Article by: Giannos Lytras

EU takes another step towards its "Fit For 55" goal by implementing world's first CO2 tariff.

The European Parliament on approved sweeping reforms to make EU climate change policies more ambitious, including an upgrade of the bloc’s carbon market that is set to hike the cost of polluting in Europe.

Europe’s carbon market forces power plants and factories to buy CO2 permits when they pollute. It has slashed those sectors’ emissions by 43% since 2005, but it has more ambitious targets.

Parliament voted to approve, with a large majority, a deal to reform the carbon market and cut EU emissions by 62% below 2005 levels by 2030.

As part of the same package, the Parliament also voted on plans to launch a new EU carbon market covering emissions from fuels used in cars and buildings in 2027, plus an €86.7 billion EU fund to support households affected by the costs.

Under the upgrade, factories will lose the free CO2 permits they currently receive by 2034, and shipping emissions will be added to the CO2 market from 2024.