EU Parliament votes to retain free CO2 quotas for industry

(EurActiv, 10 Mar 2021) The European Parliament has rejected proposals to phase out free CO2 pollution credits for industries covered by the EU’s Emissions Trading System (EU ETS), even as the bloc plans to gradually replace the scheme with a carbon levy at its border.

The move came as lawmakers voted on Tuesday evening (9 March) on plans to impose a carbon charge on imports of goods coming into the European Union, as a way to shield EU industries from environmental dumping.

Although the vote does not introduce new legal obligations for companies – a formal proposal on the EU’s border levy is expected in June – it reflected deep divisions within the EU assembly.

By a narrow margin, Parliament voted against scrapping free carbon emissions allowances under the ETS once a planned carbon border adjustment mechanism is in place.

A total of 334 MEPs voted to keep free allowances, 329 against and 23 abstained.

The European Commission will unveil its proposal for a carbon border levy in June as part of a package of climate laws aimed at cutting the EU’s CO2 emissions by 55% by the end of the decade.

“It’s a matter of survival” for EU industry, said Frans Timmermans, the European Commission’s climate chief, who warned about the risk of “carbon leakage” if companies were to leave Europe to avoid the cost of the bloc’s emissions-cutting policies.

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EurActiv, 10 Mar 2021: EU Parliament votes to retain free CO2 quotas for industry