Climate change

Countries mull delaying new EU carbon market in search of climate deal

Published

4 years ago

June 17, 2022

The European Union countries are contemplating a one year delay in the launch of a new European market for carbon markets for buildings and transport. This would push the start back to 2027 as they seek a compromise to more ambitious climate policies. Draft documents indicate.

The EU, which includes 27 countries, is working to reduce its emissions. It is currently negotiating a series of laws that will put a price for pollution. This includes an upgrade to the existing carbon market in industry and a new scheme to impose carbon dioxide costs on fuel suppliers used in transport and buildings.

According to Reuters, a draft compromise proposal has been revealed that EU country negotiators will consider launching the new market by 2027. The European Commission, which is responsible for drafting EU laws, proposed 2026.

This policy aims to reduce rising transport emissions as well as the third of EU's emissions from fossil fuel-guzzling structures. It has been criticized by some countries who, keeping in mind recent high gas prices, fear that it will increase citizens' energy costs.

Diplomats stated that the launch of 2027 - which could change during negotiations - shouldn't undermine the EU’s climate targets as long as the proposal was strengthened in other areas.

This delay is intended to persuade hesitant countries and it comes earlier than any other options that countries have discussed. Brussels warned that this could jeopardize the EU's green goals. The fund will be funded by the revenues from the new carbon marketplace.

France, which is currently chairing meetings of EU countries on the topic, proposed that shipping would be gradually added to the EU's existing carbon market by 2027. This would be one year later than originally planned.

The Commission proposed other changes to the existing carbon market. These included a rate at which the CO2 permit cap in the scheme is falling each year and a 2035 phase out of industries receiving free CO2 permits.

Diplomats will also discuss rules that make it easier for countries to respond to price spikes in CO2. This will be ahead of a meeting later in the month, where ministers will try to agree on their stances before countries and the EU parliament negotiate final laws.

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