the European Union gives its last green light to the reform of the carbon market

A new and final step taken: on April 25, the European Union has just adopted a series of regulations related to the climate policy of the Old Continent. With the objective of carbon neutrality by 2050 in sight, the Member States are thus giving the last green light to one of the main axes of the European climate plan, namely the ambitious reform of the carbon market.

In the wake of an already positive vote by MEPs last week, the Twenty-Seven definitively validate the revised directive on the emissions trading system (Seqe) which itself includes several measures. The forthcoming entry into force of the latter will have significant consequences for several sectors of activity, including industry and construction.

A second carbon market dedicated to heating buildings

Concretely, the “carbon tax” will soon apply to housing as well as at the borders of the common market, with a view to bringing European imports more into line with the requirements of sustainable development. As a reminder, the first step is to reduce greenhouse gas emissions in the Old Continent by 55% by 2030, compared to their 1990 level.

According to the “polluter pays” principle, theAFP Points out that electricity producers and energy-intensive industries – including cement manufacturers in particular – currently have to pay ‘polluting permits’ on the European emissions quota market (ETS), considered as the most innovative in the world. Created in 2005, it now applies to 40% of polluting emissions in Europe.

The reform therefore plans to speed up the rate of reduction of the proposed quotas, so as to force the manufacturers concerned to reduce their emissions by the same amount. While the ETS market will be gradually extended to the maritime sectors and intra-community air flights, a second carbon market, called ETS2, will see the light of day. It will be devoted entirely to building heating and road fuels.

Which already arouses opposition, because it is currently expected that households will pay a carbon price on the heating of their homes from 2027. The ratified text should, at least until 2030, cap it at 45 euros per tonne.

A social fund for households and micro-enterprises

However, Europe wants to counterbalance this measure by establishing a Social Climate Fund in 2026: with a budget of almost 87 billion euros, this system will aim to support vulnerable households as well as micro-enterprises in this energetic transition. The last part concerns the establishment of a “carbon border adjustment mechanism”.

This tool, which will not constitute a tax strictly speaking, will apply the criteria of the European carbon market to imports from Member States in the sectors considered to be the most polluting: steel, aluminium, cement or even electricity will be the first to be impacted. Companies importing these resources will therefore have to buy “emission certificates” at the CO2 price set in the EU.

There “carbon tax” at the borders should grow between 2026 and 2034, which will allow Europe to eliminate in parallel, and here too gradually, the free emission quotas allocated to industrialists on the Old Continent.

Acceleration of the rhythm

“From now on, member states will have to devote all their emissions trading revenues to climate and energy projects, and address the social aspects of the transition, in addition to planned climate expenditures. in the EU budget”, reacted by press release the representation in France of the European Commission. More broadly, the EU continues to revise its ambitions upwards in terms of ecological and energy transitions.

When the Council of the European Union was under French presidency in June 2022, He had already adopted “general guidelines” on two proposals in relation to the famous package of legislative measures “Fit for 55” (“Fit for 55”). Concretely, this implied providing the Community directives on the renewable energies and theenergetic efficiency even more ambitious objectives than those originally set.

Beginning of March 2023, the negotiators of the Member States and the European Parliament then passed an agreement on energy efficiency which plans to reduce by at least 12% the final energy consumption of the EU in 2030. A decision that will have many impacts, such as on building renovations or district heating and cooling networks.

Then, on March 30, the representatives of the Council and the Parliament have agreed to increase the share of renewable energies in the energy consumption of the Old Continent to 42.5% by 2030accompanied by a “additional indicative target” 2.5%, which would therefore make it possible to reach 45%. Although it is still considered provisional, and will therefore have to be formally adopted by the Community institutions, this agreement commits all Member States to contributing to the achievement of this collective objective.

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