EU climate legislation faces a divided Parliament

The EU’s climate ambition hangs in the balance in the European Parliament.

This week, lawmakers in the environment committee (ENVI) will settle on their position for key pieces of the European Commission’s climate package — known as Fit for 55 — that aims to slash the bloc’s emissions by 55 percent this decade.

But majorities for strengthening the Commission’s proposals are “razor-thin” in many cases, said Mohammed Chahim, vice president of the center-left Socialists & Democrats (S&D).

And even if they do squeak through the committee, the measures face fierce challenges when the full Parliament votes next month.

The Commission’s 55 percent target is the “bare minimum” to ensure the bloc’s climate goals are met, Chahim warned. “Preferably, we have to show more ambition, because that’s what was asked from us,” he said.

With many EU governments expected to try to chip away at measures and targets they dislike, the Commission is counting on MEPs to help defend the package in interinstitutional talks starting later this year.

Environment committee lawmakers, Chahim argued, had a special responsibility to aim high as they effectively decide “what the starting point will be in the negotiations” with their colleagues and the Council.

ENVI will tackle seven policy proposals this week — two files setting targets for national emissions reductions (known as the Effort Sharing Regulation) and carbon sinks (LULUCF); aviation emissions; the interlinked tangle of proposals that comprise the Emissions Trading System (ETS) reform, the carbon border tax (CBAM) and the Social Climate Fund; and an opinion on renewable energy.

In some cases, ENVI is pushing for more than the Commission proposed.

A pre-vote compromise on carbon sinks set an additional target that would have the EU absorb 50 million tons more emissions in natural deposits like forests. There is also a preliminary deal to boost the Effort Sharing Regulation. Airlines also face tougher emissions rules under the committee’s proposal.

But it’s touch-and-go for two files key to determining the overall scope of emissions cuts: the carbon market reform — which strengthens and expands the ETS, including by introducing a new carbon price on heating and transport fuels — and the related carbon border tax, meant to put a levy on imports from countries without a carbon pricing scheme to protect EU industry from unfair competition.

The Social Climate Fund, which is meant to ensure carbon pricing measures don’t hurt poor households, will go to a joint vote between ENVI and the employment committee on Wednesday.

Conservative concerns

Existing splits between political groups and parliamentary committees have been sharpened by rising energy prices and the war in Ukraine putting pressure on industry and households, which has led some lawmakers to argue against adopting tougher targets.

A vote in ENVI last week on phasing out the combustion engine stuck close to the Commission’s proposal, but it passed by only 46 votes to 40, underscoring just how narrow majorities might be in this week’s session.

Many left-wing and centrist lawmakers put the blame on the center-right European People’s Party (EPP), which has opposed some attempts to maintain or increase emissions targets.

The EPP tried and failed last week to water down efforts to end the sale of new combustion-engine cars by 2035, and this week is expected to vote against more ambitious elements of the carbon market reform, such as setting a tougher cap on emissions for sectors covered by the ETS.

“Wherever ambition is concerned, the EPP stonewalls,” said Michael Bloss, a Green MEP working on the carbon market proposal.

The EPP disagrees. Jessica Polfjärd, in charge of Parliament’s work on the Effort Sharing Regulation, said the left-leaning groups don’t take into account what society and industry can accept.

“We are ambitious, but we also want it to be an ambition that has the understanding from industry and citizens,” she said.

And the EPP isn’t alone in chipping away at the Commission proposal. The Greens, the S&D and parts of centrist Renew Europe succeeded in reaching a deal on a new carbon price for heating and transport that would exempt households and apply only to businesses.

The Commission has said this would “majorly weaken” the mechanism. The left-leaning groups say they’ll make up for it with higher targets in other areas, like the reform of the existing carbon market — but it’s uncertain whether those efforts will get majority support.

“I accept that there will be a slight decrease of the level of ambition because we reduce the size of [the carbon price proposal]. But to my view, it’s slight,” said Pascal Canfin, a Renew MEP who chairs the environment committee. But he said it’s “more than compensated” by what the committee “might” vote on this week.

Committee battles

ENVI’s other problem is, well, everyone else.

The unprecedented scope of the climate package means other parliamentary committees get to give input or lead work on certain elements — and in many cases their conclusions would result in lower emissions cuts.

The industry committee (ITRE) “is totally fixated on fossil fuels,” said Green lawmaker Bloss, pointing to the different outcomes on car emission standards as an example. In their opinion, ITRE lawmakers rejected the Commission’s proposal for a 100 percent CO2 emissions reduction target by 2035, settling for 90 percent instead — a target also advocated by the transport committee (TRAN).

ITRE chair Cristian-Silviu Bușoi, an EPP member, noted that his committee is converging around higher targets for renewables and energy efficiency, helped along by growing momentum for weaning Europe off Russian fossil fuels.

However, the energy crisis does mean that lawmakers are unlikely to support more ambition on other policies like carbon pricing, he argued.

But it’s TRAN that has most often found itself at odds with ENVI. Its position on the carbon market reform rejects a tougher cap on emissions, which S&D environment committee lawmaker Jytte Guteland said would undermine the EU’s legally binding climate targets.

It’s no surprise that committees are approaching the Fit for 55 package from different angles, acknowledged her colleague Tiemo Wölken, who got ENVI to settle on a far more ambitious approach to maritime fuels than the Commission.

But he said that if MEPs who backed the climate targets in a 2020 vote are now shying away from passing the Fit for 55 measures meant to implement them, they “are not honest towards their citizens.”

Andrey Novakov, an EPP lawmaker leading TRAN’s work on the carbon market reform, argued his committee’s position protects industry while maintaining ambition.

Whatever position ENVI settles on will “reflect the environmental point of view,” Novakov said. “And then the negotiations between the committees and the work in the plenary will decide what will remain in and what not.”

Plenary trouble

Canfin, the ENVI chair, fears that narrow left-leaning majorities in his committee this week could give Parliament’s more conservative factions leverage to water down the package when the full plenary is due to vote on the measure next month.

“I am concerned,” he said. “Because the last thing I would like is to play on the whole climate policies package with [a margin of] two votes in plenary in June.”

But that’s where things are heading. Jens Gieseke, the EPP’s policy lead on car emission standards, said he plans to push again to amend the legislation in the plenary vote.

His colleague Peter Liese, in charge of the carbon market reform, said he thought left-leaning efforts on the ETS revision would succeed in committee but fail in June: “I’m quite sure that the plenary will be more realistic and more close to the EPP position.”

Keeping the overall balance for the full package would then become tricky. If one proposal is watered down, others would have to be strengthened to still cut emissions by 55 percent overall.

With the Council rarely pushing for more action, a less ambitious Parliament stance makes it likely that the package would emerge weakened from interinstitutional negotiations — jeopardizing EU efforts to limit global warming and casting doubt on the bloc’s climate leadership.

“The European Parliament has been very important in pushing the Commission to do more for climate. It’s important that now we actually do the job,” said the S&D’s Guteland.

“I have general trust that the colleagues in this house, that the majority understands that,” she added. “But it’s a little more nervous now than I would have hoped.”

Joshua Posaner contributed reporting.