EU Parliament towards the elimination of free ETS allowances
Green light of European Parliament with three pillars, included in 5 different sizes, del Fit for 55the EU strategy to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, as foreseen by the European climate law. The texts adopted by the Eurochamber concern the reform of the emissions trading system (ETS), which will include air and sea transport, the so-called carbon taxi.e. Border Adjustment Mechanism (Cbam) and the Social fund for the climate.
The reform of the Ets passed, with 413 votes in favor, 167 against and 57 abstentions, provides for the gradual elimination of free quotas for businesses between 2026 and 2034. According to the text, a new system will also be created, called You are II, for fuels used for road transport and for buildings. Parliament has voted to include greenhouse gas emissions produced in the ETS for the first time maritime sectorwith 500 votes in favor, 131 against and 11 abstentions, and approved the revision of the system valid for the aviation sector with 463 votes in favor, 117 against and 64 abstentions.
The final vote on the Carbon Border Adjustment Mechanism (Cbam), the so-called carbon tax, recorded 487 votes in favor, 81 against, and 75 abstentions. The new mechanism will require companies importing products covered by the ETS system into the EU to notify the amount of emissions contained in goods at the border and will include iron, steel, concrete, aluminum, fertilizers, electricity, hydrogen and indirect emissions under certain conditions.
Social fund for the climate of 65 billion euros
Finally, the agreement also arrives, adopted with 521 votes in favor, 75 against and 43 abstentions, for a Social fund for the climate of the EU aimed at ensuring a just and socially inclusive climate transition. The text provides that, as soon as it is fully operational, the Fund will be financed by the revenues from the auctioning of allowances up to an amount of 65 billion euros. The approved texts will now also have to be formally approved by the Council. They will then be published in the Official Journal of the EU and will enter into force 20 days later.
“ETS is the cornerstone of EU climate policy, a highly efficient way to reduce emissions – said the Executive Vice-President of the EU Commission for the Green Deal, Frans Timmermans Fossil fuel and energy companies will also need to start purchasing emission permits for fuels used in road transport and heating. This will create a strong incentive for clean transport and make buildings more energy efficient. Those who can pay for heat pumps and solar panels will have a strong incentive to do so. For those without sufficient resources, the Social Climate Fund will help to insulate houses, install a heat pump, buy an electric car or take other measures that save energy and money. From 2026, more than €86 billion will be available for vulnerable citizens and micro-enterprises”.
What is Ets
This is the system for it EU emissions trading. The EU ETS is the first, still the largest, international system for the trading of emissions allowances in the world, was established in 2005 and is active in 31 countries (the 28 of the EU, plus Iceland, Liechtenstein and Norway). This system limits the emissions produced by over 11,000 energy-intensive plants and by airlines operating in the European economic area, covering around 40% of the total greenhouse gas emissions produced in the EU. u
The ETS market therefore requires thousands of realities, industries and energy producers to request an emission certificate for each ton of CO2 produced. At the moment a substantial “slice” of these certificates is recognized free of charge to companies. But with the measure voted on, the free allowances will be eliminated by 2034.