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European Parliament adopts position on ETS & CBAM

Today, the European Parliament plenary adopted its position on the revision of the EU Emissions Trading Scheme (ETS) and the Carbon Border Adjustment Mechanism (CBAM).

Regarding the ETS, the position was adopted with 439 votes for, 157 against and 32 abstentions. MEPs agreed on the following:

  • Increase the Commission’s overall ambition to reduce emissions in the ETS sectors from 61% to 63% by 2030, compared to 2005.

  • Extend the scope of ETS to maritime transport.

  • Remove free allowances for CBAM sectors by 2032.

  • Establish a separate new emissions trading system for fuel distribution for commercial road transport and buildings on 1 January 2024.

  • Not include residential buildings and private transport in the new ETS before 2029. Their inclusion is only subject to a thorough assessment by the Commission followed by a new legislative proposal to be agreed upon by Council and Parliament.

  • Insert a price cap of 50€ so that if the average price of allowances in ETS II exceeds this cap prior to 2030, 10 million allowances should be released from the Market Stability Reserve.

The position on the regulation establishing CBAM was adopted with 450 votes for, 115 against and 55 abstentions. It includes the following key aspects:

  • Extend the scope to cover organic chemicals, plastics, hydrogen and ammonia. Organic chemicals and polymers shall be subject to a Commission assessment of their technical specificities.

  • Extend CBAM to include indirect emissions.

  • Phase out free allowances in the ETS sectors covered by CBAM from 2027 and disappear by 2032, when Parliament wants the mechanism to be fully implemented. The free allowances should be reduced to 93% in 2027, 84% in 2028, 69% in 2029, 50% in 2030, 25% in 2031 and 0% in 2032.

  • Create a centralised EU CBAM authority.

The European Parliament is now ready to start negotiations with Member States.

For more information, please click here.


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