Lawmaker offers households temporary opt-out from EU’s new carbon market

Peter Liese, Member of the European Parliament during a press conference in Glasgow, Britain, 11 November 2021. [EPA-EFE/ROBERT PERRY]

European Union countries should be able to temporarily remove households from the bloc’s planned carbon market for buildings and road transport, according to an early draft of the European Parliament’s negotiating position on the policy.

The European Commission last summer announced plans to introduce an EU-wide carbon price on home heating and transport fuels from 2026 to meet Europe’s goals to cut planet-warming emissions.

A draft of the European Parliament’s amendments to that proposal, seen by EURACTIV, would impose the scheme in 2025 but allow countries to omit private buildings and transport from it until 2027. Commercial operators could not opt out.

Countries that use the opt-out must prove they can still meet their emissions-cutting targets, the draft said.

The plan, by German lawmaker Peter Liese, aims to overcome opposition from some EU countries and lawmakers worried about the social impact if the CO2 price hiked households’ bills. The amendments also support the Commission’s proposal for an EU fund to help compensate low-income citizens.

“I have to create a majority,” Liese told Reuters, adding that the proposal had received “quite positive reaction” from other lawmakers.

EU countries slam new carbon market plans as energy prices soar

The European Commission’s plan to introduce a separate carbon market for road transport and the building sector, alongside the EU’s existing Emissions Trading Scheme (ETS), was widely criticised by EU environment ministers at their meeting last week.

Revamp of existing carbon market rules

Liese also suggested changes to a planned revamp of the EU’s existing carbon market.

Industrial firms with the best performance on emissions would be rewarded with extra free CO2 permits – which they could sell for profit. Firms that lack convincing emissions-cutting plans could lose free permits faster, the draft said.

Meanwhile, steel, cement and other industries that will be covered by the EU’s planned carbon border tariff would lose the free CO2 permits they currently receive. That aligns with the Commission proposal.

However, Liese suggests putting those permits in a reserve, rather than cancelling them. If there are problems launching the carbon border levy – a policy that has stoked tensions with countries including China – the permits could be handed back to EU industry, the draft amendments said.

Liese’s draft also supports adding shipping to the EU’s existing carbon market from 2025, rather than 2026 as proposed by the Commission.

Parliament aims to finish its amendments by summer, before negotiating the final rules with EU countries.

> The draft ETS report from Peter Liese can be consulted below or downloaded here. Explanatory memorandum here.

ETS DRAFT DRAFT Report

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