Two of its flagship proposals for the «Green Agreement», legislative initiatives which will «Answer» The Commission has managed to weaken climate change and its effects.
The long-awaited revision of the Emissions Trading System (ETS) and the plan to strengthen energy transition are no longer a priority for the climate, but for the European industry.
In particular, changes in the pollution trading system divided the 27 Commissioners at the College of the Commission who had to approve the reform. The final details were kept until the last minute so secret, even commissioners were invited to read the exhibition in a safe room.
Pollution trading rights
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The Emissions Trading System is considered the EU's most effective tool. to reduce greenhouse gas emissions. Since its start in 2005, it has generated revenues of over EUR 270 billion, which have been reinvested in innovation, the exemption of the industry from carbon emissions and the modernisation of Europe's energy system. At the same time, it helps Europe reduce emissions by 50% in the areas it covers. This market-based system ensures predictability in all EU countries.
However, energy-intensive industries argue that costs become unsustainable and have gained the support of an alliance of countries in central, eastern and southern Europe.
Free allowances protecting the heavy industry for more than a decade are gradually abolished, while the emission ceiling is being tightened up at a faster rate, reducing the annual licence offer by an additional 80 million tonnes – roughly equivalent to Austria's annual greenhouse gas emissions. At the current rate, no new rights will be issued after 2039.
Countries such as Greece, Italy and Poland strongly pressed for a more industrial-friendly reform, at the same time as the Nordic countries and Spain resist any weakening of EU climate ambitions. Within such an unstable geopolitical setting, they say, industries cannot have the increase in energy prices and the reduction of pollutants at the same time.
The ETS review responds to rising energy prices and fears of Europe's industrial base – along with pressure from national governments. Yesterday, the 27 Commissioners managed to agree. But from now on all 27 capitals must be convinced...
Changes are expected to have an impact on markets as well and will force Brussels to decide between two hot priorities: tackling climate change or strengthening European industry.
Reduction of energy taxes
Europe's dependence on imported fossil fuels has led to increased electricity bills. The EU is exposed to geopolitical shocks, which have led to an increase in energy prices for both households and businesses and have reduced the competitiveness of the EU.
While 70% of EU electricity It is now produced from domestic clean energy sources, the electricity demand has remained stagnant at 23% over the last decade. «Therefore, we must speed up the electricityification of energy-using sectors, especially industry, transport and buildings.»The Commission said yesterday.
As an indicative power target, the Commission sets 46% by 2040. The achievement of this objective could reduce EU expenditure. for imports of fossil fuels by EUR 260 billion per year by 2040, the Commission estimates. Eelectricity brings significant benefits to the economy, businesses and citizens of the EU. with regard to lower energy prices and competitiveness, stronger energy security and resilience.
«In order to help European manufacturers take advantage of and lead industrial discharge efforts from carbon emissions and electricity – to make the transition – we need investment on a scale», said the Commission.
In addition to the electricity target for 2030 to accelerate the transition from fossil fuels and an action plan for heating and cooling, the Commission plans to ensure that electricity is taxed less than natural gas. This is the key to providing incentives to switch to heat pumps. It also plans to introduce potential sales targets for heat pump manufacturers.
The Commission will also push countries to reduce VAT on electric cars, heat pumps and household batteries. Countries will be encouraged to use revenue intended for Social Climate Plans to finance the social rental of electric vehicles. This will help address a key obstacle to consumer participation: initial costs. There will also be improved certification of installed heat pumps, which is an issue that consumers have highlighted.
«Consumers have paid the price for too many energy crises caused by volatile fossil fuels. The Commission is right to speed up the shift towards electricity. It is the best way to protect consumers in the long term from crises in fossil fuel prices», commented the Director-General of the European Consumer Federation (BEUC), Augustine Rayna.
«Reducing taxes on electricity to make a more attractive choice than natural gas is the key. But we must ensure that those who remain connected to the natural gas network are protected from rising costs. For a long time, consumers were discouraged from investing in heat pumps or electric cars due to high electricity prices in many countries», add.
