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EU countries splinter in hunt for deal on new climate laws
Global Banking & Finance Review®
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By Kate Abnett
LUXEMBOURG (Reuters) -European Union countries struggled to agree on new legislation to help combat climate change on Tuesday, with disagreements over how tough the laws would be and how to help poorer citizens shift away from fossil fuels.
Environment ministers from the EU’s 27 members met on Tuesday in Luxembourg to negotiate their joint positions on more ambitious laws to reduce planet-warming emissions, including reforms to the EU carbon market and a 2035 phase-out of new fossil fuel-powered cars.
“Nobody’s going to leave the room without a bit of pain,” EU climate policy chief Frans Timmermans said, adding that he was hopeful the ministers would reach a deal.
The raft of new laws is designed to deliver the EU’s 2030 target of reducing net emissions by 55% from 1990 levels. What ministers agree will set their position for negotiations with the EU Parliament on the final laws.
But countries were at odds over the plans, with talks set to resume in the afternoon after a first round of negotiations did not yield a deal. One point of contention is a fund to shield poorer households from CO2 costs under a new EU carbon market.
Brussels’ proposal would introduce costs on polluting fuels used in transport and buildings from 2026. It has faced resistance from countries such as Poland who fear it could add to soaring energy bills.
Ministers disagreed on Tuesday over the size of the new fund. The Commission proposed it contain revenues from a quarter of the CO2 permits sold in the new carbon market – expected to yield roughly 72 billion euros ($76 billion) from 2025-2032.
Wealthier states, who would receive less from the fund than they pay into it, say that is too big. Germany made a compromise proposal on Tuesday of 48.5 billion euros, which won support from Denmark and the Netherlands but was opposed by countries including Poland – who along with other central and eastern countries, wants a bigger fund.
France, which is chairing the ministers’ meeting, proposed delaying the new carbon market’s launch to 2027, in a bid to win support from sceptics. Any deals need to win support from a majority of EU countries, who must together represent at least 65% of EU citizens.
An EU plan to effectively ban new combustion engine car sales from 2035 got a boost on Tuesday when Germany, the bloc’s biggest car market, backed the proposal, despite opposition expressed by the German finance minister last week.
Environment minister Steffi Lemke told the EU meeting Germany would back the goal if a separate proposal is made to allow cars running on “CO2 neutral” fuels to be sold after 2035.
Italy, Portugal, Slovakia, Bulgaria and Romania want the car target delayed to 2040, however, according to a document seen by Reuters.
The average lifespan of new cars is 15 years, and Brussels has warned a later ban would stop the EU reaching net zero emissions by 2050, the global milestone scientists say would avert disastrous climate change.
($1 = 0.9454 euros)
(Reporting by Kate Abnett; additional reporting by Marine Strauss; Editing by Lincoln Feast, Angus MacSwan and Raissa Kasolowsky)
A carbon market is a trading system where countries or companies can buy and sell allowances for greenhouse gas emissions, aiming to reduce overall emissions through market mechanisms.
Sustainability refers to the practice of meeting current needs without compromising the ability of future generations to meet their own needs, often focusing on environmental, social, and economic dimensions.
Fossil fuels are natural substances formed from the remains of ancient plants and animals, primarily consisting of coal, oil, and natural gas, which are used for energy production.
A phase-out plan is a strategy to gradually eliminate the use of certain products or practices, such as fossil fuel-powered vehicles, over a specified period to promote sustainability.
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