Newsletters

On 22 March, the European Parliament’s Environment Committee (ENVI) discussed the over 1700 amendments tabled on the revision of the EU Emission Trading System (EU ETS). Rapporteur Peter Liese (EPP, Germany) stressed the need to use ETS revenues for investments in renewable energies and noted that the creation of a separate ETS system for buildings and road transport (ETS2), is the most important part of the reform, where a compromise needs to be found. Mr Liese reflected on the need to implement the ETS2 system once the energy prices will go back to normal, referring to the current high energy prices.

Shadow rapporteur Jytte Guteland (S&D, Sweden) highlighted that the S&D Group proposed to increase the climate ambition of the ETS and reduce free allocations as much as possible, thanks to other instruments being discussed such as the CBAM. Renew Europe tabled amendments to enhance innovation, reframe the innovation fund to reward net zero target, and reduce exemption and free allocations to current ETS. Michael Bloss (Greens/EFA, Germany) called for reducing surplus allowances and support industry decarbonisation with the Innovation Fund. MEPs also exchanged views on the creation of an Ocean Fund to help decarbonise maritime transport and reflected on the scope of maritime emissions covered by the EU ETS. The ENVI committee is expected to vote on Mr Liese’s report around mid-May, for a vote in Plenary session scheduled in June 2022.

MEPs also discussed the over 1300 amendments tabled on the proposal for a Carbon Border Adjustment Mechanism (CBAM). Whilst MEPs agreed on some points, such as the need to establish a more centralised system of governance of CBAM, they had diverging opinions on other key points, such as the phase out of free allowances.

Shadow Rapporteur Adam Jarubas (EPP, Poland) mentioned other aspects of the proposal that need to be further discussed, such as the sectors to be included under CBAM. MEP Nicolae Ştefănuță (Romania), Shadow Rapporteur for the Renew Group, stressed the importance of having a CBAM mechanism that is compatible with WTO rules, and providing sufficient predictability for the industry with a feasible timeline for phasing out free allowances. The Greens called for shortening of the transition period and early phase out of free allocations by 2025, as well as an extended scope of CBAM. Th Greens also supported the creation of a centralized CBAM governance, and the adoption of strong penalties and sanctions to prevent circumvention.