There were turbulent scenes in the plenary of the European Parliament on 8 June 2022: the vote on Parliament’s position on the Emission Trading System did not result in a majority for the final report. As a result, voting on the Social Climate Fund and the Carbon Border Adjustment Mechanism was suspended and all three dossiers were referred back to the Environment Committee.
Almost a year ago – in July 2021 – the EU Commission presented a comprehensive legislative package called “Fit For 55”, the aim of which is to reduce greenhouse gas emissions by 55 % by 2030. A key dossier is the reform of the Emission Trading Systems (ETS), which is to be extended to heating and road transport. A Social Climate Fund shall be set up at the same time to lessen the negative impact on vulnerable households. Apart from that, the aim is to create a Carbon Border Adjustment Mechanism to prevent the production of carbon-intensive goods in countries with less strict environmental regulations. The current allocated free allowances for companies within the scope of the Emission Trading System to avoid production from being relocated to countries with less strict regulations, shall gradually be phased out on the introduction of this border adjustment.
Lobbying to water down climate targets has been successful
Whilst during the vote in the leading Environment Committee on 17 May 2022 the gradual phasing out of free allowances from 2024 to 2030 had been demanded. Now, in the plenary, a majority of MEPs around the European People’s Party (EPP) voted in favour of an amendment, which would have set back this phasing out for four years – from 2028 to 2034. Hence, the lobbying tsunami regarding these legislative proposals, which some MEPs had bemoaned, had been successful. However, the final vote in the European Parliament on the full version of the report did not result in a majority for the latter.
Tense atmosphere in Parliament
That 340 MEPs and thereby the majority in the plenary refuses to give full backing to a final report is a rare occasion, which can be compared to a political earthquake in Strasbourg. The last known example concerned the vote in plenary on the mobility package in July 2018. Whilst then the fronts were to a lesser extent drawn through the groups in Parliament, but more between MEPs of different Member States, the opposite is the case in respect of the ETS: the groups of Social Democrats, Greens and the Left almost unanimously voted against the final report on ETS, the MEPs of the European People’s Party (EPP) and the Liberals almost unanimously in favour. The majority against the report was reached due to the fact that also both right-wing groups in the EU Parliament voted against the final report, which resulted in EPP MEPs accusing the groups of Social Democrats and Greens of cooperating with the Far Right. However, in doing so they are overlooking the fact that the approval of the Far Right at the same time was necessary to reach the majority of those amendments, which significantly weakened the proposal’s climate ambitions.
By referring the dossiers back to the Environment Committee, the negotiations are back to square one and the current heated atmosphere is unlikely to make finding compromises easier. However, the plenary has adopted the final reports for five other dossiers of the “Fit For 55” package, including the one on CO2 standards for cars, which confirmed the Commission Proposal on the ban of selling cars with combustion engines from 2035. Regarding these dossiers, the final negotiations with the Council can begin, when it has determined its general approach.