The reform of the Emissions Trading System (ETS) was among the regulations included in the Fit for 55 in 2030 package that the European Parliament passed on Tuesday.
The ETS aims to lower carbon emissions in the sector. EU emissions have decreased in the industries it covers by 41% since its inception in 2005. The ETS revision that the Parliament approved intends to reduce industry emissions by 62% from 2005 levels by 2030. From 2026 through 2034, free grants to industries are gradually phased off. The new EU Carbon Border Adjustment Mechanism (CBAM) will also be implemented gradually between 2026 and 2034. Imported products from less ambitious nations would be subject to a carbon tax.
In addition, the ETS will be extended to the maritime industry, and free allowances for the aviation industry would be phased out by 2026. In 2027, a new ETS II will be developed to price emissions from fuel used in buildings and for road transportation. Only starting in 2029 would private transportation and residential construction be introduced, necessitating a fresh Commission proposal.
The creation of an EU Social Climate Fund (SCF) to combat energy and mobility poverty was also authorized by the parliament. In the latter half of 2022, MEPs and EU governments approved the modifications. Before being published in the EU Official Journal, the documents must now get the Council’s official approval.