Members' Research Service By / April 14, 2023

European Parliament Plenary Session April 2023

Members of the European Parliament meet in Strasbourg from 17 April, with a number of high-profile issues to discuss, not least the current geopolitical situation and the continuing fight against climate change.

© European Parliament / P.Naj-Oleari

Written by Clare Ferguson with Rebecca Fredrick.

Members of the European Parliament meet in Strasbourg from 17 April, with a number of high-profile issues to discuss, not least the current geopolitical situation and the continuing fight against climate change. A key debate following Council and European Commission statements on the need for a coherent strategy for EU-China relations is scheduled for Tuesday morning. In a second key debate on Wednesday morning, Members will hear Council and Commission statements on the situation of children forcibly deported from Ukraine and the International Criminal Court arrest warrant for Vladimir Putin. The Prime Minister of Luxembourg, Xavier Bettel, is due to attend the plenary to take part in the latest ‘This is Europe’ debate, on Wednesday. In the foreign affairs field, a statement is expected on the deep political crisis in Peru. The Question Time session scheduled for Tuesday afternoon provides an opportunity for the Commission to respond to Members’ questions on the legacy of the European Year of Youth, which encompassed a series of events and initiatives in 2022.

Launched in 2005 and covering 40 % of EU greenhouse gas (GHG) emissions, the EU has not revised its emissions trading system (ETS) since 2018. An update is therefore necessary to align the ETS with the European Climate Law target of a 55 % reduction in EU net GHG emissions by 2030, compared with 1990 levels. In a joint debate on the EU’s ‘Fit for 55’ ambitions on Monday evening, Members are due to consider provisional agreements on a number of proposals. The first is the agreement reached on the proposed revision of the ETS. The agreed text increases overall emissions reductions and envisages the inclusion of municipal waste incineration from 2028. It covers a wider range of fuels and phases out free allowances from 2026 to 2034. From 2024, the ETS will also cover maritime transport emissions under a linked proposal.

A separate proposal covers trading in aviation emissions, which are set to rise. Here, Members are due to consider a provisional agreement that reflects Parliament’s demands for transparency measures and to set aside allowances to encourage uptake of sustainable aviation fuels. Locations such as small islands and outermost regions will be able to cover the price difference between sustainable fuels and kerosene, while monitoring of non-CO2 aviation emissions will begin in 2025.

As part of the transition to a cleaner economy, the EU aims to phase out the free allocation of carbon emission allowances to European industry. To prevent non-EU manufacturers from taking unfair advantage of the new rules, however, a carbon border adjustment mechanism (CBAM) should provide a level playing field between EU and non-EU producers. Members are set to consider a provisional agreement that greatly amends the original proposal, extending the CBAM to a wider range of products and emissions and scheduling the transitional period to phase-in the CBAM to 31 December 2025.

A further, separate, ETS for road transport and buildings (ETS II) should begin in 2025 (although if energy prices remain exceptionally high, this could be delayed). This part of the necessary transition to a greener economy will have a direct impact on the whole of society. The proposed €72 billion social climate fund therefore aims at supporting the most vulnerable citizens and companies to counter the costs of extending the ETS to these sectors. Members are expected to consider the provisional agreement reached between the co-legislators on creating the fund from 2026. While funding is largely expected to come from ETS credits, national governments should co-finance 25 % of the total estimated cost of their plans under the social climate fund.

Deforestation contributes to global warming, so the EU is keen to contribute to the global fight against deforestation by halting EU consumption of commodities and products that contribute to deforestation and forest degradation. On Monday evening, Members are due to debate the provisional agreement on a proposal to ensure only deforestation-free products reach the EU market. If adopted, the new law would impose due diligence obligations on importers and set penalties for non-compliance. During negotiations on the file, Parliament succeeded in extending the scope to include additional products; a wider definition of ‘forest degradation’; and to ensure consultation with indigenous peoples.

Digital or virtual ‘crypto’ assets are a relatively new phenomenon. Mindful of both the opportunities they present and the potential risks, the EU seeks to legislate to protect investors and maintain financial stability, whilst also encouraging industry innovation. A joint debate on two provisional agreements concerning crypto‑assets is therefore set to take place on Wednesday afternoon. The first is the subject of a Committee on Economic and Monetary Affairs (ECON) report on markets in crypto-assets, which would cover crypto‑assets not covered by existing legislation. Key amongst these are ‘stablecoins’, digital assets whose value is stabilised against major currencies, and whose popularity has surged in recent years. The provisional agreement reinforces safety measures for crypto‑assets, requiring issuers to have plans in place to tackle turbulence and ensure reserves to back up their currency.

Due to their low traceability, speed and global reach, there is a risk of criminals using crypto-assets, including to finance terrorist activity. The EU therefore proposes to extend the ‘travel rule’ (payment service providers must include payer and payee information with each transfer), to cover crypto-assets. During interinstitutional negotiations on the proposal, Parliament succeeded in imposing additional rules for transactions between crypto‑asset service providers and self‑hosted addresses (‘wallets’, for crypto‑assets that are otherwise almost impossible to monitor for money-laundering activity). Members are therefore also due to debate a joint report by ECON and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) on revising existing law on fund transfers to include such transfers of crypto-assets.

On Tuesday afternoon, Parliament is expected to debate a motion for a resolution, tabled by the Committee on Budgets (BUDG), on Parliament’s ‘guidelines’ for the 2024 EU budget. The guidelines set Parliament’s goals for the Union’s budget before negotiations begin with the other EU institutions, and ahead of the Commission formally presenting the draft budget. The BUDG committee urges the Commission to revise the 2021-2027 multiannual financial framework in light of the significant challenges (Russia’s war of aggression, high levels of inflation) that have arisen since its adoption and which hamper achievement of the EU’s political goals. The committee calls upon the Commission to present a second basket of new own resources, highlighting the importance of repaying debt incurred under the EU recovery instrument. It reiterates the importance of the 2024 EU budget in delivering across a variety of policy areas, including the green and digital transitions, and ensuring energy security and independence. The committee stresses that EU funding should not be used for the construction of walls or fences at the EU’s external borders.

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