Swedish Climate and Environment Minister Romina Pourmokhtari said her government will “fight tooth and nail against this weakening of the framework.”
“In the midst of a Europe gripped by extreme heat, the Commission has chosen to back down and weaken the EU’s most powerful tool for cutting emissions,” said Pourmokhtari. “This proposal undermines the level playing field for the companies that have led the way by investing in ambitious climate action.”
The speed at which companies under the ETS will be forced to reduce their emissions will be considerably slower than previously planned. That will be done by reducing the “linear reduction factor” (LRF) — the rate at which pollution caps fall annually, which was due to reach zero by 2039.
Under the Commission’s review, the LRF will be reduced from 4.4 percent to 3.7 percent between 2031 and 2035. After 2036, it will decrease at the even gentler rate of 1.7 percent annually. That will extend pollution well into the 2040s, and will likely be seen as a major rollback by the ETS’s staunchest defenders.
The Commission will also hand out free carbon allowances for several years longer, including to sectors covered by the carbon border tax, which will now receive them until 2038 — a move that could inspire challenges at the World Trade Organization.
For the first time, starting in 2036, the Commission will give industry the option of buying carbon credits from outside the EU to offset their emissions. That has the potential to lower the carbon price and give industries more options to pollute if EU carbon allowances run out.