EU Parliament Sends Carbon Market Review Back To The Drawing Board

In an unexpected turn of events in the European Parliament, a watered-down carbon market package was rejected by a majority of MEPs. The review of the EU Emissions Trading System (EU ETS) Directive was referred back to the Environment Committee and will now overlap with member states finalising their position later this month.

In Strasbourg today, amid heavy industry pressure, the EU ETS package was undermined by amendments that would have increased emission limits and free handouts to polluters compared to the Commission proposal. The 68% emission reduction by 2030 target endorsed by the Parliament's Environment Committee was weakened to 64%. To make matters worse, MEPs opened up several other routes for more free allowances to be handed out to sectors like steel, cement and chemicals.

However, as voting neared its close, a majority of MEPs voted against the European Commission proposal with the new amendments as a whole and referred the file back to the Environment Committee.

“Large polluting industries almost succeeded in convincing policymakers in the European Parliament to put profits ahead of the planet. But ultimately, today irresponsible short-terminism did not prevail. The MEPs will have to retake their exam and look at the facts: ensuring climate protection and delivering peace and prosperity in Europe are two sides of the same coin,” said CMW Policy Director Sam Van den plas.

What next for EU climate policy?

The unnecessary delay on this agreement effectively weakens the European Parliament compared to the Council in the quest for higher climate targets and implementing the EU Green Deal. Other key files of the climate package such as those on the Carbon Border Adjustment Mechanism have also been sent back to the committee drawing board - a logical consequence, but with similar risks.

“Carbon pricing policies are only as strong as the political will behind them. The ETS now needs another chance to be made fit for purpose by the courage of our political representatives rather than remain an unfulfilled aspiration due to their cowardice,” said CMW’s Executive Director Sabine Frank.

The ball is now in the Council’s court. In the coming weeks, member states will have the opportunity to step up and ensure that their vision on the revision of the EU ETS firmly contributes to achieving the objectives of the Paris Agreement and applying the polluter pays principle.

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