Brussels (Brussels Morning Newspaper) – Germany, the Czech Republic, and 14 other nations are pushing the European Union to implement tougher price controls on its new carbon market. They’re concerned that the policy will drive up consumers’ bills, Reuters reported.
With backing from enough countries to meet the “qualified majority” required to pass EU laws, the proposal seeks to push the European Commission to overhaul the EU’s carbon market for transport and heating fuels, set to launch in 2027.
Why are countries urging stricter carbon price controls?
“To address the legitimate concerns around price uncertainty and social impacts and to strengthen the public acceptance of the system, improvements should be considered already prior to the market’s launch,”
The paper said.
Under the new EU carbon market, suppliers of polluting fuels used in cars and buildings will face a CO2 price. If the price reaches 45 euros, the market will release additional CO2 permits to help control costs.
Some countries are proposing to boost this, by adding more CO2 permits to the market if prices surge.
Additionally, the EU should bolster a special “reserve” that issues extra permits to the market when supply is tight, along with other reforms, such as launching carbon permit auctions ahead of schedule, to provide a glimpse of prices, according to the proposal.
Other countries, including Austria, Belgium, Bulgaria, Croatia, Estonia, Italy, Latvia, Lithuania, the Netherlands, Poland, Romania, Slovakia, Slovenia, and Spain, have also signed the document. Some countries, such as Poland and the Czech Republic, have previously expressed concerns that the policy could spark a backlash against aggressive climate change measures if it drives up fuel costs.
Could high CO2 costs threaten climate policy support?
Europe‘s agreed to put billions of euros from the new market into a fund to help citizens cover their bills, subsidize electric cars, and make energy-efficient home upgrades. This year, the EU has scaled back its green policies in response to growing pushback on its environmental agenda.
So far, the EU hasn’t softened its core targets for cutting emissions. However, the Commission is reportedly considering easing up on a planned climate goal for 2040 in order to win over skeptical countries. The EU Commission plans to propose this 2040 climate target on July 2.
