EU ETS Reform Proposal Falls at Parliamentary Hurdle

EU legislation has suffered a setback today as the European Parliament failed to agree on a proposal to reform the EU’s Emissions Trading System (ETS) – a proposal that is part of a wider raft of reforms taking place under the European Commission’s ‘Fit for 55’ package. The ETS works by requiring companies in carbon-intensive industries to buy CO2 permits when they pollute, to incentivise them to more quickly transition to low-carbon operations and products. Prior to the vote, the European Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) backed a proposal that would result in a 67% reduction of emissions produced by sectors covered by the ETS until 2030, which was an increase on the Commission’s originally proposed 61%. The position Parliament was set to adopt today would have achieved a 63% cut in emissions, but would also include a slower one-off reduction of carbon credits, removing 70 million from the market in 2024 and 50 million in 2026 as opposed to the Commission’s proposed 117 million in 2024. Some MEPs argued this would result in more emissions in the short term, choosing to vote down the “weaker” proposal altogether, causing delays. It will now be sent back to the parliamentary committee to be redrafted. 

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