The European Council has adopted five laws that will enable the European Union (EU) to cut greenhouse gas emissions within the main sectors of the economy, as reported by ESG Today on April 25. The vote in the Council is the last step in passing several key elements of the European Commission’s “Fit for 55” climate roadmap into law, which aligns the EU’s policies with its commitments to reducing greenhouse gas (GHG) emissions by at least 55% from 1990 levels by 2030 and achieving climate neutrality by 2050.

The new rules adopted include upgrading the carbon market, namely the EU Emissions Trading Scheme (EU ETS). The new laws require the sectors covered by the EU ETS to reduce emissions by 62% from 2005 levels by 2030, a more ambitious target than the previous 43% mandate. Notably, the new laws will add emissions from the shipping industry to the EU ETS for the first time. Starting in 2024, shipping companies will have to purchase carbon permits to offset at least 40% of their emissions, rising to 70% from 2025 and 100% from 2026. Under the new rules, a separate new ETS for buildings, road transport, and other sectors has been established. The legislation also includes establishing the new EU Carbon Border Adjustment Mechanism (CBAM). From 2026, the program will impose a tariff on imports of high-carbon goods, such as steel, cement, aluminum, fertilizers, electricity, and hydrogen, with free allowances for these products being phased out between 2026 and 2034.

Sources:

https://www.esgtoday.com/eu-lawmakers-adopt-legislation-to-establish-carbon-tax-cut-sector-emissions/

https://earth.org/eu-carbon-market/

https://www.consilium.europa.eu/en/press/press-releases/2023/04/25/fit-for-55-council-adopts-key-pieces-of-legislation-delivering-on-2030-climate-targets/