To fulfill its commitments under the Paris Agreement, the European Union plans to increase the ambition of its 2030 greenhouse gas emissions reduction target. As a basis for this debate, in December 2020, the EU Commission published the communication "Stepping up Europe's 2030 climate ambition" and a related Impact Assessment (IA) on raising the 2030 target in September 2019. In the communication, the Commission proposed to increase the EU target to -55% compared to 1990 and presents different policy approaches to reach this target.

In this communication, the Commission proposes a major shift in its policy architecture: the extension of EU-wide carbon pricing to buildings and road transport. The Commission’s main argument for extending the ETS is the security of reaching emission reductions in line with the climate targets while generating government revenues for climate action or for addressing distributional concerns. The cap of an extended ETS would cover the vast majority of EU emissions and would thus create a harmonised incentive for all covered entities to reduce their emissions in line with the target. The option of extending emissions trading to road transport and buildings raises a wide array of questions, particularly with respect to design options and their implications, distributive effects within and between Member States, competitiveness concerns and the timeline for implementation.

In this project, the Ecologic Institute supports Agora Energiewende in the production process for a publication that will address the different impacts of extending carbon pricing at EU level. This includes participation in a number of workshops (with internal and external participation) to arrive at a common position, the elaboration of a structure for the report, and the contribution of draft texts for several chapters of the report.