The measures are part of the 27-nation region’s plan to cut emissions by at least 55% from 1990 levels by 2030 and reach net zero by 2050. 

The EU wants to be a global leader in the green shift, an increasingly challenging objective after US President Joe Biden’s landmark climate package and competition from China in low-carbon technologies and critical materials. At the same time, the bloc is grappling with an unprecedented energy crisis triggered by a cut in gas supply from Russia following the war in Ukraine.

“It is now more important than ever for the EU to get and stay on track to climate neutrality and resilience, providing a positive example to galvanize global action and to work with our partners worldwide to develop the solutions needed for all to transition to climate neutrality,” the commission said. 

The EU indicated an emissions cut of 75% to 80% would follow the average trajectory between 2030 and climate neutrality in 2050. Lowering pollution by more than 90% would signify “a very high ambition, close to reaching climate neutrality already in 2040,” the commission said. 

The commission signaled it is considering various options on the evolution of the EU Emissions Trading System, the bloc’s flagship carbon cap-and-trade program. They included an extension to cover new sectors, potential inclusion of all fossil-fuel uses and accounting for carbon capture technologies.

It also said removing carbon dioxide from the environment is indispensable and sought views on how to tackle emissions from agriculture, including putting a carbon price on greenhouse gases from the sector. 

Eoin Treacy's view

The EU is an energy importer and its reliance on imports has been emphasised following Russia’s invasion of Ukraine. That has also removed the partial salve of being able to pay for energy in their own currency so the EU is now even more committed to curtailing imports to the greatest extent possible.

The carbon emissions market is aimed at increasing the cost of energy to the point where businesses and consumers will have no choice but to use renewable sources. That puts a floor under prices for as long as economic growth holds up. Even following a recession the number of emissions contracts would be reduced to support the price so they are unlikely to stay low for long.
Aker Carbon Capture is a Norwegian company supplying solutions to industrial plants to help mitigate their carbon costs.  The share is currently rebounding in line with the carbon price.

Drax Group pulled back sharply this week on news the UK government was not going to support its carbon capture plan and rebounded when support was eventually confirmed. The share has now clearly demonstrated support in the region of the 1000-day MA.