Agnes Pannier-Runacher – Photo © European Union 2022
(LUXEMBOURG) – The EU Council adopted its negotiating positions on key proposals to enable the EU to reduce its net greenhouse gas emissions by at least 55% by 2030 and achieve climate neutrality in 2050.
The member states adopted a common position on EU emissions trading system (EU ETS), effort-sharing between member states in non-ETS sectors (ESR), emissions and removals from land use, land-use change and forestry (LULUCF), the creation of a social climate fund (SCF) and new CO2 emission performance standards for cars and vans.
On the EU emissions trading system, the Council agreed to keep the overall ambition of 61% of emissions reductions by 2030 in the sectors covered by the EU ETS, proposed the Commission.
The ministers also agreed to a one-off reduction of the overall emissions ceiling by 117 million allowances (“re-basing”) and to the increase in the annual reduction rate of the cap by 4,2% per year (“linear reduction factor”).
The Council endorsed the proposal to strengthen the market stability reserve (MSR), by prolonging, beyond 2023, the increased annual intake rate of allowances (24 %) and setting a threshold of 400 million allowances above which those placed in the reserve were no longer valid.
The Council agreed to make the launch of the mechanism that activates the release of MSR quotas on the market, in case of excessive price rise, automatic and more reactive.
As regards sectors covered by the Carbon Border Adjustment Mechanism (CBAM), the Council endorsed the proposal to end free allowances for the sectors concerned by the CBAM progressively, over a ten-year period between 2026 and 2035. However, the Council accepted a slower reduction at the beginning and an accelerated rate of reduction at the end of this 10-year period. The Council agreed to include maritime shipping emissions within the scope of the EU ETS.
The Council agreed to create a new, separate emissions trading system for the buildings and road transport sectors. The new system will apply to distributors that supply fuels for consumption in the buildings and road transport sectors. However, the start of the auctioning and surrender obligations will be delayed by one year.
The Council introduced an opt-in for all fossil fuels. It introduced simplified monitoring reporting and verification requirements for small fuel suppliers.
The Council agreed to phase out free emission allowances for the aviation sector gradually by 2027 and align the proposal with the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The EU ETS will apply for intra-European flights (including the United Kingdom and Switzerland), while CORSIA will apply to EU operators for extra-European flights to and from third countries participating in CORSIA.
On the CO2 emission performance standards for cars and vans, the Council agreed to raise the targets for reducing CO2 emissions for new cars and new vans by 2030 to 55% instead for cars and to 50% for vans. The Council also agreed to introduce a 100% CO2 emissions reduction target by 2035 for new cars and vans.
Commission proposal on the revision of the EU Emissions trading system (ETS)
Commission proposal on the revision of the Effort Sharing Regulation (ESR)
Commission proposal on the revision of the LULUCF Regulation
Commission proposal for a Regulation establishing a Social Climate Fund
