On December 17th, 2022, the Council of the EU and the European Parliament reached an historic provisional agreement on critical legislative proposals of the ‘Fit for 55’ package aiming to further reduce emissions and address their social impacts. The deal is provisional pending formal adoption in both institutions.
Originally proposed in 2021 by the European Commission, the scheme elevates the EU-27 ambitions to combat climate change and to achieve the European climate plan’s greenhouse gas reduction targets. In addition to reforming the carbon market, it also includes several other important measures such as a carbon tax to be paid by households on fuel and on gas or oil heating starting in 2027. This tax, however, will be capped until 2030 and may be postponed for one year if energy prices continue to rise.
The Council and Parliament also agreed to establish a new emissions trading system particularly for the building and road transportation sectors. It also creates a new Social Climate Fund to help vulnerable households and small businesses cope with the new CO2 costs, along with making investments in energy-saving and other green technologies.
This agreement promises to deliver ambitious legislation, putting European nations at the front line of the global fight against climate change.