The EU has agreed to tighten the functioning of the market with emission allowances
Earlier this morning, the European Union tentatively agreed to tighten and expand the functioning of the market with emission allowances. It signed up to the central point of its Green Deal for Europe, which aims to make the EU economy carbon neutral by mid-century. It informed the Czech Presidency and the Council of the EU about it today.
The representatives of the EU countries and the European Parliament agreed on the change. The allowance trading system will now also apply to heating and road transport, but maritime transport will not escape it either. At the same time, the Union will speed up the pace at which companies in various sectors – from electricity generation to steel mills – will have to reduce harmful emissions. The newly established climate fund is intended to help consumers mitigate the economic impacts of the transition to cleaner energy.
The deep reforms form the EU’s plan to reduce carbon dioxide (CO2) emissions by at least 55 percent by 2030 compared to 1990 levels. By 2050, the EU wants to achieve carbon neutrality, meaning no more greenhouse gases are emitted into the atmosphere than they can be technically stored or how much nature can absorb on its own.
“It is the biggest climate protection law in Europe so far, and some say in the world,” European Parliament negotiator Peter Liese told reporters this morning.
“The air will benefit from this, a large volume of CO2 will be saved, and at the lowest possible price,” he added, according to Bloomberg. The negotiation takes about 29 hours.
If companies are emitting CO2, you now have to buy allowances, which incentivizes them to emit less. Free certificates will now be phased out until 2034.
Impacts on consumers, such as the rise in heating costs, should be compensated by the climate social fund, for which EUR 86 billion (almost CZK 2.1 trillion) is calculated. It is supposed to finance, for example, investments in more energy efficient buildings.
The projects are at the heart of some of the “Fit for 55”, which the European Commission presented in the summer of 2021. The agreement has yet to be officially confirmed by the European Parliament and the states, but this is considered only a formality.
In anticipation of stricter rules, the prices of emission allowances have already risen to a record 99.22 euros per ton this year. On Friday, the price of futures contracts for allowances in Amsterdam hovered just above 83 euros per tonne, more than five times the price five years ago.