EU hails deal to expand carbon trading market for business

Europe is also set to accelerate the pace at which energy-hungry companies are obliged to reduce pollution

Sun, 18 Dec, 2022 - 17:12

Ewa Krukowska and John Ainger

The EU has reached an agreement to strengthen and expand its flagship carbon market, endorsing the centrepiece of the Green Deal strategy that aims to make its economy climate-neutral by mid-century.

Under a provisional deal announced by representatives of EU members and the European Parliament, emissions trading will be extended to heating and road transport, and will also cover shipping.

The EU will also accelerate the pace at which firms, from power producers to steel manufacturers, are obligated to reduce pollution.

“The EU is leading the way in climate protection and is demonstrating determination — despite all the crises,” German economy minister Robert Habeck of the Green Party stated.

European climate policy ensures that we in the EU walk the path to climate neutrality together, and it sets standards for the implementation of climate policy worldwide.

The deep reforms are part of the EU’s plan to cut emissions by at least 55% from 1990 levels by 2030, and reach net zero by 2050.

“It is the biggest climate law ever in Europe, and some say in the world,” Peter Liese, lead negotiator for the European Parliament, told reporters at a briefing.

“We get a lot for climate, a big amount of CO2 saved, at the lowest possible price.”

While some provisions of the overhaul were watered down compared with the original proposal — as the EU grapples with an unprecedented energy crisis following Russia’s invasion of Ukraine — the EU is determined to make the green overhaul the basis of its growth strategy, and set a precedent for other nations and regions in the fight against climate change.

“The deal is a success for the EU and will provide certainty to companies and investors even if some compromises had to be made as the economic environment is very challenging,” said Ingo Ramming, head of carbon markets for Banco Bilbao Vizcaya Argentaria in Madrid.

Expectations of stricter rules already helped send carbon prices to a record €99.22 per tonne this year.