What path is the EU taking with the vote of the European Parliament?

Emissions trading remains the central element of the Fit for 55 climate package, with which the EU aims to reduce its CO2 emissions by 2030 percent by 55 (compared to 1990). With the reform now to be passed by parliament, the number of emission rights will be severely reduced. They will fall by 2030 percent by 62 compared to 2005, compared to "only" 43 percent so far. In doing so, the EU will initially give participants in emissions trading a little more leeway until 2026, after which emissions will have to fall all the more. Countries that phased out coal by 2030 should take the emission allowances released in this way out of the market as far as possible, but do not have to. The classic emissions trading scheme for electricity producers, industry and aviation will be extended to shipping and possibly waste incineration from 2028 onwards. In addition, there will be a separate "Emissions Trading 2" for heating and road transport. Instead of around two-fifths of total EU emissions, this covers four-fifths.

Emissions trading, what is it again?

Hendrik Kafsack

Economic correspondent in Brussels.

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Emissions trading caps emissions at the level necessary to achieve the EU's climate targets. A corresponding amount of emission allowances is issued, which the participants usually have to buy at auction if they want to emit CO2. This is how CO2 gets a price. The "polluter-pays" principle applies. The scarcer the number of emission allowances becomes, the higher the price rises. This creates incentives for participants in emissions trading to invest in climate-friendly technologies. The charm of emissions trading lies in the fact that the state can completely stay out of how the participants reduce emissions. You can look for the best ideas for this in free competition. Those who innovate and reduce emissions more quickly can sell their emission allowances to others. Bans and government requirements are superfluous.

What does the decision mean for motorists, tenants and homeowners?

Emissions from buildings and road traffic will also receive a CO2 price – as already decided in Germany by the Fuel Emissions Trading Act. This will be based on the German "upstream" model, i.e. with the fuels gasoline, diesel, heating oil or natural gas. "Emissions Trading 2" is scheduled to start in 2027. However, if energy prices rise again to the record level of spring 2022 before then, the launch will be postponed for a year. Emissions in "Emissions Trading 2" are to be reduced by 43 percent compared to 1990 and thus much more slowly than in "Emissions Trading 1". In addition, the price will be capped at 2030 euros per tonne of CO45 by 2. This is less than half of what the industry would be allowed to pay in "Emissions Trading 1". It corresponds to a surcharge of around 9 cents per litre of petrol and 11 cents per litre of diesel. The energy companies must disclose how much of the costs they incur from the purchase of CO2 rights they pass on to customers. If the Commission finds that there are "unfair mark-ups", it should come up with proposals on how to prevent this. Germany must transfer its national system to the new EU system in 2027.

How will the financial consequences for consumers be mitigated?

A social climate fund will be set up for this purpose. This is to be endowed with 2026.2032 billion euros for the period 86 to 7, 25 percent of which must be provided by the member states. The remainder is to be financed with the auction proceeds from "Emissions Trading 2". All countries are entitled to money from the fund, but rich countries such as Germany receive less than poorer countries such as Poland. The fund will be activated one year before the introduction of emissions trading for buildings and road transport, i.e. in 2026. Up to 37.5 percent of the funds can be used for direct income support on a transitional basis. However, the core task should be to promote long-term effective projects such as building renovation or the expansion of the charging infrastructure for e-cars. The aid is intended to benefit low-income households, micro-enterprises and road users.