Tired EU Parliament agrees carbon pricing compromise ahead of Council clash

The European Parliament is ready to begin negotiations with the EU states over the reform of the EU carbon pricing scheme, the flagship policy of the European Green Deal. [EPA-EFE/OLIVIER HOSLET]

The European Parliament has adopted a common position on the European Emissions Trading Scheme (EU-ETS) reform and the bloc’s forthcoming carbon border tax (CBAM) following a compromise between the biggest parties.

Just two weeks ago, the Socialists & Democrats (S&D) pulled the rug out under the European People’s Party at the last minute, collapsing the ETS compromise crafted by rapporteur Peter Liese (EPP).

Tensions and name-calling ensued, followed by tense negotiations to find a new compromise as fast as possible to be ready for the parliament’s real fight: holding the line in talks with the Council.

It was thus a tired group of EU parliamentarians briefing the media ahead of a vote that was largely a formality following the compromise.

“I am very grateful that we have now been able to work so constructively over the last 14 days,” Liese told journalists. The ETS and the CBAM are the “biggest package of climate legislation that we have ever had,” he would later say to the plenary of the EU parliament ahead of the vote.

Four hundred and thirty-nine EU parliamentarians voted in favour of the ETS reform, while the proposed position on the Social Climate received 479 positive votes. Four hundred and fifty voted in favour of the position on CBAM.

In essence, the European Parliament agreed to enter negotiations with the Council with a proposal on ETS that is less ambitious than the European Commission’s in the short-term but achieves a higher overall CO2 emission reduction by 2030.

Contentious free CO2-emission permits will be phased out one year later than envisioned by the Commission. They will be fully replaced by CBAM as of 2032, which will penalise the goods of third-country companies associated with large CO2 emissions due to laxer domestic climate protection rules.

Similarly contentious going forward is probably the plan to introduce carbon pricing for road transport and heating, usually referred to as ETS II. The EU parliament agreement wants businesses to pay a carbon price on products like fuel or heating oil, while regular consumers are to be exempted.

Something largely underreported is the parliament’s push to force oil and gas companies to pay their share of the ETS II carbon price instead of pushing it down the line to consumers. “We demand that oil and gas companies contribute to the costs of ETS 2,” Liese said.

The compromise had been crafted at breakneck speeds by the three largest parties, who possessed enough votes to push it through parliament on their own, with some help from the Greens.

Parliament groups strike compromise on EU carbon market reform

The European Parliament’s three biggest political groups, backed by the Greens, have reached a compromise deal on the reform of the EU’s emissions trading scheme ahead of a decisive vote in plenary next week.

Gearing up for the next fight

Presenting a front that is as unified as possible has become crucial for parliament ahead of the negotiations with the Council in a so-called trilogue.

“As a parliament, this was a collective failure,” admonished Pascal Canfin, a liberal EU parliamentarian with close ties to the French president Emmanuel Macron, who chairs the parliament’s environment and health committee ENVI.

“We found a compromise that will allow us to vote massively in favour of this climate protection package,” he added. Hard work and the method of European cooperation would be “the only way to win, as an institution and for the climate.”

Green parliamentarians share his concerns.

“So I’m voting for this deal because even this minimum standard on climate action is not yet certain. In autumn, the trilogue – the negotiations with the EU Council and Parliament – will begin,” explained Michael Bloss, who negotiated the ETS reform on behalf of Greens/EFA, in an op-ed for EURACTIV.

“With my vote for the current deal, I want to defend the minimum standard vis-à-vis the Council,” he added.

Liese similarly regretted the two-week interruption, effectively calling it a waste of valuable time. “We should have used these two weeks to achieve something approaching a majority in the Council for our shared ambition,” he said.

He alluded that negotiating with the EU states over the proposed ETS II split would become challenging. “So far, I hear that there is rather a majority in the Council for a position closer to the Commission proposal,” he told media representatives in an emailed statement on 22 June.

Now, negotiations with the Council loom as influential industrial associations have begun voicing their concerns. The German chemical association VCI called the CBAM compromise a “legally uncertain bureaucratic monster prone to abuse.”

“If the Council adopts its position as planned next Tuesday, 28 June, we will start negotiations in the trilogue immediately after the Czech Presidency begins,” the conservative lawmaker explained.

It remains to be seen whether today’s demonstrative show of unity will suffice after such a “collective failure” by parliament.

Why I am voting in favour of the ETS deal in the European Parliament

Today’s European Parliament vote on the revised EU Emissions Trading System is meant to defend a minimum standard on climate action, argues MEP Michael Bloss. “This is unfortunately all we can get with the current majorities in the European Parliament,” he writes.

[Edited by Alice Taylor]

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