EU climate change plans are colliding with rising cost of emissions

Brussels ’historic attempt to tackle climate change faces a wall of opposition from bloc governments, as its plans would affect their homes with higher energy costs.

EU lawmakers told the Financial Times that the European Commission is trying expanding carbon prices to the most polluting sectors of the economy such as cars and buildings are in danger, as member states object that it will force its poorest to pay.

Frans Timmermans, executive vice chairman of the commission in charge of the Green Deal, has said measures are needed to “put a price on carbon and a premium on decarbonisation”.

“Our current tools are not enough. If we do not fight the climate crisis, we will fight for water and food wars, ”he said.

Presented on Wednesday Brussels 13 legislative measures designed to help reduce average greenhouse gas emissions by 55% by 2030 and reach zero net emissions by 2050, compared to 1990 levels.

At the heart of the strategy is a commitment to expand the EU’s carbon pricing mechanism, known as the emissions trading system, where companies have to pay for the cost of pollution.

I’m in favor of the package, but I keep going [the ETS] the narrative has become the imposition of new taxes. It’s a real shame

The governments of some of the largest states lined up to question the merits of expanding the system to cover emissions from road transport and heating buildings, arguing that it will have a “regressive” effect on those residents who they can’t easily afford greener alternatives.

Since its inception in 2005, the bonus system has been limited to large power generators and polluting industries that buy credits to cover the cost of their emissions.

The price of carbon in the EU has fluctuated over the last month at around 55 euros per tonne, or more than double its pre-pandemic level, as traders bet that the availability of carbon quotas will have to be reduced. whether the EU wants to meet its emissions targets.

But France, Spain, Italy, Hungary, Latvia, Ireland and Bulgaria expressed concern over the impact on citizens on Wednesday at a meeting of EU ambassadors when they were briefed after the plans were released, diplomats said. a FT.

Commission President Ursula von der Leyen also faced a revolt among at least seven of its 26 commissioners before presenting the plans. The reforms will need the support of a qualified majority of EU governments and the European Parliament to take effect.

A senior EU diplomat said the ETS expansion could be abandoned, despite being positioned alongside a proposed € 72 billion fund to help alleviate energy poverty.

Tortuous negotiations on the package are promised, which will begin in the coming months and are expected to continue until 2023. Controversial controversies include a ban on the sale of new diesel and gasoline cars from 2035, the introduction of a tax on kerosene for aviation and a border levy on imports based on their carbon content.

The so-called social fund for climate was also met with resistance from “frugal” northern countries such as the Netherlands, where there is opposition to a greater redistribution of funds to the bloc. “If the fund is wasted, the logic of the new ETS disappears,” the diplomat said.

The opposition has forced the commission to delay plans on how to use the money generated by the carbon market and a border tax to pay off EU debt that was scheduled for next week, officials said.

Germany and Denmark are among the countries supporting the expansion of the ETS, which Brussels says is needed to accelerate the decarbonisation of transport and buildings where emissions have steadily increased over the past 20 years. Germany has been testing a domestic carbon market for cars and buildings since the beginning of the year.

Denmark’s climate minister, Dan Jorgensen, said the ETS had already proven successful in reducing the industry’s emissions and should be expanded. “We know there are pitfalls and we need to be careful that the system produces reductions more than the opposite,” he told FT.

Pascal Canfin, a French MEP and head of parliament’s environment committee, said the measure runs the risk of hampering the message behind the European climate push in the eyes of citizens. “I am in favor of the package, but I continue [the ETS] the narrative has become the imposition of new taxes. It’s a real shame. “

France will have to play a central role in the leading negotiations on the green package, as Paris will take over the rotating EU presidency next year, coinciding with the presidential election.

The government of Emmanuel Macron, which has backed the EU’s climate goals, has warned that consumers will not face the kind of rising energy prices caused by the yellow vests protests against the government.

Canfin said holding the election would mean the French council presidency “cannot give the green light to a measure that is deeply against what we want to see.”

A French official said on issues such as heating: “People have no immediate alternative: they can’t change boilers overnight. Which seems really important to us because of the experience of the yellow vests, is to have a way to help people make the change ”.

Additional reports by Sam Fleming in Brussels and Victor Mallet in Paris