EU proposes slowing down cuts to carbon emissions for businesses
The European Union has unveiled proposals to slow cuts to businesses’ greenhouse gas emissions limits as part of a major climate policy overhaul.
The reforms will relax the rules of the bloc’s emissions trading system (ETS) to give businesses more time than previously planned to reduce their carbon output.
The changes mean some industries could receive emissions allowances by 2038 instead of 2034 if they commit to investing in decarbonization efforts.
The proposals still need to be approved by EU countries and lawmakers; This process can take up to a year.
“We are taking a more business-friendly and more conscious approach,” said Wopke Hoekstra, the EU’s climate commissioner.
The European Commission, which develops legislation for the EU’s 27 member states, said the changes would ensure the ETS is compatible with the EU’s target of reducing carbon emissions by 90% compared to 1990 levels by 2040.
Introduced in 2005, the ETS is the EU’s main tool for controlling greenhouse gases.
However, it was criticized by some member states; Italy in particular has condemned the trade plan as a de facto tax that helps keep energy prices artificially high.
Under the ETS, industries and power plants in Europe must purchase a permit or allowance for every tonne of carbon dioxide they emit; This creates a financial incentive to invest in cleaner technologies.
Companies can purchase or trade extra permits. Some businesses are given free permits to help them compete with foreign companies that do not pay carbon costs.
ETS also limits the number of permits issued each year to ensure missions are reduced.
The European Commission has proposed slowing the rate of reduction of this cap each year to around 3.7% from 2031 and then to 1.7% from 2036 (from 4.3% currently).
As part of the changes, the EU is also proposing that furloughs be continued until 2038, when a carbon border tax on imports would be introduced for some sectors, rather than ending in 2034.
The Commission will also offer 80% free allowance in advance to companies planning to invest in decarbonisation in Europe. Once these investments are made, businesses will receive the remaining 20%.
Responding to the proposals, Polish climate minister Paulina Hennig-Kloska said Poland would push to weaken the policy further.
“For the first time we see the attitude softening rather than hardening; this is a great achievement for Poland. But we will fight for more,” he said.
But Green politicians were less impressed. German member of the European Parliament Michael Bloss said the plans would lead to “massive climate pollution” and that the next generation would have a worse quality of life as a result.
