Context: 

A European Climate Law writes into law the goal set out in the European Green Deal for Europe’s economy and society to become climate-neutral by 2050. The law also sets the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

A so called ‘Fit for 55’ package submitted to the European Council in July 2021 is being discussed across several policy areas, such as environment, energy, transport and economic and financial affairs, with a range of measures likely to be legislated.

These include further development of the EU Emissions Trading system and the launch of a Carbon Border Trading Mechanism to prevent the emissions reduction efforts of the EU being offset by increasing emissions outside its borders through relocation of production to non-EU countries (where policies applied to fight climate change are less ambitious than those of the EU) or increased imports of carbon-intensive products.

This summer EU Climate and carbon trading legislation has been paused following defeat in the European Parliament Plenary session for a revised EU Emissions trading system that would target the emissions coming from road transport and buildings, but exempting private buildings and private transport until 2029. This ETS file will be referred back to the environmental committee in a bid to reach a new compromise and bring it back to Parliament possibly after the summer.

Rejection of the ETS report led to the postponement of two other key votes: one on the Social Climate Fund, which would be partially financed by revenues obtained from selling ETS permits, and another on the Carbon Border Adjustment Mechanism (CBAM). With the three files clearly interlinked all three proposals will go back to discussions at committee level before a new compromise is put forward to the whole chamber in the autumn.

Resolution Criteria:

This question will be resolved with an official announcement by the European Council that legislation applying a carbon border adjustment mechanism, passed by the European Parliament, has been adopted.

Further Reading:

The EU 'Fit for 55' package

The net-zero transition: What it would cost, what it could bring - Mckinsey

Joint Statement by Executive Vice-President Timmermans and US Special Presidential Envoy for Climate Kerry following the 6th EU-US High-Level Climate Action Group

U.S.-EU Joint Statement of the Trade and Technology Council 16 May 2022 Paris-Saclay, France