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Regulatory Briefing: EU rejects tougher carbon emissions rules

By Victor Smart

The European Parliament has unexpectedly rejected plans to toughen up carbon emissions rules, in a blow to the EU’s core climate policy and ambitions to establish itself as global leader on environmental issues. The decision was made by the bloc’s lawmakers against the backdrop of war in Ukraine and rocketing energy prices. Even so, experts are hopeful that a meaningful deal can still be agreed.

Despite approval in the parliament’s committee on the environment, food health and public safety last month, lawmakers in the wider parliament refused to back reforms to the EU’s Emission Trading System, the world’s first and biggest carbon market. The changes under the EU commission’s climate neutrality work plan would have extended ETS coverage and phased out the allocation of free allowances to certain sectors. It would also have developed a system of ‘carrots and sticks’ to incentivise climate-friendly businesses.

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