Opposition Grows to EU's Fit for 55 Carbon Pricing Expansion Plans Amid Electricity Price Squeeze
The recent surge in electricity prices has sparked increased opposition from countries that were already sceptical of the EU's Fit for 55 carbon pricing expansion plans. Spain and France, in particular, argue that these plans will exacerbate energy poverty. In response, EU Energy Commissioner Kadri Simson emphasised the need to reduce reliance on volatile foreign fossil fuels as quickly as possible.
Certain members of the European Parliament are now contemplating alternative measures, such as stricter regulations, instead of extending the EU Emissions Trading System (ETS) to the transport and heating sectors.
Pascal Canfin, a French Member of the European Parliament and Chair of the Parliament's Environment Committee expressed doubts about the necessity of expanding the ETS, expressing concerns about potential social unrest.
Internal estimates from the EU suggest that a carbon price of €50 per tonne on petrol and heating for buildings would result in a €40 billion cost for affected companies. Canfin suggested that the ETS expansion could be more acceptable if CO2 costs were not imposed on residential tenants but instead applied to commercial buildings. Another option would be to exclude petrol from the ETS and instead impose stricter emissions targets on the automotive industry.
The European Commission (EC) is resisting major changes to its plans, arguing that extending carbon pricing is the only way to reduce emissions in sectors that have witnessed growth over the past decade. The EC's proposal for a €30 billion Social Climate Fund is facing resistance from the Netherlands and other Nordic states that oppose financial transfers. Meanwhile, southern and eastern bloc countries are advocating for additional financing to mitigate the impact of higher carbon costs. Key decisions on the package are not expected to be voted on until early next year. In December, MEPs may decide whether to legislate the proposals as a comprehensive package or as individual files.
