Brussels Energy prices in Europe have never been as high as they are this year. Nevertheless, the EU wants to stick to the core of its climate protection program, which is about making the consumption of fossil energy even more expensive.
Companies and consumers will only notice this in a few years. Nevertheless, observers are amazed that the legislation has actually reached its final stage.
The decisive measure is the reform of European emissions trading. By 2030, it is intended to save around 25 times as much CO2 as the ban on the internal combustion engine.
In order for the laws to be passed, an agreement must be reached between the EU Parliament and EU member states, which will negotiate on this Friday and Saturday. “If the negotiations are successful, it will be noticed worldwide,” says Matthias Buck, who heads the Brussels office of the Agora Energiewende think tank. “Europe now has the chance to defend its leadership in climate protection.”
But failure is possible. There were six rounds of negotiations, in which only comparatively little progress has been made so far. “We haven’t even called up all the sensitive points yet,” says Green politician Michael Bloss, who is taking part in the talks on the part of Parliament. “Because the other side has not shown any willingness to negotiate on these points.”
An overview of the most important questions to be answered:
Expanded emissions trading
Industrial companies whose production causes CO2 must buy certificates for this. Since the certificates are becoming scarce from year to year, companies are forced to reduce their CO2 emissions. The certificates can be traded in the ETS (“Emission Trading System”).
According to the original proposal by the EU Commission, this principle should also be applied to private individuals and small companies in the future: if they fill up with petrol or diesel or heat with oil or gas, CO2 taxes should be due. We are talking about the “ETS2”. This actually simple idea threatens to become a bureaucratic nightmare.
It was controversial in Parliament whether private consumers should really be burdened with additional levies and whether industry should instead pay more. That is why the MPs agreed on a complicated compromise: companies should pay the CO2 price, but private individuals should not.
The free CO2 certificates expire in 2032.
(Photo: imago images/Future Image)
The compromise leads to significant problems, for example when there are both apartments and shops in a house with central heating. At the petrol stations, the cashier would have to ask whether a private car or a company car was filled up – and rely on the honesty of his customers.
>> Read here: No Europe-wide CO2 tax for private individuals – two prices at the pump possible
The Member States take a different position: they want to include private individuals, but not the process heat of small companies. A bakery could get the gas for its oven cheaply, but would have to pay the CO2 price for heating its café. It is not yet clear how this is to be accounted for.
Climate protectors hope that all exceptions will be removed at the weekend, which means that every liter of petrol and every kilowatt hour of gas would be subject to the same CO2 price.
Peter Liese (CDU), chief negotiator in Parliament, hopes for an uncomplicated regulation. “Both the Council mandate and the Parliament mandate bring problems in implementation,” he said. “That’s why I personally would prefer to make it as broad as possible and therefore as simple as possible.” First of all, however, Liese has the task of bringing as much as possible from the complicated position of Parliament into the final law.
Climate Social Fund
Part of the proceeds from ETS2 will go to a new climate social fund to help low-income earners insulate their homes, buy energy-efficient heaters and buy electric cars. If the EU makes fuel more expensive, it must also help find alternatives – that’s the idea.
>> Read here: How the climate social fund should work
Since there is a lot of money involved in this question, a dispute was foreseeable. The member states would rather plan the income themselves, while Parliament wants a strong social fund, the money from which is allocated according to EU rules. There is also disagreement between the states: the fund would redistribute income from rich to poorer countries. On the other hand, those who would deposit more than they get out resist.
Green MP Bloss warns against shrinking the climate social fund according to the ideas of the member states: “The ETS2 will be extremely unpopular with the citizens,” he says. “If we don’t at least use the money to help poorer people, we risk accepting the whole reform.”
Stricter emissions trading
The greatest benefit of the reform for the climate is that industry has to save more CO2 than before. The number of certificates issued is currently falling by 2.2 percent each year. In the future it should be 4.2 percent. In addition, millions of certificates are to be taken directly from the market. Any change in the number of allowances can mean enormous costs for the industry and at the same time save huge amounts of CO2.
The same applies to the discontinuation of free allocations: Many sectors have so far received CO2 certificates free of charge because they are in international competition and would be disadvantaged by the CO2 price. In the future, this should only be the case in exceptional cases such as in the chemical industry.
Other sectors, including electricity producers and the steel industry, should no longer receive free certificates. Instead, a CO2 price is also to be levied on imported goods such as electricity and steel as part of a “CO2 border adjustment”.
For the steel industry, the issue of free allocation of emission allowances for exported goods is particularly relevant.
(Photo: dpa)
The bottom line would be a fair market within the EU. There was already a basic agreement on this last Tuesday. It still needs to be clarified how quickly the free allocations will expire.
>> Read here: RWE earns a lot from the continued operation of two lignite units
Export assistance for the steel and aluminum industry
For the steel and aluminum industry, it is not only crucial that they are protected from cheap competition from abroad by the CO2 border adjustment. They want to continue to be able to offer their goods under fair conditions on the world market. Manufacturers are therefore demanding that they continue not to have to buy CO2 certificates for the products they export.
If they had to pay, their export business would probably collapse. Climate protectors see it too like this: “For exports, free allocations are still needed,” says Buck from Agora Energiewende. “This is the only exception that should remain permanent.” Such a negotiation result is indicated, but is not yet certain.
More: EU agrees on dreaded climate protection instrument – associations warn of damage to industry.