EU parliament agrees to reform carbon market to reduce emissions

BRUSSELS - The European Union member states and parliamentarians on Sunday reached an agreement to reform the bloc’s carbon market, the central plank of its ambitions to reduce emissions and invest in climate-friendly technologies.

This new deal aims to accelerate emissions cuts, phase out free allowances to industries, and target fuel emissions from the building and road transport sectors.

The EU Emissions Trading System allows electricity producers and industries with high energy demands such as steel and cement to purchase free allowances to cover their carbon emissions under a “polluter pays” principle.

The quotas are designed to decrease over time to encourage them to emit less and invest in greener technologies as part of the EU’s ultimate aim of achieving carbon neutrality.

Negotiators representing member states and the parliament had spent more than 24 hours in intense talks before reaching an agreement on Saturday night that widens the scope of the carbon market.

The deal further indicates that emissions in the ETS sectors are to be cut by 62 percent by 2030 based on 2005 levels, up from a previous goal of 43 percent. Concerned industries must cut their emissions by that amount.

The EU agreement also seeks to accelerate the timetable for phasing out the free allowances, with 48.5 percent phased out by 2030 and a complete removal by 2034, a schedule at the center of fierce debates between MEPs and member states.

The carbon market will be progressively extended to the maritime sector and intra-European flights. Waste incineration sites will be included from 2028, depending on a favorable report by the commission.

A carbon border tax which imposes environmental standards on imports into the bloc based on the carbon emissions linked to their production, will offset the reduction of free allowances and allow industries to compete with more polluting non-EU rivals.

The agreement also aims to make households pay for emissions linked to fuel and gas heating from 2027, but the price will be capped until 2030.

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