The new carbon price will result in a emission tax produced. It will apply to gasoline, diesel and heating fuels such as natural gas.
Residents of the European Union will have to start paying for the greenhouse gases they emit. That means that you have to pay for each tank of gas and each time the heating is turned on because of the pollutants it releases.
People who properly insulate their home, buy a heat pump or opt for an electric car can benefit from subsidies from a special fund. There will also be money for people with fewer resources at their disposal, also due to inflation. More than 86 billion euros are available in this fund.
CO2 emissions must be cut by more than half
These measures are part of a package of climate laws. By 2030, CO2 emissions must be reduced by 55%. European industry, part of which is already subject to this obligation, will have to face higher emission costs, and companies outside Europe will have to pay for their emissions at the border. The money collected can be used for climate plans.
Citizens and businesses will have to start paying for the CO2 emitted by their exhaust gases and chimneys. This will go through energy companies and service stations. They have to pay the emission rights and pass the cost on to the customer who comes to fill up or turn on the gas stove.
At the end of the talks, the negotiators agreed to start setting a carbon tax resulting from the combustion of fossil fuels for road transport and heating in 2027, with a price cap of 45 euros per ton of carbon emitted which s will apply until 2030.
The deal is “even more ambitious than what the European Commission expected”, said Peter Liese, a German MEP representing the European Parliament, as it now includes “process heat” from industrial activities as well as office heating in the building. scope of the new system.
Agriculture and fishing will not have to pay an additional carbon cost because they are “sensitive” sectors, Liese said. Diesel-powered trains are also excluded from the scope of the system and will not have their carbon emissions taxed accordingly.
The new system will lead to higher prices at the pump: up to 10.5 cents for a liter of gasoline and 12 cents for diesel, according to a study from the Potsdam Institute for Climate Research.
The prices of heating fuels such as gas, fuel oil and coal will also rise, to the detriment of poorer EU Member States, which are more dependent on polluting fossil fuels.
With the current energy crisis, the new system could be delayed by a year, until 2028, if energy prices remain “exceptionally high”, Parliament said in a statement. communicated.
The provisional deal now needs to be confirmed by EU member states and the European Parliament, which will vote in plenary in January or February 2023.
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In Europe, heavy industry companies are only allowed to emit the quantities for which they have CO2 certificates. This is called the Emissions Trading System (SEQE-UE or EU-ETS in English). Each year, the EU decides how many of these “CO2 certificates” can be distributed to companies. The quantity of allowances distributed decreases each year, which reduces European emissions.
Companies are allowed to trade these allowances, hence the name Emissions Trading System. If a company produces efficiently, it can sell the remaining certificates to polluting companies that need additional rights. Thus, more economical companies are better off and there is a financial incentive to produce sustainably.
It was feared that this system would push companies out of Europe. Since European companies have to pay extra for their emissions, their products are more expensive than those of non-European companies. Due to this unfair competition, companies could choose to relocate outside of Europe. As a result, the industry got some of its allowances for free and received subsidies, which partly negated the financial incentive to become more sustainable.
The EU has found a solution to this problem: the CBAM (Carbon Border Adjustment Mechanism). When non-European polluting companies want to sell their products in Europe, they will pay at the border for their CO2 emissions. It will be implemented gradually at the same pace as the abolition of free allowances. the CBAM will therefore start in 2026 and be fully implemented by 2034.
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