The European Parliament approved laws including a review of the Emissions Trading System (ETS) set to meet EU climate targets, and the creation of the Carbon Border Regulatory Mechanism (CBAM) and the Social Climate Fund to implement a carbon tax at borders. .
During the session of the European Parliament’s General Assembly (EP), held in Strasbourg, various legal regulations were voted on in the “Fit for 55” package, which is part of the European Green Deal and aims to reduce emissions by at least 55 percent by 2030.
MEPs voted to reform the Emissions Trading System (ETS), which would reduce EU emissions, by 413 votes, to create a new Border Carbon Regulatory Mechanism (CBAM), which includes a border carbon tax on products from third countries such as iron, steel and cement. and aluminum, fertilizers, hydrogen and electricity. It also approved, by 521 votes, the creation of the Social Climate Fund to support poor families and small businesses against the financial implications of the new emissions trading system.
Under the new laws, greenhouse gas emissions for sectors in the Emissions Trading System (ETS) will be reduced by 62 percent by 2030 compared to 2005 levels. Free emissions allowances for companies from 2026 to 2034 will also be eliminated.
A new emissions trading system for road transport fuels and structures will be established in 2027. Thus, a fee will be paid for greenhouse gas emissions from these sectors. Should energy prices rise excessively, this demand may be delayed until 2028.
Maritime emissions will also be included in the scope of the system.
Emissions trading for the aviation sector will also be reviewed. Flying free allowances will be abolished by 2026. The use of sustainable aviation fuels will be encouraged.
With the CBAM, a mechanism will be created to balance the carbon price paid for EU products with the carbon price paid for imported goods.
Thus, while non-EU countries will increase their climate targets, the shift of production to places with lower climate and environmental targets will be prevented.
The mechanism will cover products such as iron and steel, aluminum, fertilizers, electricity and hydrogen.
Importers of these products will have to pay the difference between the carbon price paid in the country of manufacture and the carbon emission prices in Europe.
To ensure that the climate-friendly transition is socially just and inclusive, the EU Social Climate Fund will be established in 2026.
Poor households and small businesses, which will be particularly affected by increased energy and transportation costs, will benefit from this fund. Most of the fund will come from the emissions system. Member states will give a solid 25% to the fund. The total size of the fund is expected to be 86.7 billion euros.
After this stage, the new laws must be officially adopted by the European Union countries and published in the Official Journal of the European Union in order to enter into force.
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