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The European Parliament is set to confirm its position on a raft of proposals to cut planet-warming emissions faster this decade, ahead of negotiations with EU countries on final climate laws.
Among the measures is an upgrade of Europe’s carbon market, a planned tariff to impose CO2 costs on imported goods, and an effective ban on new combustion engine car sales in the bloc from 2035.
A flashpoint is the committee’s plan to speed up the phase-out of the free CO2 permits the EU gives industries to help them compete with foreign rivals that do not pay for carbon emissions and discourage industries from moving to regions with weaker climate policies. It proposes to replace them by 2030 with a carbon border adjustment mechanism (CBAM) – a new levy on imports of carbon-heavy goods like cement, steel and fertilisers.
The ban on car sales is of particular importance for the UK as the bloc remains the biggest buyer for the British industry.
According to Statista, the European Union is the main export destination for passenger cars exported by the United Kingdom.
In 2020, 54.8 percent of the cars sold by UK based manufacturers went to member states of the EU.
The European Commission, which drafts EU policies, had proposed a 2036 phase-out and the steel industry association EUROFER last week sent MEPs a statement warning against bringing the date forward.
Signed by 50 CEOs and published online, it urged them to avoid further scaling back of the current system “until the CBAM has proven its effectiveness and a solution for exports is in place.”
The EU says free permits must go when its new carbon border charge kicks in to avoid breaching World Trade Organization rules by giving European companies “double” protection.
Higher CO2 costs are a key tool in the EU’s plans to fight climate change, by giving businesses a financial incentive to cut emissions. While already-soaring EU carbon prices have hiked costs for polluters in recent years, they have also raised billions of euros for national governments’ budgets.
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Many industries want to keep their free permits for longer, however. Another statement sent to lawmakers by energy-intensive industries including EUROFER, Cefic and Cembureau also warned against cutting them faster. EUROFER will co-host a “dinner debate” for lawmakers on Monday to present its position ahead of the assembly votes.
A EUROFER spokesperson said Europe’s steel firms support EU climate goals and have 60 low-carbon projects underway, but accelerating free permits’ phase-out would boost their carbon costs, leaving them with less to invest in decarbonisation.
Farming industry group Copa-Cogeca also wrote to MEPs, warning that the environment committee’s plan was “too ambitious” and would put an “additional burden” on agriculture.
Copa-Cogeca said a faster introduction of the border carbon levy would further hike prices of imported fertilisers, which have soared in recent months amid surging gas and raw materials costs.
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Other emails showed auto lobby groups urging MEPs to oppose plans to end polluting car sales in 2035, while airport groups warned against proposals to hike CO2 costs for flights.
Jytte Guteland, who was parliament’s negotiator on the EU’s 2030 emissions-cutting target, urged colleagues to keep in mind voters calling for faster action on climate change.
“Society would prefer that we do more for climate,” she said.
With some MEPs still undecided, EU officials said the vote, happening on Wednesday, is still uncertain.
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