Soaring energy prices intensify backlash against Brussels carbon tax plan



Climate Change Updates

Soaring gas and electricity prices in Europe have intensified the political backlash against Brussels’ plan to extend carbon taxes on gasoline and heating bills, threatening a policy central to the will of the EU achieve net zero emissions by 2050.

EU energy ministers will meet in Slovenia on Wednesday to discuss Europe’s record energy costs, which have prompted some governments to prepare billions of euros in emergency aid for struggling households.

The price squeeze has emboldened countries like Spain and France who are firmly opposed to the planned overhaul of the EU’s carbon pricing system. They say it will push poorer households further into fuel poverty by increasing household and gasoline bills.

As part of its Green Deal package to reduce greenhouse gas emissions, the European Commission has proposed to extend the EU carbon market to cars and heating of buildings, including homes. Some European Parliament lawmakers are now considering dropping the plan and replacing it with alternative measures such as tighter regulations.

Pascal Canfin, French MEP and head of the European Parliament’s environment committee, which is due to approve the committee’s green package, said his centrist group Renew Europe was working on plans to ‘recalibrate’ the trading system. emission allowances (ETS) of the block to prevent a “yellow vests 2.0 “- a reference to the revolt against planned increases in the gasoline tax in France which began in 2018.

“I am not convinced by the need to expand the ETS,” said Canfin, whose concerns about the social impact of the measures are shared by some environmental NGOs, the Greens in the European Parliament and central governments. left of the EU.

The Green Deal includes 13 policies designed to reduce EU emissions by 55% by 2030 from 1990 levels, to drop to net zero by 2050.

The plan to extend ETS to consumer sectors such as cars and housing would increase gasoline and energy prices as companies will be forced to buy carbon credits to cover their emissions. Brussels has also proposed a € 30 billion fund to help compensate those hardest hit by the changes.

Internal EU estimates suggest that a carbon price of € 50 per tonne on gasoline and heating buildings would impose a cost of € 40 billion on the companies concerned. “We can afford this increase,” said a senior EU official.

Canfin said the ETS extension could be made more acceptable if the rise in the price of CO2 was not borne by domestic tenants but only focused on commercial buildings. Another option would be to exclude gasoline from the ETS and tighten emissions targets for the automotive industry.

“We have to try to make it work because if it doesn’t, I’m afraid it will damage the whole [Green Deal] package, ”he said.

The commission is resisting sweeping changes to its plans, arguing that extending carbon pricing is the only way to cut emissions in sectors such as transport, whose carbon footprint has increased over the past decade.

“If the ETS extension disappears, that leaves a big hole that will need to be filled,” the EU official said. “You can’t just replace an instrument like the ETS with a new target. “

Disputes over how best to design a carbon pricing mechanism are expected to last for months as governments and MEPs debate their positions on the ETS and on separate plans, including emissions targets for cars, a carbon tax at EU borders and binding greenhouse gas targets at national level.

The Brussels plan for a 30 billion euro social climate fund has sparked opposition in so-called frugal northern states such as the Netherlands and the Nordic countries, which oppose financial transfers which, according to the commission, are crucial for social equity. But countries in the South and East are pushing for a bigger pot to limit the regressive impact of rising carbon costs.

Nicolas Schmit, European employment commissioner, told FT that Brussels would supplement the climate fund with additional measures to mitigate the social impact of climate policy, including plans for retraining workers.

“We won’t leave anyone to fend for themselves, neither when it comes to paying their energy bills, nor when it comes to preparing for the new ‘greener’ jobs,” Schmit said.

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