European Union negotiators reached a deal on Sunday that will see the bloc reduce its CO2 emissions faster while accelerating its carbon market. In addition, the agreement will introduce new CO2 costs on fuels used in road transport and buildings which will come into effect in 2027.
Currently, around 10,000 European power plants and factories are required to purchase CO2 permits when they pollute. By enforcing such purchases, the EU hopes to build towards its goal of cutting its net emissions by 55% by 2030 compared with 1990 levels.
From 2026 to 2034, the EU will plan to phase out the free CO2 permits that it gives to industries in an effort to protect them from foreign competition. Instead, the EU plans to introduce a carbon border tariff, thereby maintaining a barrier to foreign competition while encouraging a reduction in emissions for local firms.
“From 2027 on, it’s crunch time. Everybody needs to reduce emissions by then or will have to pay a lot,” European Parliament’s lead negotiator Peter Liese stated following the conclusion of the deal. Liese expressed his hope that the earlier deadline would push European companies to invest in green energy.