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European Parliament Backs Carbon Market Reforms

In Important, World
June 23, 2022

Members of the European Parliament (MEPs) voted in three major draft laws aimed at pushing for faster European Union (EU) climate action and energy independence on Wednesday.

MEPs said the Emissions Trading System (ETS) should be reformed and its scope enlarged, in order to encourage industries to further reduce their emissions and invest in low-carbon technologies.

They also called for a broader scope and faster implementation of the EU Carbon Border Adjustment Mechanism (CBAM).

Pascal Canfin, Chair of the Environment Committee at the European Parliament, tweeted that the reform of the carbon market and social climate fund are big steps forward for climate action.

MEPs believe that the ETS has already triggered significant reductions in emissions.

According to the draft laws, the free allowances in the ETS sectors covered by the Carbon Border Adjustment Mechanism (CBAM) should be phased out from 2027, and completely disappear by 2032 when Parliament wants the mechanism to be fully implemented.

MEPs also developed the Social Climate Fund, which aims at protecting the households and businesses most vulnerable to energy poverty.

The three key EU laws are part of the “Fit for 55 in 2030 package.” This is aimed at cutting greenhouse gas emissions by at least 55 percent by 2030 compared to 1990 levels, and achieving net-zero greenhouse gas emissions by 2050, in line with the European Climate Law.

The European Parliament will begin negotiations with EU governments on the final shape of these laws.