The European Parliament approved a reform of the EU carbon market with the aim of reducing greenhouse gas emissions and achieving climate neutrality. The reform was approved with 413 votes in favor, 167 votes against, and 57 abstentions, and now awaits final approval by EU member states to enter into force.
The reform accelerates the pace of CO2 emission quota reductions compared to 2005, setting a reduction target of 62% by 2030 instead of the previous target of 43%. In addition, the carbon market will gradually be extended to the maritime sector, intra-European flights, and waste incinerators. A second market for carbon will also be established for heating buildings and road fuels.
The reform also includes the controversial “adjustment” that will require companies importing products into the EU that exceed the bloc’s greenhouse gas standards to buy emission certificates. The adjustment will come into force in October this year and apply across the bloc from 2026.
Revenues from this mechanism will be incorporated into the EU’s general budget, and a Social Climate Fund will be established to help microenterprises and vulnerable households during the energy transition.
The EU seeks to reduce carbon emissions by 62% by 2030 compared to 2005 levels and is preparing specific legislation to boost European industrial competitiveness in the face of US subsidies and Chinese investment in the renewable energy sector.