Key facts
- The European Commission has proposed reforms to the EU Emissions Trading System (ETS).
- Critics argue the changes risk weakening emissions cuts and jeopardizing EU climate targets.
- The reforms would extend free pollution permits for heavy industries until 2038 and slow the annual reduction rate of emission caps.
- The EU aims to reduce emissions by 90% by 2040 compared to 1990 levels.
- The ETS will be expanded to cover municipal waste and flights within a 5,000km radius of a central European point.
The European Commission has proposed significant changes to the EU Emissions Trading System (ETS), its primary policy for reducing greenhouse gas emissions. Critics argue that these proposed reforms, aimed at addressing concerns about industrial competitiveness and high energy costs, risk weakening the effectiveness of the carbon market and jeopardizing the EU's climate targets.
The overhaul comes as the EU aims to reduce emissions by 90% by 2040. However, some member states have pressured the Commission to ease the ETS's burden on industries, fearing job losses and reduced competitiveness. In response, the proposals include extending the period during which heavy industries like steel and cement receive free pollution permits, pushing the phase-out from 2034 to 2038. Additionally, the annual reduction rate of emission permits will be slowed.
EU climate commissioner Wopke Hoekstra defended the proposals, emphasizing that they are designed to incentivize investments in clean production within Europe and prevent industries from relocating due to perceived unfair competition from rivals with heavy state subsidies. He stated that the ETS is a "phenomenal asset" that has already significantly reduced gas consumption and emissions.
However, environmental groups and some lawmakers have voiced strong opposition. Michael Bloss, a German Green MEP, accused the Commission of granting industries a "licence to pollute" for longer and at a lower cost. Camille Maury of WWF warned that the changes jeopardize a predictable price on pollution crucial for clean technology investments, comparing the removal of core elements to destabilizing a Jenga tower.
The proposals also include extending the ETS to municipal waste and flights within a 5,000km radius of a central European point, as well as applying it to private jets for the first time. While industry groups welcomed the adjusted pace, they expressed concerns about new conditionalities for free allowances and the role of international carbon credits. EU officials maintain that the plans align with the binding 2040 climate target, with Hoekstra highlighting the focus on "more investments" on European soil.
The draft law now requires agreement from the EU's 27 member states and the European Parliament. Peter Liese, who will represent the parliament in negotiations, welcomed the proposals, stating that climate protection leading to unemployment is not a role model and that the goal is to foster investment within the EU.