what does the new European agreement mean?

What these agreements will mean in practice in 2027 now depends on individual governments. A European social climate fund of 86.7 billion euros should in any case prevent people with the lowest incomes from getting into difficulties due to the new CO2 requirements. This money can be used for income support, for energy investments in existing homes and for switching to more environmentally friendly transport such as electric cars and expanding public transport.

Member States must make their own plans for subsidies and income support. Additional arrangements will also have to be made if energy prices remain exceptionally high. In that case, maximums can be set for what people have to pay or the new taxes on CO2 emissions from buildings and road transport can be postponed for another year, until 2028.


The billion-dollar fund will be largely financed by industry, which will have to pay more and more for its CO2 emissions. Those emissions are tied to allowances granted by the EU. Some of these allowances are granted free of charge, especially to sectors that are unable to afford expensive adjustments due to competition from outside the EU. Payment must be made for the other rights.

By reducing the total of allowances, by making allowances more expensive and by no longer distributing free allowances after 2034, the EU hopes that industrial emissions will fall further. Since 2005, when the emissions allowance system was introduced, greenhouse gas emissions from European industry have already been reduced by 41 percent. In 2030, that should be 62 percent.

Another important change is that shipping will be brought under the EU regime. Aviation was already bound by European emission regulations, but the notoriously polluting seagoing vessels were not yet. These are now also being brought under the European environmental regime in phases.

‘Up to 460 euros extra’

European Commissioner Frans Timmermans, responsible for the Green Deal, the greening of Europe, is pleased with the agreements. “At the end of a difficult year, this is very positive news,” says Timmermans. “Emissions trading is the core of the Green Deal, to put a price on CO2. The now strengthened emissions trading system will help to boost investments in CO2 reduction and reduce emissions further and faster.”

Flemish Minister of the Environment Zuhal Demir (N-VA) calls the agreement part of the “European rat race to systematically impoverish singles and families”. Last year she already calculated that the new emissions trading system would cost an average family between 320 and 460 euros extra per year in 2030. It is one of the reasons why Flanders is reluctant to approve the European climate package.

Saturday’s agreement is provisional. It must now be approved by the full European Parliament and by the governments of the individual Member States.

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