Senior members of the European Parliament’s environment committee have reached initial agreement on a plan to restrict market speculators’ access to the European carbon market, as well as to tighten the carbon market by pushing for a 67% cut in emissions by 2030.
Christian Democrats, Liberals, and Conservatives in the committee agreed to propose that by January 2025, only polluters in the EU Emissions Trading System and their financial intermediaries would be able to operate accounts in the carbon registry used to transfer EU Allowances.
The European Commission will be required to publish an assessment of the restrictions by July 2023, and to recommend adjustments if the limits are deemed to be negative for the market.
The plan will be voted by the committee on next Tuesday, and by the entire EU Parliament in June. The ultimate version of the carbon market reform would also require the support of 27 member states and the Commission.
The EU ETS reform, proposed by the Commission in July, aims to align the cap-and-trade system with stronger climate targets for 2030. It plans to expand the scheme, which currently covers approximately 11,000 facilities owned by manufacturers, power producers, and airlines, into shipping.
The majority of political groups on the environment committee want to accelerate emission reduction faster than the Commission recommends. The Socialists and Democrats, Greens, Renew, and The Left want to tighten the emission cap, introducing a one-off cut of 205 million allowances, so that the EU ETS can reach a 67% carbon reduction by 2030, rather than the Commission’s recommended 61%.
According to Peter Liese, a German Christian Democrat MEP, such proposal is unlikely to survive a plenary vote in the following step. He added that the Christian Democrats and Conservatives oppose tightening the cap at a time when Europe has to use coal to substitute Russian gas as a result of Russia’s invasion of Ukraine, which pushes up the demand of emission allowances.