Drama in the European Parliament. As MEPs were due to vote on a series of proposals in the ‘Fit for 55’ climate change package on Wednesday, 8 June, the Parliament’s plenary session was thrown into disarray following the rejection of Peter Liese’s (EPP, Germany) draft report on the review of the EU Emissions Trading System (ETS).
This rejection (265 votes in favour of the report, 340 against and 34 abstentions) led the Parliament to postpone the votes on the EU's’ Carbon Border Adjustment Mechanism (CBAM) and the final vote on the creation of a Social Climate Fund (SCF). As with the ETS review, these two issues, which are directly linked to the ETS reform, are thus referred to the parliamentary committee.
Abolition of free allowances derails the vote on the ETS
“Indecent” and “a disgrace” were the terms used at the end of the voting session on the ETS review, with the political groups blaming each other for the failure to adopt the report.
It was a vote on phasing out free emissions allowances that turned the tables, leading the Greens/EFA and Social Democrats to oppose the report at the last minute.
MEPs have been divided for weeks over the link between the entry into force of the CBAM and the end of free emission allowances for products covered by it (see EUROPE 12966/3).
The EPP first won a victory with the adoption of its amendment for an end to free allowances in 2034 (327 votes in favour, 297 against and 18 abstentions).
On the other hand, the Renew Europe and S&D amendment for an exit in 2032 was narrowly rejected (303 votes in favour, 314 against and 20 abstentions).
“This agreement (the S&D-Renew Europe amendment, editor's note) was supposed to gather a majority, but it was rejected by 11 votes. Six MEPs were supposed to vote in favour, but voted against... “, said the Chair of the Parliament’s Committee on the Environment, Public Health and Food Safety (ENVI), Pascal Canfin (Renew Europe, France). A handful of MEPs from his political family and the S&D did not follow their group and voted against the agreement at the last minute.
The division between the political groups on this key vote was felt in the hemicycle where the emotion was palpable following the vote.
“The Social Democrats and the Greens have failed to live up to their responsibility for climate protection”, said the rapporteur, Peter Liese, expressing his surprise and frustration.
For him, the opposition of these groups is unjustified, as the adopted amendments have “tightened up the Commission proposal in many places and mean more climate protection”.
He then criticised them for joining forces with the far right (the Identity and Democracy Group) to reject his report.
An attack to which the Greens/EFA Co-President, Philippe Lamberts (Belgium), reacted directly, blaming Mr Liese for refusing to build a “solid pro-European, pro-climate majority” around the text.
“This strategy to do the content with the far right and then expect the progressives to vote in favour of it does not work”, agreed Michael Bloss (Germany), the Greens/EFA shadow rapporteur on this dossier.
Interviewed by EUROPE, Jytte Guteland (Sweden), shadow rapporteur on the ETS for the S&D group, also criticised the EPP approach: “We were disappointed with how EPP treated this report. We thought they were taking support from that right wing to secure their own not climate friendly positions.
Divisions on the level of ambition
In addition to the issue of phasing out free allowances, votes on the one-off reduction in the number of allowances in the ETS and the increase in the ‘linear reduction factor’ (LRF - the percentage by which the ETS ceiling will be reduced each year) also led MEPs from the left-wing groups to oppose the text.
These two variables determine the level of ambition in terms of greenhouse gas emission reductions in the sectors covered by the ETS.
In an extremely close vote, the ENVI Committee voted in favour of a 67% reduction by 2030 compared to 2005 emission levels, 6 percentage points higher than what the European Commission had proposed (see EUROPE 12954/2, 12942/4).
In the plenary vote, a majority of MEPs preferred to support an amendment by the EPP and Renew Europe groups to reduce the number of allowances in circulation by 80 million in 2024 (compared to around 117 million in the European Commission’s proposal) and 40 million in 2026, while increasing the LRF to 4.4% from 2024 to 2026 and to 4.5% from 2026 onwards (see EUROPE 12964/37, 12963/7).
Other points of the text were adopted during the votes on the amendments, notably the one on the establishment of a second carbon market covering emissions from heating of buildings and road transport (ETS2) for commercial activities only (see EUROPE 12954/2). However, these may or may not be reopened in the forthcoming negotiations aimed at finding new compromises and breaking the deadlock.
Referral to the ENVI Committee
After rejecting the report, the Parliament broadly supported Mr Liese’s proposal to refer the matter back to the ENVI Committee (495 votes in favour, 120 against and 16 abstentions).
The rapporteur welcomed this decision which, in his view, “makes sensible compromises possible”. This “diminishes the Parliament’s influence”, as the EU Council is likely to adopt its position before the Parliament, he stressed.
Mr Bloss, for his part, called on the EPP to “work constructively with the pro-Europeans” to achieve results, while acknowledging that today’s vote risks “deteriorating” trust between the political groups.
This reversal of fortune also means that the draft report on the CBAM has been referred to the ENVI Committee. The issue of free allowances, which led to the rejection of the ETS report, is indeed at the heart of the CBAM report. It is therefore a question of adopting two perfectly coherent texts.
The same goes for the Social Climate Fund, another collateral victim of the rejection of the ETS report, which will be referred back to the ENVI and EMPL committees because of its link with the ETS2.
On this text carried by EPP rapporteurs David Casa (Malta) and Esther de Lange (Netherlands), MEPs were nevertheless able to vote on amendments that some considered problematic (see EUROPE 12965/18).
This includes the one tabled by the EPP group proposing the eligibility of SMEs in the scope of the Fund. The original EPP amendment was eventually rejected in a vote that came down to the wire: 318 votes against inclusion, 312 in favour and 11 abstentions. Some MEPs from the S&D and Renew Europe groups supported this EPP amendment.
This rejection meant that an S&D amendment to limit support for SMEs (to 5% of national SME plans) would have been dropped if the EPP amendment had passed. While sources said on Wednesday that a reopening of the negotiations on the scope of the Social Climate Fund was unlikely, they could not rule out all the risks of a referral to committees.
Discussions started immediately after the vote between the groups to try to find compromises on these three texts. “I am currently checking the procedural rules to refer the text back to the ENVI committee and then to the plenary as soon as we have a stable agreement”, said Pascal Canfin.
He then said on Twitter that the Parliament was giving itself 15 days to reach an agreement and vote again at the mini-plenary on 22-23 June. (Original version in French by Damien Genicot and Léa Marchal with Solenn Paulic and Anne Damiani)