On the night of Tuesday 9 and Wednesday 10 December, the Council of the EU and the European Parliament reached an agreement on the amendment to the ‘European Climate Law’, aimed at including a target to reduce greenhouse gas emissions by 90% by 2040 (compared to 1990).
The two positions were very similar. However, the co-legislators still had a few sensitive points to resolve. They achieved this after just over four hours of negotiations (see EUROPE 13768/11).
International carbon credits. In particular, the European Parliament succeeded in including additional safeguards on the use of international carbon credits in the compromise text. These credits, which enable the EU to offset its greenhouse gas emissions by financing decarbonisation projects abroad, can contribute up to 5% of the reduction target by 2040 (compared with a domestic reduction of 85%).
The compromise takes up Parliament’s wording on the “quality criterion” for international carbon credits and states that these must be regulated by the EU to ensure that they are based on “credible and transformative activities in partner countries whose climate objectives and policies are compatible with the objectives of the Paris Agreement”.
Only the reference to “safeguard measures to prevent the financing of projects contrary to the Union’s strategic interests” has been deleted.
Parliament’s request for the Commission to be able to “set stricter criteria than those set out in Article 6.4 of the Paris Agreement” has also been amended. The aim now is to “complete” these criteria, precisely defining the use of carbon credits on an international scale.
Emissions Trading System. In the end, the final compromise does not include a recital stating that international carbon credits should not play a role in compliance with the EU Emissions Trading System (ETS). However, Parliament wanted this reference to be reintroduced. The Council of the EU had left it in an earlier version, before deleting it with the addition of a corrigendum.
According to several sources, the European Commission has indicated that it will carry out a stability assessment of the ETS and has hinted that it will not allow these carbon credits to be integrated into the ETS.
Postponement of ETS 2. The other key points of the agreement concern a one-year postponement of the ETS 2, extending the emissions trading system to the buildings and road transport sectors, to 2028.
The compromise also includes a revision clause and the possible addition of additional international carbon credits, to achieve up to 5% of the climate effort required of Member States post-2030.
The provisional agreement still has to be formally approved by the Council of the EU and the European Parliament. In particular, this is a victory for the Danish Presidency of the Council of the EU, which is completing negotiations between the institutions before the end of its mandate on 31 December. (Original version in French by Pauline Denys)