The industry is concerned it will face a high carbon price its non-EU competitors will not have to shoulder. While he is aware of the industry’s challenges, he says there is no evidence the carbon price leads to measurable shifts in import/ export patterns or investments going out of Europe.Īnother controversial topic is how EU industry can competitively trade outside the bloc once free allowances are removed. Six billion free allowances are expected to be handed out between 20, but according to van der Plas, “If you hand them out for free, you are not auctioning them, so it’s forgone revenues to member states, it’s foregone financial means which are available to help decarbonise.” ![]() Beyrer, director general at BusinessEurope, said they “need to see first whether this new instrument works before we give up the little protection we have for the energy-intensive sectors which are under heavy competition”.īut Sam van den Plas from Carbon Market Watch argues delaying the phase-out decreases the incentive to decarbonise and prevents money from going to the Innovation Fund that finances clean technology. “As the steel sector, we were supporting the idea of the CBAM from the beginning, but always conditional on a cautious testing and a cautious interaction with the free allocation and the current measures,” Adolfo Aiello, deputy director general at the steel industry group EUROFER, told EURACTIV.Ī slow phase-out is also favoured by industry group BusinessEurope. If it fails, they fear being undercut by cheaper, more carbon-intensive products from outside the bloc. Industry is concerned about the impact of a quick phase-out, given the newness of the carbon border levy. Industry and environmentalists are both watching the debate closely. Parliamentary lawmakers want free allowances to finish in 2032 while EU countries want a much slower phase-out ending in 2035. However, the positions differ drastically past 2030. The hardest topic to negotiate will be the speed of the phase-out, the lead CBAM negotiator, Dutch MEP Mohammed Chahim, told EURACTIV.ĮU countries and the European Parliament have a similar stance when it comes to starting the phase-out, with EU countries wanting a start date of 2026 and Parliament aiming for 2027. The idea is to gradually replace these with the carbon border adjustment mechanism (CBAM)., which would put a price on carbon-intensive goods entering the bloc. While a deal before COP27 in November would be ideal, he said it is more realistic to expect one by the end of the year.Ī major source of contention is how quickly to phase out free permits to pollute, meant to mitigate the impact of the carbon price and prevent companies from leaving Europe for places where it is cheaper to emit. Liese expects at least four more trilogues. The main point is that no institution should have the belief that the deal is done and the other side just needs to agree,” Liese told EURACTIV.Įven the overall emissions reductions target for ETS sectors has to be negotiated, with the Commission and EU countries aiming for 61% and the European Parliament wanting 63%. “There are too many issues to speak about red lines now. ![]() For instance, both want to expand the carbon price to the maritime sector, but the details are yet to be worked out. There are “many points” where the Parliament and Council agree in principle, the lead ETS negotiator Peter Liese said after the first trilogue in July. ![]() “We need to make sure that, for instance, on the reform of the emissions trading system, we bring the two co-legislators closer together so that we can come up with a common conclusion – I think that is the most thorny issue,” he added. There’s an agreement in Council, but in some areas, these agreements do not overlap yet,” EU climate chief Frans Timmermans told journalists on 14 July. Now the three must thrash out the details in meetings called ‘trilogues’. In June, EU countries and the European Parliament decided their respective positions on the carbon market reform, tabled by the European Commission in 2021. This article is part of our special report A hard winter up ahead.Īmid an energy crisis, Russian gas cut-offs, and worsening climate change, EU negotiators face the mammoth task of overhauling Europe’s core emission reduction tool, the emissions trading scheme (ETS).
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