Under a provisional deal announced by representatives of EU member states and the European Parliament, emissions trading will be extended to heating and road transport, and will also cover shipping. The 27-nation bloc will also accelerate the pace at which companies from power producers to steelmakers are obligated to reduce pollution.
While some provisions of the overhaul were watered down compared with the original proposal as the EU grapples with an unprecedented energy crisis following Russia’s invasion of Ukraine, the bloc is determined to make the green overhaul the basis of its growth strategy, and set a precedent for other nations and regions in the fight against climate change.
The deal also complements a landmark measure agreed earlier this week to slap a pollution price on imports of certain goods to Europe, and shield its own producers from cheaper competitors in countries with less strict environmental rules. As part of the emissions market reform, policy makers set the rules for phasing in the Carbon Border Adjustment Mechanism from 2026 and phasing out by 2034 pollution allowances that sectors covered by the levy get for free.
The overhaul, the biggest since the market was created in 2005, will raise in 2024-2026 the rate at which the pollution cap shrinks each year to 4.3% from 2.2% now. The so-called Linear Reduction Factor will then accelerate to 4.4% from 2027, according to Liese.