Carbon revamp to hit polluters’ wallets

The European Union is set to hit carbon polluters in the pocketbook in a bid to drive down the bloc’s greenhouse gas emissions that contribute massively to global warming.

Reuters news agency reported on Wednesday that the group of 27 industrialized nations is preparing to overhaul its system through which it effectively taxes polluters for the harm they have done to the environment.

The revamp of the bloc’s emissions trading system, or ETS, will be the largest since the initiative was launched in 2005.

A leaked EU document draft details how the bloc plans to make it more expensive to pollute, and how it also wants to extend the ETS to cover pollution by ships, trucks and mass heating systems.

The ETS, which already covers factories, power plants and airlines, compels carbon emission producers to buy permits to offset their pollution. The number of permits needed is based on the amount of pollution created, which incentivizes companies to produce less carbon in order to save money.

Polluters are currently paying around 56 euros ($66) per metric ton of carbon they produce, which is twice the price it was two years ago. The Financial Times said the price could rise to as much as 85 euros per metric ton by the end of the decade.

Reuters also reported that the EU will contemplate reform of the ETS on July 14, though the bloc has yet to confirm this.

Emissions target

The EU is in the midst of trying to hit its target of cutting net carbon emissions by 55 percent of the 1990 levels by 2030.

Bloomberg said the overhaul of the ETS will include a reduction in the number of permits that the EU issues. With fewer permits available, the price they trade at will inevitably rise.

If the proposals are indeed discussed on July 14, EU member nations and lawmakers in the European Parliament will be able to amend them. The process to overhaul the ETS could take around two years.

The European Commission, which is the European Union’s executive branch, has previously said it will use all money collected through the system to bolster competitiveness of its industrial sector and help vulnerable families pay for their energy needs if the cost rises because of green policies.

The proposed ETS overhaul will be unveiled at the same time as a raft of updated EU laws that are being rewritten in line with the bloc’s 2030 European Green Deal climate change commitments.