Tightening the noose around top foreign players operating in European Union, the European Commission has come down heavily on carbon dioxide emitters while including shipping in Europe's emissions trading system (ETS).
The move is likely to make the cost higher for polluters under Brussels' plans to meet the European Union's climate targets, the European Commission said on Wednesday.
The EU ETS, which forces emitters to pay for each tonne of carbon dioxide they generate, is the keystone of an EU drive to cut net greenhouse gas emissions by 55% from 1990 levels by 2030.
At present manufacturers, power firms and airlines operating flights inside Europe are already covered by the scheme but, under the new plan, shipping would be phased into the ETS over a three-year period.
Emissions from sea voyages within the EU, plus 50% of ships' emissions from international voyages starting or ending in the EU, would fall under the existing ETS, plus emissions that occur when ships are at berth in EU ports.
Emissions from road transport and from heating systems in buildings also would need to comply with a separate ETS from 2026. To ward off concerns that new levies could drive up costs for households, the Commission proposed that 25% of revenues generated from permit sales in the new ETS would go into a fund to shield low-income households from the carbon costs.
The EU now gives many free carbon permits to industries to help them compete with overseas firms that do not pay carbon costs.
Under the new proposals, the sectors covered by the EU's planned carbon border tax on CO2 emissions embedded in imported goods such as steel and cement would be phased out from 2026. The EU will also reduce the number of permits it gives to other industries from 2026.