Following a 7 June 2022, Parliament on Wednesday adopted its position on three key EU laws that are part of the “Fit for 55 in 2030 package”. This is the EU’s plan to cut greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, and to have net-zero greenhouse gas (GHG) emissions (climate neutrality) by 2050, in line with the European Climate Law. Parliament is now ready to start negotiations with EU governments on the final shape of these laws.

The package is an important step towards the EU’s goal of becoming independent from expensive and polluting fossil fuels from Russia well ahead of 2030.

Emissions Trading System reform

Parliament wants to incentivise industries to further reduce their emissions and invest in low-carbon technologies. The Emissions Trading System (ETS) should be reformed accordingly, to include:

• New ETS II for buildings and road transport - citizens excluded until 2029
• The 2030 GHG emissions reduction target should be increased from 61% to 63%
• Free allowances to be phased out from 2027 and to end by 2032
• A bonus-malus system to be introduced from 2025
• Revenues to be used exclusively for climate action in EU and member states.

For more details, a separate press release will be available shortly here.

More ambition for new carbon leakage instrument

MEPs call for a broader scope and faster implementation of the EU Carbon Border Adjustment Mechanism (CBAM) to prevent carbon leakage and raise global climate ambition, including:

• Phasing in CBAM earlier and ending free EU ETS allowances by 2032;
• Extending the scope to include organic chemicals, plastics, hydrogen and ammonia as well as indirect emissions;
• An amount equivalent to the CBAM revenues should be used from the EU budget to support the green transition in least developed countries;
• Need for a centralised EU CBAM authority.

For more details, see the separate press release that will be available shortly.

Social Climate Fund to combat energy and mobility poverty

Parliament agrees with the creation of a Social Climate Fund (SCF) to help those most affected by energy and mobility poverty cope with the increased costs of the energy transition. The SCF should support

• Temporary direct income support measures (such as a reduction in energy taxes and fees) to tackle the increase in road transport and heating fuel prices;
• Investment in buildings renovation, renewable energy and a shift from private to public transport, car-pooling and car-sharing and active transport (such as cycling). Measures may include fiscal incentives, vouchers, subsidies or zero-interest loans.

For more details, a separate press release will be available shortly here.

Parliament has also adopted its position on

- CO2 emission standards for cars and vans

- Land use, land use change and forestry sector (LULUCF)

- Greenhouse gas emissions in other sectors (effort sharing)

- Reducing emissions in the aviation sector

- Market Stability Reserve