EU ETS vote stalls over dates of free allocation phase out

Bundle of ETS reforms includes inclusion of shipping, but disagreement over dates delays progress

Political differences have hindered the European Parliament voting on how to bring shipping into the European Trading Scheme.



European Members of Parliament (MEPs) met this week in Strasbourg to vote on potential sweeping amendments to the ETS to help bring it in line with the EU Fit for 55 packages and ambition.


However as MEPs rejected the report on the revision of the ETS, three draft laws have been put on hold.



Draft legislation on the Emissions Trading System (ETS) reform was referred back to committee after Parliament rejected the report by 340 votes to 265, with 34 abstentions.  



A potential EU Carbon Border Adjustment Mechanism (CBAM) was referred back to committee ahead of the votes on the amendments. The CBAM is being proposed to ensure there is no carbon leakage when manufacturers order tools and services in non-EU countries that could be more greenhouse gas intensive.



In a press conference, Pascal Canfin, chair of the Environment, Public Health and Food Safety Committee said the key disagreement relates to the start of the phase out of the free allocations under the ETS, and the date for the introduction of the carbon border adjustment mechanism.



He said that one vote was to start the CBAM in 2025, and end free allocations in the ETS in 2030, but this was voted down, as expected, he said. Then the idea was to vote on starting free allocation phase out in 2026, and CBAM fully implemented by 2032.


In the end, he says the starting point for phasing out free allocations will be between 2026 and 2028.


Also MEPs were to vote in plenary on the amendments to the Social Climate Fund legislation, but the final vote was adjourned pending political agreement on the future of the ETS reforms as the Fund and ETS are interlinked.



Parliament’s rules of procedure provide for the possibility, upon request by a political group or Members reaching at least the low threshold, to refer a file back to committee for further consideration.



As a result of the stalling, the committee on the Environment, Public Health and Food Safety will first discuss the matter  among political groups’ coordinators, in order to find a way forward on the files, with the aim of quickly adopting Parliament’s position on the texts and starting inter-institutional negotiations relating to the ETS.



The European Parliament press office confirmed a new vote is already scheduled for June 22nd when MEPs meet in plenary in Brussels.

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