A single lime and a grain of sand stand in stark contrast to the tangled debate over reforming the EU’s CO2 emission quota trading system. This Wednesday, one of the central pillars of the climate framework known as Fit for 55 faced heavy scrutiny as political divides resurfaced between left-leaning groups pushing for stronger industry demands and more conservative factions favoring a lighter timetable. The result was a rejection by a majority of the European Parliament, which sent the proposal back to the environmental committee for further consideration. Meanwhile, a separate plan to ban the sale of new internal combustion engine vehicles from 2035 remained under intense debate.
The European Commission’s original plan envisioned eliminating CO2 emissions from new passenger cars and light commercial vehicles by 2035. It also proposed curbing diesel and petrol engines, including hybrids produced before that date, to accelerate automotive decarbonisation and move the union closer to climate neutrality by 2050. In a last-minute bid to clarify the timetable for industry, the European People’s Party tried to push the reform toward a 90% reduction. However, the effort did not materialize amid a long and chaotic voting day.
Greens and Social Democrats opposed any weakening of the proposal. Groups such as ECR and ID consistently voted against, showing that there was no broad majority to back the softened approach. Dutch environmentalist MEP Bass Eickhout highlighted the reasons for the cancellation of the emissions quota reform, noting that changes backed by liberal and conservative members had softened the plan and delayed the phase-out to 2034. The proposed phasing out of free emission rights would affect about 10,000 industrial plants subject to the quota regime.
The restructuring signaled a shift in parliamentary dynamics. Left-leaning groups accused the reform of ceding climate ambition, while conservatives argued that a clearer path was necessary for industry. A German conservative remarked that Social Democrats and Greens had not shouldered their climate responsibilities, calling it a setback for Parliament. He recalled that the reform had increased the 2030 reduction target to 63 percent, compared with Brussels’ 61 percent, a figure the environment committee had sought to raise to 67 percent. The debate underscored a broader tension: whether to demand cohesion from the political spectrum while preserving a robust climate path that could win cross-party support. The critique echoed by iratxe garcia, a socialist leader, who contended that it was untenable to demand far-right votes to curb ambition while seeking broad support for the package as a whole.
Look for a new consensus
As a consequence, the text was sent back to the responsible parliamentary committee with instructions to pursue a renewed consensus among the groups. A French liberal, Pascal Canfin, indicated that action would be taken quickly once a workable agreement emerged. In the meantime, inter-institutional negotiations with the Council could not begin, setting back the timetable for the climate package and potentially delaying related measures. An additional dimension in play is the Border Carbon Adjustment Mechanism, which would impose a CO2 tax on imports of carbon-intensive goods such as steel and cement, a proposal whose fate became linked to the broader climate reforms being debated. The European Parliament also opted to postpone votes on this mechanism since the three regulations depend on one another for final adoption.
On a related front, the Parliament has pressed forward its stance on the aviation sector’s carbon market and the long-discussed international aviation emissions compensation system. The current proposal would extend the emissions trading system to all flights departing from airports within the European Economic Area and push for a gradual reduction of free aviation rights by 2025. The plan also includes exceptions for flights to and from outermost regions. In addition, the Parliament reaffirmed its rules on reducing CO2 emissions in the land use sector, tying these measures to the broader framework for climate accountability across sectors.
Overall, the European Parliament advanced its position on emissions trading and climate policy even as it paused formal negotiations with the Council. The path forward depends on reaching a sustainable and broadly supported consensus that can align environmental goals with the economic realities faced by industry stakeholders in Canada, the United States, and beyond. The discussions highlight how regional climate strategies intersect with global trade, energy security, and industrial competitiveness as the EU seeks to accelerate decarbonisation while maintaining economic resilience. The outcomes will shape how markets price carbon, how industries invest in cleaner technologies, and how policymakers translate ambitious targets into concrete, actionable policies for years to come.