Carbon Prices Jump After EU Assembly Backs Tougher Climate Goals

(Bloomberg) -- The European Parliament endorsed a plan to toughen the bloc's 2030 emissions-reduction target to 60% from 1990 levels, putting pressure on European Union governments in upcoming talks about the final shape of a landmark climate law.

The EU assembly published on Wednesday the results of more than 170 amendments to the law that will implement the Green Deal, a sweeping strategy for the region to eliminate greenhouse gases by 2050. Carbon prices jumped as much as 4.1% immediately after the announcement.

While the parliament's reduction target is stricter than the 55% proposed by the European Commission, it's unlikely to be approved by the EU's member states. It will rather serve as a tool to prevent national governments from softening other provisions in the draft European Climate Law in negotiations with lawmakers over the next months.

“It's very clear that the European Parliament would like us to work faster and transition to climate neutrality faster,” said Jytte Guteland, a Swedish lawmaker overseeing the measure in the EU assembly. “It's a very strong signal before the negotiations in the fall.”

Political Guidance

The Green Deal will require tougher emissions-reduction across the European economy, affecting every area from transport to energy and farming. The details of the law to enact it, which will pave the way for a torrent of sectoral regulations, will be ironed out in the coming months, after member states agree their negotiating stance for talks with Parliament.

For that to happen, ministers representing national governments in the Council of the EU are awaiting political guidance from EU leaders, who are set to discuss the climate law at a summit next week and plan to make a decision in December. The 55% emissions-reduction target recommended by the commission already has the qualified majority support needed to win approval by ministers, according to two diplomats with knowledge of the matter. The challenge is to get the political nod from the heads of government, who vote by unanimity.

Read More: European Green Law Risks Delay as Leaders May Defer Decision

In the next step, the representatives of the Parliament and member states will hold private talks to find a compromise over the measure. The final stage is adoption by the assembly and the Council of EU governments.

The permits to emit carbon dioxide in the EU carbon market pared earlier gains and traded 2.7% higher at 27.5 euros a metric ton on the ICE Futures Europe exchange as of 9:24 a.m. in London.

The 60% target is higher than sought by the European People's Party, the biggest political group in the EU Parliament. Still, the EPP will not vote against the climate law as amended in the final ballot scheduled for later on Wednesday, said Peter Liese, key German member of the assembly who oversees environment policies for the group.

“We will abstain, because we sincerely dislike the 60% and think it really endangers jobs,” he said on Twitter. “We are very confident that the Council of the EU will take care that we will come back to the Commission's proposal of net 55%.”

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