On Tuesday in Strasbourg, the EU Parliament voted in favor of several important climate protection laws by a large majority. Technical names such as emissions trading, CO2 border adjustment and climate social funds hide important innovations.

The EU wants to reduce its CO2 emissions by 55 percent by 2030 compared to 1990 and become climate neutral by 2050. The three areas that the EU Parliament has now voted on – emissions trading, the climate social fund and the CO2 tariff – are considered the heart of the “Fit for 55” package that the European Commission will present in summer 2021 to combat climate change had.

Emissions trading is a central instrument for European climate protection. For example, companies have to buy pollution certificates if they emit CO2. This should create an incentive to produce less CO2 (read more about this here). This system is now being tightened: the number of pollution rights is to be reduced faster than previously planned. Free certificates for companies would therefore gradually expire by 2034.

The climate policy spokesman for the FDP parliamentary group, Olaf in der Beek, spoke of a “good day for climate protection in Europe” after the vote. But he still sees room for improvement: As a next step, the national system of CO2 pricing in Germany must develop into a real emissions trading system with a fixed CO2 cap from 2024. The Green negotiator in the EU Parliament, Michael Bloss, said: “The era of free pollution is over. That means: If you produce in a climate-friendly way, you save money.”

Greenhouse gas emissions from shipping will also be taken into account in the future. The system is also to be extended to heating buildings and transport. This has little impact on Germany: emissions trading already applies to these areas. “The regulation is very important for German medium-sized companies because there is finally equality in competition,” said the responsible rapporteur Peter Liese (CDU). He spoke of the “greatest climate protection law of all time”.

In the future, producers abroad will also have to pay for CO2 emissions if they want to sell their goods in the EU – through a so-called CO2 border adjustment, which is to apply in full from 2034. This system is intended to motivate non-EU countries to set higher climate protection targets. It is also designed to ensure that climate protection efforts are not undermined by shifting production out of the EU to countries with more lax regulations. The rules apply to iron, steel, cement and aluminium, but also to fertilisers, electricity and hydrogen. Anyone who wants to import these goods has to compensate for the difference between the CO2 price paid in the country of production and the higher price of the CO2 certificates in the EU emissions trading system.

“The CO2 border adjustment strengthens the ‘polluter pays’ principle as the basis for a sustainable industrial policy. Such a mechanism protects the European market from climate dumping from third countries with weaker environmental standards,” praised the environmental and climate policy spokeswoman for the European SPD, Delara Burkhardt.

Higher costs for consumers due to the energy transition, such as rising heating costs, are to be absorbed by a fund of 86.7 billion euros from 2026. This can relieve households or finance investments, for example in more efficient buildings or public transport. Three-fourths of the fund is to come from revenues from emissions trading and one-fourth from the member states. The social policy spokesman for the AfD group in the EU Parliament, Guido Reil, criticized the climate social fund as “an indirect admission that the EU’s climate policy is an elite project that puts a greater burden on the weaker and poorer in society in particular”. The EU states still have to agree to the plans, but this is considered a formality.