EU Approves Additional Free CO2 Permits to Support Heavy Industries
EU Proposal for Additional Free Emissions Permits
By Kate Abnett
Background and Rationale
BRUSSELS, Sept 16 (Reuters) - European Union countries on Wednesday backed proposals to give more free emissions permits to heavy industries over the next few years to help struggling companies to stay economically competitive.
Details of the Proposal
• EU countries backed a proposal by the European Commission to give industries an extra 121 million free CO2 permits over 2026-2030, based on their heat production and fuel use, the council of the EU said in a statement.
Estimated Financial Impact
• That could save companies about €8.25 billion ($9.52 billion) in carbon costs, Reuters calculations show, and would give companies more free permits than the European Commission had originally proposed.
Industries Benefiting from the Permits
• The beneficiaries would include chemical producers, metals processing companies and ceramics and glass makers.
EU Emissions Trading System (ETS) Context
How the ETS Works
• Under the EU's Emissions Trading System (ETS) heavy industries have to buy permits to emit CO2, providing an incentive to emit as little as possible. But there is also a pool of free CO2 permits to help companies to compete with foreign rivals that do not pay emissions costs.
Temporary Increase in Free Permits
• The EU plan will temporarily add extra permits to this free allocation despite the ETS being designed to reduce free permits gradually to ensure emissions decrease over time.
Next Steps and Broader Reforms
Negotiations with the European Parliament
• EU countries will negotiate the final rules — known in EU jargon as the ETS "fall-back benchmarks" — with the European Parliament. The negotiations are being fast-tracked to reach a final deal this year.
Future ETS Reforms
• The EU is also negotiating broader reform of its ETS, aiming for a deal in 2027.
Currency Conversion
($1 = 0.8668 euros)
(Reporting by Kate AbnettEditing by David Goodman)
