EU Reforms the Carbon Market

UE

The 27 Member States approved five key texts of the EU’s climate plan on Tuesday night, agreeing in particular on the amount of a fund that is supposed to cushion consumers from the impact of a carbon market extended to cars and housing.

Meeting in Luxembourg, the European Union’s environment ministers adopted their common position on the objective of zero emission new cars by 2035, the distribution of climate efforts between States and the imposition of targets for natural “carbon sinks” (forests, etc.), before talks with MEPs to finalize these texts.

But the proposal for a “social climate fund”, another key part of the plan presented by the European Commission in July 2021, was the subject of bitter negotiations late into the night, threatening to block agreement on the other texts of the package.

The European plan is to oblige fuel and heating oil suppliers to buy allowances covering their CO2 emissions on a new carbon market, as is already the case today for electricity suppliers and certain industries.

Concerned about the additional costs for small businesses and the most vulnerable households, Brussels is proposing a “social fund” fed by the revenues of the new “housing and road transport” carbon market, in order to compensate for the impact of price increases, via “temporary” direct aid and the financing of work to reduce their energy consumption.

The EU-27 agreed on the principle, but disagreed on the size of the fund. Brussels was aiming for an amount of 72.2 billion euros for 2025-2032: far too high for a group of so-called “frugal” states (Germany, Denmark, the Netherlands, Finland…).

The EU finds a compromise

Berlin had proposed to reduce the share of the revenues from the new carbon market allocated to the fund to a mere 20 billion euros, so that a larger share of these revenues would go to national budgets. Germany had finally raised its proposal on Tuesday to 48 billion.

On the other hand, many Eastern and Southern European countries found the social mechanism largely insufficient. France, which holds the rotating presidency of the EU, has rallied the majority of states to a compromise of 59 billion euros for a shorter period (2027-2032). 11.5 billion from the carbon market revenues that were initially intended for the European “innovation fund”.

This strategy has increased the level of the social fund without further eroding the revenue from carbon emissions accruing to the states, the red line of the “frugal”.

Paris praised a “fairly balanced compromise”, noting that the Innovation Fund was “rather intended” for the rich regions, which should not suffer too much from seeing it cut. The agreement did not convince Poland, which denounced “decisions that risk undermining popular support for the climate plan. Latvia is also concerned that the fund is “too small and unable to respond to the challenges faced” and hopes that it will be increased during the upcoming negotiations with the Parliament.

Reform of the carbon market

States also agreed on Wednesday to phase out the free emissions allowances granted to certain industrial sectors, as a carbon tax on imports from third countries is phased in at the EU’s borders between 2026 and 2035.

The Council proposes a much more gradual pace of reduction than that advocated by Brussels and MEPs. The free quotas allocated to airlines would be eliminated by 2027.

Finally, the EU-27 have validated the inclusion of maritime transport in the carbon market, but with “transitional” arrangements for winter navigation, “public service” routes and services to small islands.

Articles qui pourraient vous intéresser

centrale sans émissions

Spain wants to Tax Emission-Free Power Plants

Spain wants to introduce a law to tax emission-free power plants. The latter would have received many benefits due to the tension in the energy markets in general. The Russian invasion of Ukraine has impacted the various energy markets. Electricity prices are rising exponentially due to the unpredictability of Russian deliveries. Russia is the main supplier of oil and gas to Europe. This, in turn, has prompted country governments to intervene. A tax for emission-free power plants Spain wants to introduce a tax on zero-emission power plants, arguing that they have benefited from the rise in electricity prices. This increase is due to the fact that these zero-emission plants are exempt from paying for pollution permits. These are needed to burn fossil fuels like gas and coal. For example, Spain is working on a law to require companies that operate these zero-emission plants to make payments to the state to reflect the situation of fossil-fuel plants. The country says the money raised will be reinvested in the electricity system for the benefit of consumers. Spain estimates that this measure could generate 1.6 billion euros per year. The big industrial groups oppose this bill and refer to the EU The industry...

Pemex

Pemex reviews its Crude Export Strategy

According to its latest monthly report, Mexico's state-owned oil company Pemex is increasing its crude exports to the North American market. This redefinition of the export policy is accompanied by a significant reduction in shipments to Europe and Asia. This change can be understood from the US domestic demand for oil. Pemex's geographic redeployment First, Pemex reports crude exports of 965,000 barrels per day (bpd) for the month of May. About 740,000 bpd are going to the American continent. The United States is the main recipient of Pemex's shipments to the continent. Pemex's May exports in the Americas should be compared with April's data. Thus, the company shipped 594,000 bpd to the region, out of a total of 1.02 million bpd. Second, Pemex's exports to other continents are declining. For Europe, they represented 32,000 bpd in May. This number was 100,000 bpd in April. As for Asia, particularly the Far East, Pemx crude shipments fell to 192,000 bpd in May from 330,000 bpd in April. The context of U.S. demand First of all, Pemex does not explain the changes in exports to its partners. An understanding of the oil environment in the United States can lead to some explanations. The...

Pétrole_Russie

Oil up slightly ahead of Opec+ meeting

Oil was trending slightly higher ahead of Thursday's meeting of the Opec+ oil exporting countries. This comes against a backdrop of strong demand and threats to supply in several producing countries. By 10:30 GMT (12:30 in Paris), a barrel of Brent North Sea crude for August delivery was up some 0.17% to $118.18. The barrel of U.S. West Texas Intermediate (WTI) for delivery in the same month was up 0.36% to 112.17 dollars. "Demand is holding up well as we approach the peak of the summer season" with lots of travel, says Stephen Brennock, an analyst for PVM Energy. "At the same time, the short-term supply outlook is marked by a shortage," he continues. The 23 members of Opec+ (the Organization of the Petroleum Exporting Countries and its allies) are meeting on Thursday by video conference, to decide on a further adjustment of their total volume of black gold production. Analysts expect a status quo despite numerous calls for action. Opec+ spare capacity reported this week as much lower than expected, reinforcing concerns about the offer," says Stephen Brennock. The state of production capacity in some Opec+ countries The United Arab Emirates assured that they were at the maximum of...

prix des carburants

Battle of proposals to curb fuel prices

The battle of proposals is raging between the government and the opposition to curb the rise in fuel prices. Purchasing power will be at the center of the debate in Parliament. The executive is currently considering extending the 18 cent/litre discount applied since April until the end of August. He is also thinking about a targeted mechanism for heavy rollers. Debate on fuel prices The Minister of Economy Bruno Le Maire proposes to "discuss with all those who wish to do so in the National Assembly". It wants to extend the 18 cent per liter discount, which was due to expire in August, until the end of the year. Mr. Le Maire also asked earlier this week for an effort from the giant TotalEnergies to extend or increase its own 10 cent discount per liter. He says he favors such direct action over a one-time tax on the record profits of the energy giant and other large companies that benefit from inflation. It is not certain that this will be enough to satisfy the oppositions. As the vacations approach, gasoline and diesel prices at the pump remain high very high, despite the state-funded discount. Last week, even if they had...