In a politically delicate compromise reflecting the European Union’s struggle to balance climate ambition with economic pressures, negotiators from the Council of the EU and the European Parliament agreed on Tuesday to postpone the introduction of the new ETS2 emissions trading system until 2028. The revised legislation also sets a legally binding target to cut greenhouse gas emissions by 90 percent by 2040 compared with 1990 levels—one of the most far-reaching climate commitments ever adopted by the bloc.
A Later Start for Carbon Pricing on Buildings and Transport
The ETS2 scheme, originally scheduled to take effect in 2027, would apply carbon pricing to fuel combustion in buildings and road transport—sectors responsible for a substantial share of Europe’s emissions and long seen as difficult to decarbonize. Policymakers cited economic uncertainty and the need for a smoother transition as key reasons for the one-year delay.
Under the provisional agreement, EU industries will be required to reduce emissions by 85 percent, while the remaining reductions after 2036 may be achieved through payments to non-EU countries for verified emissions cuts—a mechanism intended to preserve cost efficiency and global cooperation.
“The agreement shows that climate action, competitiveness, and strategic independence go hand in hand,” a spokesperson for the EU climate commissioner said, calling the package “strict but realistic” and a necessary signal to global partners ahead of future climate negotiations.
Political Resistance and Economic Concerns
The deal follows months of contentious negotiations. Poland, Slovakia, and Hungary resisted deeper cuts, arguing that accelerated decarbonization would disproportionately burden domestic industries already strained by high energy prices, cheap Chinese imports, and protectionist U.S. tariffs.
The outcome reflects the EU’s broader challenge: maintaining global climate leadership while addressing the economic anxieties of member states facing uneven transitions.
If confirmed by the full Parliament and EU governments, the legislation will shape Europe’s climate policy trajectory for the next two decades—setting the stage for one of the most transformative energy shifts in the bloc’s history.