The new effort is expected to untie the knot in the bloc's carbon market reform.
After being rejected last week, the EU's carbon market reform proposals will once again undergo a vote at the EP, which is scheduled for June 22. In order to pave the way for the proposals to gain approval in the upcoming vote, more than 400 MPs, accounting for a majority of the total 705 seats in the EP, have worked hard to negotiate and reach a new agreement.
The new agreement affirms that emissions reductions from industries covered by the EU carbon market will reach 63 percent by 2030. In addition, the legislators set the deadline for EU to phase out the free CO2 permits received by industries from 2027 to the end of 2032, while agreeing to stop this policy if the EU successfully launches a carbon border tariff on imported products. Socialist lawmaker Mohammed Chahim expressed his hope that, with the above changes, the new agreement can win a "big majority" in the upcoming parliament vote.
The carbon market, which is known as the emission trading market, operates based on the exchange of emissions quotas. Accordingly, organisations and enterprises with large emissions must pay to buy emission rights. On the contrary, those with low emissions can obtain financial benefits. In other words, the carbon market operates on the principle that polluters must pay, thereby creating an incentive for businesses to promote investment in clean and low-emission technologies. The carbon market is currently considered one of the effective policies to help many countries around the world actively reduce their annual emissions and contribute to limiting climate change.
Formed in 2005, the EU carbon market is the world's first and largest emissions trading system (ETS). With the participation of all EU members and 3 other European countries, the EU carbon market limits emissions from more than 11,000 energy and industrial plants that use a lot of energy, such as iron, steel, cement, ceramic, paper and aviation. In total, around 45 percent of total EU greenhouse gas emissions are regulated by the EU ETS. Therefore, this is considered to be one of the most important tools for the EU to respond to climate change and implement the commitments of the Kyoto Protocol and now the Paris Agreement on climate change.
In the context of the EU setting ambitious targets on combating climate change, the requirement of carbon market reform is more urgent than ever. Analysts said that the EP's early adoption of carbon market reform proposals is of great significance, helping the EU realise its goal of reducing emissions by 55 percent compared to 1990 levels by 2030.
Many experts noted that as the EU suffers increasingly heavy consequences due to climate change, the efforts to enhance the efficiency of the carbon market must be accelerated. According to a report by the European Environment Agency (EEA), heat waves in the continent are responsible for 90 percent of climate-related deaths between 1980 and 2022, at an estimated cost of 27 to 70 billion euros for countries during the 1980-2000 period. Over the past 20 years, the damage has been much higher and is forecast to continue if countries do not drastically cut their greenhouse gas emissions.
Carbon market reform is one of the key goals of the EU's ambitious plan on combating climate change. The EP’s support is very important in contributing vital impetus to the EU on its journey to protect the green planet.
