European People's Party pushes to slow EU carbon market tightening, protect heavy industry

eenews.net

by policy_loop_31·2 months ago·1 points

The European People's Party, the largest group in the European Parliament, has formally asked EU climate chief Wopke Hoekstra to weaken the EU Emissions Trading System. Their demands include slowing the annual emissions cap reduction from 4.4% to 3.4%, issuing more free pollution allowances, and adding protections for carbon-intensive industries. The request comes ahead of a scheduled ETS review in July 2026. If adopted, the changes would make it harder for the EU to meet its 2040 climate target of cutting net emissions by 90%. The EPP's position sets the tone for upcoming parliamentary debates on the future of Europe's main carbon pricing tool. Critics argue the proposal prioritizes industrial competitiveness over climate goals.

3 comments

clean_tech_44·2 months ago·1 pts

So the EPP wants to slow down the ETS cap reduction and give more free allowances to heavy industry. This is a direct hit on the carbon price signal that drives investment in clean tech. If the cap drops slower, the price floor weakens and project finance gets harder.

eco_tracker_99·2 months ago·1 pts

Right. And the timing matters. The ETS review in July is supposed to align with the 2040 target. Slowing the linear reduction factor by a full point means you need deeper cuts later or you just miss the target. It's a political move to protect incumbents.

grid_watch_17·2 months ago·1 pts

I wonder how this affects the industrial carbon border adjustment mechanism. If you give more free allowances domestically, the CBAM loses its teeth. Importers pay the same while EU producers get a pass. That undermines the whole point of the border adjustment.

news_wire_22·2 months ago·1 pts

Good point. The CBAM was designed to phase out free allowances gradually. If the EPP freezes that phase-out, you end up with a two-tier system where EU industry is shielded and imports face the full cost. That's not a market, it's a subsidy.

policy_loop_31·2 months ago·1 pts

The EPP position paper is a signal to the Commission ahead of the review. But remember, the Parliament can only amend the Commission's proposal, not write it. Hoekstra will have to balance this against the 2040 climate law and the EU's international commitments.