This agreement “makes it clear to European industry that it is profitable to invest in green technologies”, according to the rapporteur.
The European Parliament approved on Tuesday, April 18, a set of ambitious measures for the climate, in particular a reform of the carbon market which should increase the cost of the right to pollute in Europe. The objective for the European Union is to reduce net CO2 emissions by 55% by 2030 (compared to 1990).
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For this, there has been, since 2005, a market system that imposes a carbon price on energy-intensive industries, so the right to pollute has a cost for them. The reform voted on Tuesday reinforces this process: since it plans to reduce the number of pollution permits, to gradually eliminate from 2026, free CO2 emission quotas and to extend this carbon market to new sectors. For the rapporteur of the text, “This agreement sends a clear signal to European industry that it pays to invest in green technologies”.
The carbon market so far concerns 110,000 power plants and factories whose production is very energy-intensive (such as the steel industry or the production of cement). And this carbon market system should gradually extend to the maritime sector, to the air sector for intra-European flights. And another novelty: households will also pay indirectly, a carbon price on fuel and heating from 2027 or 2028. A European social fund should be set up in 2026, to mitigate the consequences of the reform for the most modest .
Anticipating price increases from 2027
Since 2017, this system has significantly reduced CO2 emissions, particularly in the electricity production sector. For Thomas Pellerin Carlin, Europe director at the Institute for Climate Economics, the system works well when it is large industrial groups that are subject to this CO2 market. But for him, “Making the price of carbon weigh on smaller economic actors, and on households, is a riskier bet socially, and more uncertain on the climate level”.
We will have to seriously anticipate the rise in fuel, gas and fuel oil prices, from 2027, he warns, and support households so that they can adapt and equip themselves, for example, with electric vehicles, heat pumps, or in terms of home insulation.