On 17 May, the European Parliament's Committee on Environment, Public Health and Food Safety (ENVI) adopted five reports of the Fit for 55 package, including on the Carbon Border Adjustment Mechanism (CBAM) and the EU Emissions Trading Scheme (ETS).
Regarding the CBAM, MEPs called for a broader scope and faster implementation to prevent carbon leakage, raising the global climate ambition. Some of the actions include:
Broadening the scope of CBAM to cover aluminium, hydrogen, polymers and organic chemicals as well as extend CBAM to include indirect emissions.
Phasing in CBAM and ending free allowances in ETS by 2030, 5 years earlier than proposed by the Commission.
Creating a centralised EU CBAM authority to help combat forum shopping from importers.
Transferring the revenues generated by the sale of CBAM certificates to the EU budget.
On the ETS reform, MEPs want to incentivise industries to further reduce their emissions andinvest in low-carbon technologies. The following actions were proposed:
Accelerate the decarbonisation of industry through ETS I. MEPs want the annual reduction of emission allowances to increase annually by 0,1 percentage points compared to the previous year until 2030, starting from 4,2 % in the year following the entry into force of this amendment.
A new ETS II for commercial buildings and transport to be established on 1 January 2025. Private buildings and private transport should not be included in the new ETS before 2029.
Free allowances to be phased out from 2026 and disappear by 2030, five years earlier than proposed by the Commission. The free allowances should be reduced to 90% in 2025, 80 % in 2026, 70 % in 2027, 50% in 2028, 25% in 2029 and 0 % in 2030.
A bonus-malus system to be introduced from 2025 so that the most efficient installations in a sector will get additional free allowances.
Targeted solidarity and support for new technologies. MEPs remind that a well-defined share of the auctioning revenue of the ETS should be used as an own resource to finance the EU budget as a general income.
Both reports will be voted at the June plenary session, after which Parliament will be ready tostart negotiations with Member States.
Several industry organisations have expressed their concerns over the ambitious reforms proposed, arguing they risk undermining European competitiveness. Unrealistic benchmarks, legal unpredictability and overburdening conditionality criteria are some of the many concerns raised by industry.