Brussels, 18 December 2022  

The European Parliament and the Council reached a tentative agreement to strengthen the EU Emission trading System (ETS), which will further reduce emissions and address their social impact. Indeed, the two institutions undertook to increase the overall ambition of emission reductions by 2030 to 62%, representing a substantial increase of 19 percentage points compared to the 43% reduction under current legislation. Furthermore, the Parliament and the Council agreed to include maritime shipping emissions within the scope of EU ETS. There will be a gradual phasing-in for shipping companies to return allowances, namely:

  • 40% for verified emissions from 2024;
  • 70% for verified emissions from 2025;
  • 100% for verified emissions from 2026.

The majority of large vessels will be included from the very beginning in the scope of EU ETS. Big offshore vessels above 5,000 gross tonnage will be included in the 'MRV Regulation' on monitoring, reporting and verification of CO2 emissions in the EU ETS from 2027. General cargo and offshore vessels between 400 and 5,000 gross tonnage will be included in the MRV Regulation as of 2025 and their inclusion in the EU ETS will be reviewed in 2026. The agreement takes also into consideration geographical specificities and proposes transitional measures for small islands, ice-class ships and voyages related to the outermost regions and public service requirements and strengthens measures to combat the risk of evasion in the maritime sector.

Moreover, the two institutions have established a Social Climate Fund, which will provide a targeted financial support to Member States, to help vulnerable citizens and micro-enterprises with investments in energy efficiency measures. The fund will start functioning in 2026, before the entry into force of the new ETS for transport and building fuels and will be financed by €65 billion from the EU budget, plus 25% co-financing by Member States.

The Czech minister for environment, Marian Jurečka, commented: “The agreement on the EU Emissions Trading System and the Social Climate Fund is a victory for the climate and for European climate policy. This will allow us to meet climate objectives within the main sectors of the economy, while making sure the most vulnerable citizens and micro-enterprises are effectively supported in the climate transition. We can now safely say that the EU has delivered on its promises with ambitious legislation, and this puts us at the forefront of fighting climate change globally”.

The political agreement reached on the 18th of December is provisional, pending formal endorsement.

Source: Council of the European Union