EU Parliament Rejects Commission’s ETS Revamp Plan

09.06.2022 - The European Parliament was at the center of political disagreement and disappointment on Jun. 8 as a plenary vote on one of three key climate laws failed, and the proposals were sent back to committees. Finger-pointing and name-calling across the aisles followed, according to recordings from the session.

Disagreement coalesced around a vote on revising the EU’s s Emissions Trading Scheme (ETS) for energy intensive industries. The European Commission had sought changes as part of plans to adapt its Fit for 55 energy and climate package and to ease the transition away from Russian fossil fuels.

To finance the estimated €200-300 billion cost of replacing Russian energy and accommodate a temporary rise in emissions of greenhouse gases from extended fossil fuel use, the Commission has proposed issuing additional CO2 certificates.  Ecology groups reject the extensions on grounds that this could make it cheaper to burn fossil fuels.

Under the proposed revamp, the EU’S trading scheme would for the first time cover emissions from road transport and buildings but exempt private buildings and private transport until 2029. 

The session clearly rejected the Commission’s draft, with 340 voting against and 265 in favor of it, along with 34 abstentions.  Without a majority, the revamp was remanded to the parliament’s Environment committee – which had approved it earlier by a slender but adequate margin – for reworking.

Rejection of the ETS extension also torpedoed efforts to vote on two other key projects, the Social Climate Fund, which would be partially financed by revenues obtained from selling ETS permits, and the Carbon Border Adjustment Mechanism (CBAM), which is a tax on “dirty” imported fuels entering the single market.

As the parliament considered the three topics too closely intertwined to be voted on separately, all three will be put to a vote again after emerging from committee.

Political factions blamed each other for the breakdown, with conservative and industry-friendly MEPs accusing social and green MEPs, who thought the EU’s proposals plans did not go far enough, of colluding with far-right factions opposed to any form of climate control.

Left-of-center groupings faulted the other side for “caving in” to fossil fuel interests in rejecting their proposals for emissions cuts higher than those the Commission had sought.

Ahead of the vote, the German chemical industry association VCI criticized some of the Commission’s plans as burdensome, in particular the higher price for emissions certificates that would be triggered by the market stability reserve. The association’s general manager, Wolfgang Große Entrup, said also that the Carbon Border Adjustment Mechanism does nothing to help German chemical producers and also could lead to trade disputes.

Author: Dede Williams, Freelance Journalist