The European Green Deal is the EU’s long-term plan to achieve climate neutrality in Europe by 2050. To achieve this target, Europe must reduce emissions by at least 55 % by 2030 compared to 1990 levels. This commitment on the revision of the Emissions Trading Scheme (ETS) and the creation of the Social Climate Fund is a key step in the implementation of the Commission’s Fit for 55 package, which seeks to comply with the European Green Deal. This agreement is in addition to other recent conventions related to aviation emissions trading, CO2 emission standards for vehicles and land use regulations, as well as the Carbon Border Adjustment Mechanism.
Since the implementation of the EU Emissions Trading Scheme (EU ETS) in 2005, emissions in the included sectors, such as electricity generation, heat and energy-intensive industrial installations, have decreased by 34.6 %. In 2021, these installations accounted for approximately 40 % of total EU emissions. Therefore, strengthening EU ETS rules is crucial for the EU to meet its climate objectives.
In this context, in December 2022, it was decided to step up the ETS by adopting Directive (EU) 2023/99 of the Parliament and of the Council amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 on the establishment and operation of a market stability reserve under the scheme for greenhouse gas emission allowance trading within the Union.
This legislative text, which entered into force on 10 May 2023, strengthens the EU ETS by setting a price for CO2 and lowering the allowable emission limit in various sectors such as electricity generation, heat, energy-intensive industry and commercial aviation. This agreement is expected to achieve a 62 % reduction in emissions from EU ETS sectors by 2030 compared to 2005 levels, representing a significant increase of 19 % compared to current legislation. In addition, the pace of annual emission reductions will be accelerated.
Measures for maritime transport are also included, making the EU the first territory to apply an explicit carbon price to these emissions. From 2027 onwards, a separate emissions trading scheme will be implemented for the use of relevant fuels in buildings, road transport and certain industrial sectors, with the aim of supporting emission reductions in these sectors.
In addition, the Carbon Market Stability Mechanisms will be strengthened, free allowances for certain companies will be phased out and safeguards will be put in place to avoid double pricing and allow the release of additional allowances on the market when prices exceed certain thresholds.
Finally, the Directive also implies an increase in the size of the Innovation and Modernisation Funds, which will support the transition to a more sustainable economy in the Member States, including the decarbonisation of the maritime sector.