EU countries agreed on Oct. 4 to back a rewritten EU plan to use carbon market reserve to finance independence from Russian gas. The move comes after fears that the original plan would impede the union’s main policy on climate change.
As Europe aims to exit Russian gas by 2030, the European Commission said the EU countries could raise €20 billion ($19.78 billion) for new investments in energy by selling carbon permits stored in the carbon market’s “market stability reserve” of the Bloc.
The EU finance ministers agreed to raise €15 billion from the EU Innovation Fund, which typically supports innovative clean technologies. The remaining €5 billion will come from carbon permit sales held earlier than planned.
The meeting was chaired by Czech finance minister Zbyněk Stanjura, who said the countries made “significant concessions” to reach a deal.
French Finance Minister Bruno Le Maire said the agreement would support the countries in the fight against inflation and in decreasing dependence on fossil fuels.
“France will in particular be able to benefit from subsidies,” he said.
Some countries resisted the initial proposal, saying that opening up the reserve would hinder the EU carbon market and depress the CO2 price, which would in turn make it less expensive for hard-to-abate industries to pollute.
The Netherlands, Denmark, and France made alternative proposals to avoid opening the reserve, which was launched in 2019 to address the oversupply that had affected ETS prices for years. Since then, prices for carbon permits have increased dramatically.
The EU countries will negotiate the final legislation with the EU Parliament.
Earlier this week, a committee of EU lawmakers voted to raise the €20 billion by advancing planned actions of EU CO2 permits. The proposal will be voted in the full parliament.