Germany backs carbon pricing in EU climate policy overhaul – document



© Reuters. FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium May 5, 2021. REUTERS/Yves Herman

By Kate Abnett

BRUSSELS (Reuters) – The German government is backing an extension of European Union carbon pricing and an end to free carbon permits for airlines as the bloc prepares new measures to help meet climate change targets, according to a document seen by Reuters.

The European Commission will propose a dozen climate policies on July 14, each designed to slash greenhouse gases faster in line with an EU goal to cut net emissions 55% by 2030 from 1990 levels.

The package will include reforms to the EU carbon market and a border levy to impose CO2 costs on imported goods. All the policies will need approval from EU governments and the European Parliament.

In a document detailing its position on the package, Germany backed the Commission’s plan to impose CO2 prices on transport and heating in buildings through a separate system to the EU’s existing carbon market.

“The long term goal should be to have a uniform cross-sector carbon price in the EU,” the document said.

Berlin this year imposed a national CO2 levy on suppliers of heating and transport fuels, set at an initial 25 euros per tonne.

However, the plan to take the system EU-wide is facing pushback from some EU governments and lawmakers, who fear it could hike household fuel bills.

Extra measures will be needed to ensure governments have enough resources to address the policy’s social impact – particularly on low-income households and for people who rent their homes, Germany said.

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Berlin said upcoming reforms to the EU’s existing carbon market should prolong free carbon permits “to an appropriate extent”, but end them soon for aviation, the document showed.

The carbon market forces factories, power plants and airlines to buy permits when they pollute in the EU. Industry and airlines get some for free, shielding them from carbon prices that have soared to record highs this year.

Analysts have said that to comply with World Trade Organization (WTO) rules, the EU must phase out free permits when it introduces a carbon border levy on imported goods.

A leaked proposal for the border levy did not clarify whether that would happen.

A German government source declined to comment on the document’s contents.

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