The European Parliament is currently divided over a European Union proposal to reduce carbon pricing regulations. Three major political groups, including the Socialists and Democrats, Renew Europe, and the Greens, have stated that they are seeking to maintain an ambitious path toward achieving net zero under the emissions trading system and are calling for a faster reduction of greenhouse gas emissions by heavy industries compared to the Brussels proposal.
Deep divisions among political groups
This situation is particularly in contrast to the European People's Party (EPP), which is the largest parliamentary group and generally supports the European Commission's proposal. In recent years, these four groups have collaborated to pass laws that provide a political compromise and avoid cooperation with far-right groups. This occasionally unstable alliance has ensured ongoing bipartisan support for the emissions trading system (ETS), which is the main tool for reducing greenhouse gases in Europe.
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However, now the reforms of this historic plan introduced by the European Commission in July have become a major question mark. Peter Liese, a veteran German representative from the EPP, is leading the Parliament's work on these reforms and is seeking an agreement that satisfies everyone. He has stated that he does not want to cooperate with the Venezuelan majority as it contradicts his beliefs and also because no one wants far-right figures like Marine Le Pen or the Austrian far-right party FPÖ to vote on any proposals regarding the ETS.
New challenges in reaching an agreement
However, the new reforms presented last week by the Socialists, Greens, and Renew show significant gaps regarding key aspects of the ETS reform. The biggest disagreement concerns the linear reduction factor, which is the mechanism that determines how quickly the supply of emission allowances decreases each year. Under the current trajectory, the overall carbon emissions cap for all sectors covered by the ETS is slightly reduced each year and is expected to reach zero around 2039 or 2040.
Liese's proposal postpones this date to the 2040s, aligning with the Commission's initial proposal in the summer. However, the other three groups, namely the Socialists, Greens, and Renew, oppose this plan and have proposed nearly identical reforms that maintain rates until the end of this decade and help accelerate the decarbonization of industries across Europe.
Although the percentages between the conflicting groups may seem minor, these disagreements lead to millions of additional tons of CO₂ emissions and reveal an expanding political gap. The Socialists, Greens, and Renew are trying to uphold Europe's climate ideals, while the EPP is increasingly paying attention to the concerns of the chemical and metal industries that have heavily criticized the ETS.
With the chances of a moderate agreement at risk, Liese has another possible path. Reminders of fascism in the early 20th century had kept the main political groups from cooperating with far-right groups. However, this protective wall has been crumbling since negotiations with moderate allies in 2025 over the first legislative package regarding some environmental reporting laws failed.
Currently, there is a possibility that the ETS reforms could once again be a turning point in this regard. Alexander Vondra, a representative from the Czech Republic in the ECR group, has recently suggested the possibility of cooperating with Liese to secure an agreement supported by his far-right group.
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