Plenary round-up – April 2023

Written by Katarzyna Sochacka and Clare Ferguson with Rebecca Fredrick.

Highlights of the April plenary session included debates on the need for an EU strategy on relations with China and on children forcibly deported from Ukraine. Other debates addressed: energy storage; labour mobility and the social rights of striking non-EU lorry drivers; adoption of the cyber-package proposals; a digital euro; and Dieselgate (use of defeat devices in cars to disarm pollution control systems). Members also held debates on: a possible EU global health strategy; universal decriminalisation of homosexuality, in light of recent developments in Uganda; the IPCC report on climate change; and the EU action plan against trafficking in cultural goods. 

Following a statement by the High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the European Commission, Josep Borrell, Members discussed the situation in Peru. Commissioner Johannes Hahn made statements on the need for European solidarity in saving lives in the Mediterranean, particularly in Italy, as well as on EU relations with Iraq. 

The President of the European Parliament, Roberta Metsola, made a statement on the 80th anniversary of the Uprising in the Warsaw Ghetto. Xavier Bettel, Prime Minister of Luxembourg, was also present, participating in the latest ‘This is Europe’ debate.

Fit for 55 package

In a joint debate on the EU’s ‘Fit for 55’ package, Members considered and adopted provisional agreements reached in trilogue with the Council on a set of linked proposals.

Revising the emissions trading system (ETS)

Covering 40 % of EU greenhouse gas (GHG) emissions, the EU has not revised its emissions trading system (ETS) since 2018. An update is needed 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. The agreement on the proposed revision of the ETS will increase overall emissions reductions and include 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.

ETS for aviation

The agreement on aviation emissions reflects Parliament’s demands for transparency measures and 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.

Carbon border adjustment mechanism

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, a carbon border adjustment mechanism (CBAM) should provide a level playing field for EU and non-EU producers. The agreed text greatly amends the 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.

Social climate fund

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). The proposed €72 billion social climate fund aims at supporting the most vulnerable citizens and companies to counter the costs of this extension. The agreement will see the fund in place from 2026. Funding will largely come from ETS credits, but national governments should co-finance 25 % of the total estimated cost of their plans under the social climate fund.

Deforestation-free products

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

Markets in crypto-assets (MiCa)

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. Members debated and adopted a provisional agreement on markets in crypto-assets negotiated by the Committee on Economic and Monetary Affairs (ECON), which would cover crypto‑assets not regulated under 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 regulation will reinforce safety measures for crypto‑assets, requiring issuers to have plans in place to tackle turbulence and ensure reserves.

Information accompanying transfers of funds and certain crypto-assets

Members also debated and adopted a provisional agreement based on 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 transfers of crypto-assets. 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).

2024 EU budget

Parliament did not adopt guidelines for the 2024 EU budget, as the plenary rejected the report tabled by the Committee on Budgets. This rejection followed disagreement between the political groups over amendments tabled in plenary. The Commission’s presentation of the draft 2024 EU budget will be the next milestone in the 2024 budgetary procedure, and is scheduled for the end of May/beginning of June.

Question time – Legacy of the European Year of Youth

Members posed questions to Commissioner Mariya Gabriel on the legacy of the European Year of Youth, (EYY22), which encompassed a series of events and initiatives in 2022. The Commission is expected to provide Parliament with a report evaluating EYY22 by the end of 2023. In the meantime, the Committee on Culture and Education (CULT) has suggested that the EYY22 legacy and that of the 2023 European Year of Skills could be linked in 2024, with funding for follow-up activities in subsequent years.

Opening of trilogue negotiations

By vote, Members confirmed five mandates for negotiation from the LIBE committee on proposals on: the screening regulation; a centralised system for the identification of Member States holding conviction information on third-country nationals and stateless persons (ECRIS-TCN); on asylum and migration management; the crisis and force majeure regulation; and on the long-term residents’ directive. Members also confirmed, without a vote, several further mandates to enter into interinstitutional negotiations: from the LIBE committee on reports on the single permit directive; and from the Committee on Transport and Tourism (TRAN) on the directive on a trans-European transport network; from the Committee on the Internal Market and Consumer Protection (IMCO) on financial services contracts concluded at a distance; as well as three mandates from the ECON and LIBE committees on: prevention of the use of the financial system for the purposes of money laundering or terrorist financing; on measures in this context to be put in place by Member States; and on the Anti-Money-Laundering Authority (AMLA).

Read this ‘at a glance’ note on ‘Plenary round-up – April 2023‘ in the Think Tank pages of the European Parliament.