EU Council green lights European climate law in net-zero policy push

The EU Council gave its final green light on June 28 on the bloc's greenhouse gas emission reduction targets for 2030 and 2050.

The widely expected rubberstamp by member states followed a vote in the EU Parliament June 24 which approved with an overwhelming majority the provisional deal to reduce emissions by at least 55% by 2030 from 1990 levels.

The final approval by both the EU's decision-making bodies puts the climate targets into law and clears the way for the European Commission's legislative proposals on July 14 which will cover a wide range of policies that aim to deliver the revised 2030 target.

"I warmly welcome this final step of the adoption of the EU's very first climate law, which enshrines into legislation the 2050 climate neutrality objective," said Portuguese environment minister Joao Pedro Matos Fernandes in a statement June 28.

"An agreement on the European climate law has been a priority for the Portuguese Presidency [of the EU Council] and I am glad that we have successfully brought it over the finishing line," he said.

The goal to cut emissions by at least 55% from 1990 levels compares with the previous 40% target.

EU carbon prices have taken support in 2021 as the process to upgrade the bloc's climate targets progressed toward final approval.

EU Allowance futures contracts for December 2021 delivery on the ICE Endex exchange traded in a range of Eur54.58/mt ($65.13/mt) to Eur55.94/mt June 28, up from Eur49.97/mt at the close June 4. That compares with around Eur32/mt to Eur34/mt at the start of 2021 -- a rise of more than Eur20/mt in the space of six months.

The EC's July 14 package is expected to include, among other elements, a re-setting of the annual carbon caps under the EU Emissions Trading System to align it with the tougher 2030 goal, as well as a possible expansion of the system to include CO2 emissions from shipping and road transport.

Tighter caps mean reduced annual supply of carbon allowances for Europe's electricity generators, factories and airlines.

The EU Council also approved the bloc's objective to reach climate neutrality by 2050, which means net-zero emissions – balancing any remaining emissions with offsets or removals.

"The Commission will engage with sectors of the economy that choose to prepare indicative voluntary roadmaps toward achieving the Union's climate neutrality objective by 2050," the EU Council said in the statement.

"As well as monitoring the development of such roadmaps, the Commission will facilitate dialogue at EU level and sharing of best practices among relevant stakeholders," it said.