The legislation from the European Union’s Fit-for-55 climate package is about to be written – both the Council of the EU and European Parliament have adopted their negotiating positions. They will discuss their differences regarding the path to cut emissions by at least 55%, but one major issue is out of the way as both sides agree the sales of new cars and vans using fossil fuels should be banned by 2035.
Member states represented by environment ministers in the Council of the EU adopted a common position on changing the EU Emissions Trading System (EU ETS), the creation of a social climate fund (SCF) and new CO2 emission performance standards for cars and vans alongside other upcoming climate protection rules. It means negotiations with the European Parliament can begin on the climate legislation package.
As for the EU ETS, the ministers agreed to support the European Commission’s overall ambition of 61% of emissions reductions by 2030 in the sectors covered by the scheme, relative to 2005. The European Parliament wants the target to be set at 63% as legislators failed to agree to set the bar higher.
Fuel suppliers within EU ETS 2 should be exempted if they already pay a bigger or equivalent national carbon tax, the environment ministers said
The council said maritime transportation should be included in the EU ETS but with some exceptions, for example for ferries covering routes to islands with fewer than 200,000 inhabitants.
The idea is also to create EU ETS 2 for fossil fuels used in buildings and transportation in 2027, one year later than in the commission’s proposal. Member states would be able to exempt fuel suppliers until December 2030 if they are subject to a national carbon tax of an amount equal to or greater than the market price of carbon dioxide.
Rough road ahead for negotiators responsible for carbon border tax scheme
The ETS legislation from the Fit-for-55 package, designed for a 55% reduction in annual greenhouse gas emissions, is set to include the so-called Carbon Border Adjustment Mechanism. The scheme should gradually abolish free CO2 permits for energy-intensive industries in the EU while introducing a CO2 tax on the carbon content of imported electricity and goods like steel and cement.
The European Parliament said the free allocations should be phased out from 2027 to 2032 and the Council of the EU now proposed the period 2026-2035. There are also differences on how fast the number of CO2 certificates in circulation should be reduced.
Council proposes intermediate targets for ban on internal combustion engines
The environment ministers said up to EUR 59 billion is needed for the planned Social Climate Fund for the period 2027-2035. It is primarily intended for helping consumers with costs related to the buildings and transportation ETS.
Representatives of the council and parliament will try and find common ground on the proposed emission reduction tools, but they already crossed one hurdle. By 2035, all new cars and vans would need to be 100% emissions-free. The ministers proposed an intermediate target of 55% for cars and 50% for vans for 2030.