European Union lawmakers have reached initial agreements on reforms to the EU carbon market, as they prepare to negotiate an overhaul of the EU’s core policy for reducing planet-warming emissions.
Shipping emissions
Regarding shipping, Reuters reports its emissions would be fully covered by the carbon market from 2024, two years earlier than the original proposal by the European Commission, which drafts EU laws.
What is more, the ‘charterer-pays’ clause and the Ocean Fund are also included, however the scope would increase from 50% to 100% of extra-EU voyages by 2028, while the phase-in period is out.
Furthermore, the environment committee agreed to end allocation of free emissions permits by 2030 and lower the ceiling on the total that can be granted.
Earlier this year, the EU Parliament’s Rapporteur Peter Liese, published his draft report on a proposal to revise the Emissions Trading System (ETS) Directive, proposing the following:
- Full reporting on emissions to commence in 2025;
- 100% of non-EU emissions from ships calling at EU ports to be caught if IMO fails to introduce a similar global measure by 2028;
- ‘Time charterers’ now expressly included in the definition of ‘Shipping Company’;
- ETS responsibility and payment of final price to fall on the commercial operator who may not always be the Shipping Company;
- ‘Operation of the ship’ is now also expressly defined for the purposes of the contractual allocation clause;
- Establishment of an ‘Ocean Fund’ is recommended to fund R&D into maritime decarbonisation, cleaner fuels, short-sea shipping and cleaner ports.
Other agreements
Lawmakers representing a broad majority in the European Parliament’s environment committee, supported most of the changes, the legislature’s lead negotiator Peter Liese has proposed.
The changes would scale back a planned new carbon market to impose CO2 costs on suppliers of the fuels used in buildings and transport. As Reuters report, the lawmakers agreed to apply the scheme to commercial entities from 2025, and only extend it to private consumers in 2029 if certain conditions are met. In addition, prices in the scheme would be capped at 50 euros ($52.82) per tonne.
Moreover, Mr. Liese added that the deal to leave households out of the new market was a “painful compromise” but that he considered it a win, in light of the opposition from some countries and lawmakers to introducing the scheme at all.
Now, Parliament’s environment committee will vote on the proposed changes this week, before a full parliament vote in June or July. If approved, the deal will form parliament’s position for final negotiations with EU countries on the reforms.
Continuing, change is also expected to the EU’s current carbon market, the EU Emissions Trading System (ETS), its core climate policy, which forces power plants and factories to buy CO2 permits when they pollute and caps the supply of permits. Prices under that scheme are currently around 85 euros a tonne.
The lawmakers agreed to make it easier to respond to price spikes in the carbon market and reward industrial companies with the best environmental performance by giving them extra free permits, taken from firms without a plan to decarbonise.
On the other hand, lawmakers did not agree on all elements. More specifically, some parliamentary groups agreed to push for even tougher rules, including an end to free CO2 permits for industry by the end of the decade.
According to EU lawmaker Michael Bloss, negotiator for the Greens, the tougher proposals would cut carbon market emissions 67% by 2030, compared with the 61% cut under the Commission’s proposal.
Nevertheless, groups that support the tougher rules may struggle to win majority support in the full parliament.
