Brussels, Belgium: The European Commission unveiled a vast legislative program on Wednesday to increase the cost of pollution and drive the economy towards a carbon-neutral future.
The plan will be subject to intense lobbying from industry, green activists, and member states as draft laws are finalized, but here is an outline of it as it stands:
Expanded carbon market
European companies buy and sell allowances for greenhouse gas emissions that they are assigned on the EU Emissions Trading System or ETS.
The legislative package would see the ETS expanded to cover maritime transport while creating a second parallel market for road transport and domestic heating.
This could have a direct impact on consumer prices for ordinary households and private motorists and will prove politically controversial.
Brussels plans a social fund to cushion the blow on consumers — or voters.
But average expenses of the poorest households could increase by 44 percent for transport and by 50 percent for residential heating, according to the think-tank ERCST.
The idea faces opposition from NGOs and MEPs from across the political spectrum and divides the European Commission itself.
“I’m not sure it will survive,” warned one EU diplomat.
The bulk of the pollution permits or carbon quotas now traded on the ETS originate as free allowances given to European firms to help them compete with imports from less regulated markets.
Under the proposal, the EU would charge importers the market rate for carbon permits, while phasing out free allowances granted to EU-based suppliers of steel, aluminum, cement, fertilizer, and electricity.
By treating imports and local production equally, Brussels believes it will respect World Trade Organisation (WTO) rules and counter-accusations of “protectionism”.
The number of permits in circulation will also be reduced over time to mechanically force up the price of carbon emissions, encouraging investment in greener production.
This idea might antagonize Europe’s trade partners but if it survives the Brussels horse-trading it will be phased in slowly — too slowly for green activists.
The end of the internal combustion engine
The commission’s draft would reduce permitted emissions from new passenger cars and light commercial vehicles to zero from 2035 — effecting obliging the industry to move on to battery-electric models.
Brussels promises to help build one million charging points along European roads by 2025, 3.5 million by 2030, and 16.3 million by 2050.
The drafts introduce a levy on jet fuel for flights within the EU. Private business jets and cargo planes will be exempt, due to international legal constraints.
In a separate directive, the commission would raise the — still modest — target for the use in aviation of “sustainable fuels”, those containing a share of biofuels.
In addition, airlines would gradually lose the free emissions allowances they receive for their intra-EU flights.
The EU’s energy efficiency target would be increased. Energy consumption would have to fall by at least 36 to 37 percent by 2030 compared to the current target of 32.5 percent.
Forests and ‘carbon sinks’
Brussels plans to introduce a target for carbon absorption via natural “carbon sinks” such as forests, grasslands, and peat bogs, set at 310 million tonnes of CO2 equivalent by 2030 for the EU as a whole, with binding targets for each member state from 2026.
To counter the effects of regulations on the poorest households and to fight fuel-linked poverty or social inequalities in transport, Brussels will propose the establishment of a “social climate action mechanism”, a fund fed by revenues from the new planned parallel carbon market.