EU: Green climate agenda only partially adopted

The EU's ambitions to aggressively cut carbon emissions have suffered a setback after the European Parliament voted against key pieces of climate legislation on Tuesday - after MEPs squabbled over how tough the proposals should be.

The setback shows how complicated it will be to pass legislation to cut carbon emissions and tackle climate change as governments and industry grapple with mounting concerns about inflation, including soaring energy costs.

The majority of MEPs in Strasbourg, made up of socialist and right-wing MEPs, rejected a parliamentary report on expanding the Emissions Trading Scheme, a mechanism by which industry can trade emissions allowances and which is a key part of the Brussels legislative package.

Lawmakers also failed to agree on introducing a carbon border tax to make EU importers pay for their emissions, and on setting up a social climate fund to minimize the impact of carbon prices on poorer households.

The votes were the culmination of debates in Strasbourg this week on half of the proposals in the EU's Fit for 55 climate package, which aims to cut EU emissions by 55 percent by 2030 compared to 1990 levels.

However, MEPs advocated a de facto ban on new cars with internal combustion engines from 2035. The environment ministers will now negotiate the final details with Parliament.

MPs worked on a new timetable on Wednesday night after a number of measures were rejected, including the possibility of a re-vote.

The Social Democrats argued that amendments from the centre-right European People's Party, which propose a slower phasing out of carbon credits that industry can buy to cover their emissions, jeopardized the EU's ambitious 'Green Deal' climate policy. Right-wing parliamentarians opposed a general reduction in emissions.

Mohammed Chahim, a Dutch socialist and member of the parliament's environment committee, said the slower reduction in free allowances was a "weak compromise".

"With the current proposal, we only have losers: the climate, the industry - which will eventually lose its leading position - and we as a society," he said.

German EPP MEP Christian Ehler said the left wanted to push through a radical agenda that would damage Europe's economy by 2030.

The EPP's Peter Liese, who spearheaded the emissions trading system reform proposal, said the right, the Greens and the Social Democrats had "undone the compromises on emissions trading. I hope we can rectify this mistake".

Observers said the lack of agreement bodes ill for Brussels' ambitions to become a world leader on environmental policy through its Green Deal legislation.

"Given the importance of this legislation, no deal is certainly better than a bad one," said Alessia Virone, director of EU affairs at the environmental group Clean Air Task Force. "However, the attempts to water down the [parliament's Environment Committee] report and the failure of [emissions trading] call into question the European Parliament's overall climate targets."

Ingvild Sørhus, senior analyst at Refinitiv Carbon Research, said she expects lawmakers to find a compromise on the emissions trading scheme that is less ambitious than the rejected proposal but "more ambitious than today's votes suggest".