By Kate Abnett

BRUSSELS, (Reuters) – Soaring energy prices as well as a geopolitical crises over Russia’s invasion in Ukraine have hampered the European Union’s efforts to reach a raft climate change legislation. This raises concerns about whether some of these laws could be postponed or scaled back.

After the European Commission revealed the largest package of global green policies in July last year, wildfires spread across the Mediterranean Sea and flooding ravaged Western Europe. All governments, from Greece to Germany demanded urgent climate action.

The political environment is very different seven months later as EU policymakers negotiate how to make those laws binding.

Europeans have been paying higher energy bills. On Thursday, gas prices were 30% higher than July’s. The increase was caused by Russia’s invasion in Ukraine, Europe’s largest supplier of natural gas. The EU’s carbon prices have reached record highs. Inflation in the Eurozone is at an all time high.

Brussels has called Europe’s Green Transition its escape from dependence on Russian energy. It also cites the 300 billion Euros that EU countries have spent each year on oil and natural gas imports. This will not only require large investments initially, but it will ultimately lower costs and provide European industry with an advantage in green technology.

Negotiations on climate proposals between EU countries and European Parliament are being dominated by immediate concerns over cost. The laws must be approved by both the EU countries and the European Parliament.

Rising gas prices may be the primary reason for recent energy bill increases, but a rising number of EU states, particularly those in the East of the bloc are warning of public backlash if green policies and higher costs become a reality.

“We were once a very large group of countries that argued for more ambition. “We’re not many left,” said one EU diplomat.

CARBON MARKERS

It is the EU’s aim to meet its target of reducing emissions 55% per year by 2030. The EU’s proposals, which were made from 1990, put the world’s third biggest economy on a path to avoid catastrophic global warming.

The list includes a ban on the production of new petrol and diesel vehicles, taxes on polluting jetfuel and carbon border tariffs for imports high in carbon goods.

Proposed new Emission Trading Systems (ETS) are particularly controversial. This would result in carbon prices for buildings and transport, which fuel suppliers could pass onto consumers via higher bills.

“What are the costs and who is going to pay them?” A senior diplomat representing one EU country said that they are warning people not to talk about the cost and who will pay it.

Commission members suggested using the revenues of the new market for low-income households to cover the costs. However, some critics still fear a political backlash.

Pascal Canfin (chair of the European Parliament’s Environment Committee) stated that the ETS proposal was so controversial it could “freeze all climate laws.”

According to documents obtained by Reuters, groups representing over 200 members of the EU assembly proposed this month amendments to remove the ETS.

In addition to rising energy costs, reforms of EU’s current carbon market are in danger. Power plants and industries must purchase permits when emitting CO2.

Last year, CO2 permits prices rose 150% and now trade at around 90 euro per tonne. This is a record level which analysts believe could be a motivator for green industrial technology such as CO2 capture.

However, as the CO2 cost has risen so have the calls to intervene in order to reduce price rises.

The lead negotiator in Parliament this month suggested rules to allow policymakers to easily release additional permits into ETS, if there is a rapid rise in prices. Although countries like Romania, Spain, Poland and Spain support the idea, others warn that it could undermine the price signal to low-carbon investors.

One EU diplomat stated that any intervention in pricing was unwelcome.

BALANCING AGENCY

By July, the European Parliament and EU members will have confirmed their positions on major proposals including the carbon market. To strengthen EU diplomatic leverage to influence other countries into improving their plans, the Commission has called on negotiators.

EU officials anticipate that talks could spill over to 2023. EU officials expect that some talks will spill over into 2023. This could raise approval requirements as EU leaders take unanimous decisions.

It is important to make sure that the final package still meets the legally binding EU emissions goals.

Everybody says that the targets are too strict and high-stakes. Lucie Mattera of E3G’s Brussels headquarters said, “The problem is, if you combine all of these concerns, you will miss the 2030 target.”

Bas Eickhout, a Green Lawmaker, said that he is optimistic about some of the plans. These include proposals to increase renewable energy and reduce CO2 emissions for cars.

Eickhout stated that “the member states in each file are being a little more cautious.” “They promised the 55% and they have to keep their word.”