European Union (EU) lawmakers adopted key initiatives designed to achieve the EU’s climate goals of cutting emissions of the gases that cause global warming by 55 per cent over this decade.
- European Parliament members approved deals to reform the 27-nation bloc’s emissions trading system, introduce a so-called carbon border adjustment mechanism (CBAM) and to create a new hardship fund for vulnerable households and small businesses affected by higher fuel costs arising from the new measures.
Key features
- The reform of the emissions trading system, which covers about 40 per cent of the EU’s greenhouse gas emissions, stipulates that European industries and energy companies should cut emissions by 62 per cent by 2030 compared to 2005 levels, compared to a target of 43 per cent under the previous rules.
- The EU will phase out free carbon allowances for its own producers, ending in 2034.
- Under the proposed CBAM, the EU will levy an import tariff on carbon-intensive goods from 2026.
- The goods covered by the CBAM are iron, steel, cement, aluminium, fertilisers, electricity and hydrogen, and other indirect emissions under certain conditions.
- Importers of these goods would have to pay any price difference between the carbon price paid in the country of production and the price of carbon allowances in the EU ETS .
