Europe's approval to the three pillars of Fit for 55:reform of the emissions trading system, carbon tax and social climate fund

The "historic vote", as the president of the EP, Roberta Metsola, defined it, is the result of agreements reached with EU countries at the end of 2022

The European Parliament gave the green light yesterday morning - Tuesday, 18 April - to the three (key) pillars of the "Fit for 55" package, the strategy to reduce greenhouse gas emissions by at least 55% by 2030, according to as provided by European climate law.The texts adopted by the European Chamber, all by a large majority, concern the reform of the system of emissions trading (ETS);the new Carbon Border Adjustment Mechanism (CBAM), the so-called carbon tax;and, finally, a Social Fund – worth 86.7 billion euros – for the climate to fight energy poverty.The "historic vote", as the president of the EP defined it, Roberta Metsola, is the result of agreements reached with EU countries at the end of 2022.Now the legislative texts will have to be approved by the Council before being published and (officially) entering into force.

Reform of the emissions trading system

The reform of the emissions trading system (ETS), which can be summarized in the formula "the polluter pays", provides for emissions reductions in the sectors covered by the mechanism equal to 62 percent compared to 2005 levels.In summary:whoever produces them must pay.The system Emission trading system, explains the EP, will also be extended to the road transport and buildings sectors starting from 2027.But not only:for the first time the European Union Institution has adopted the inclusion of emissions produced by the maritime sector in the ETS system and the gradual elimination of free allowances for air transport by 2026, «so as to encourage the use of fuels sustainable in the aviation sector", we read on the European Parliament website.

Carbon Tax

The second thorny dossier concerns the new Carbon Border Adjustment Mechanism (Cbam).The objective of this system is to ensure that global climate efforts, as well as those of the Union, are not endangered or discouraged by the "relocation of production to non-EU countries" with less ambitious climate policies.In essence, the legislative text provides for the gradual entry into force of the so-called Carbon border adjustment mechanism from 2026 to 2034 in conjunction with the progressive elimination of free allowances in the ETS and will concern - in particular - iron, steel, cement, aluminium, fertilisers, electricity, hydrogen and indirect emissions under certain conditions.In practice, this measure will require companies importing products covered by the ETS system into the EU to communicate the quantity of emissions contained in the goods at the border, and then purchase Cbam certificates corresponding to the price they would have paid to produce the goods within the EU. Union.For the first time, the EU will therefore apply an additional tariff to manufacturing companies located outside its territory.

A Social Climate Fund to fight energy poverty

The last measure finally provides for the establishment of a Social Climate Fund (SCF) in 2026 with the aim of guaranteeing "a fair and socially inclusive climate transition".The beneficiaries of this legislation - adopted by a large majority - will be vulnerable families, micro-enterprises and transport users particularly affected by energy poverty.The Fund – says the EP – will be financed by the proceeds of the auctioning of Ets II quotas up to an amount of 65 billion euros, with a further 25% covered by national resources for an estimated total of 86.7 billion of euros.