Today the European Parliament failed to rally behind a competitive and climate-neutral future for EU industry.
By a narrow margin, MEPs voted in plenary against scrapping free carbon emissions allowances under the EU’s Emissions Trading System once a planned carbon border mechanism is in place. 334 MEPs voted to keep free allowances, 329 against and 23 abstained. They were voting on a non-legislative ‘own initiative’ report.
Heavy industries like cement, steel and chemicals, which represent 94% of EU industrial emissions, get many emissions allowances for free to try and stop them relocating outside Europe - known as ‘carbon leakage’. But the EU is set to introduce a carbon border adjustment mechanism (CBAM) to tax imports from countries where climate rules may be less strict. Should industry continue to get free allowances - as they are lobbying for and MEPs supported today - even after the CBAM comes in, it would amount to a double subsidy for those sectors, and a disincentive to decarbonise. It would also unfairly push the cost of the EU’s climate rules onto third countries.
Camille Maury, Policy Officer at WWF European Policy Office said:
“A slim majority of MEPs appear not to have grasped that polluters must pay to bring us out of the climate emergency. Today’s result would do the opposite: pay polluters to keep pumping out emissions, while pushing the cost onto non-EU countries. The Commission must correct this in its upcoming proposal, so that industry does not get compensated for “risk of carbon leakage” twice, but acts on the climate crisis.”
The EU Commission is due to make a proposal for a carbon border adjustment mechanism in June, with the mechanism due to kick in during 2023. The Commission will assess scenarios for a smooth transition from free allocation of allowances to CBAM.
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