home renovations.

Parliament's lead negotiator, Peter Liese, said the lawmakers' position was that the fund should be launched before the new ETS, which would require the 27-country bloc's budget to pay into it.

Some EU countries want to avoid that route because changes to the budget need unanimous approval from all member states.

Negotiators are also tackling a long list of issues concerning the existing ETS, which is being redesigned to cut emissions faster, cut free CO2 permits for industry and add shipping to the scheme.

To get a law in place this year, the European Parliament and EU countries will have to agree on positions in coming weeks to give themselves time to negotiate the final rules.

Wrangle over EU carbon market revamp threatens climate targets

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email