MEPs and EU governments on Saturday night agreed to reform the Emissions Trading System to further reduce industrial emissions and boost investment in climate-friendly technologies, the European Parliament said in a statement. 

The EU Emissions Trading System (ETS), which enshrines the polluter pays principle, is the foundation of European climate policy and the key to achieving the EU's climate neutrality goal. By putting a price on greenhouse gas emissions, the ETS has caused significant reductions in EU emissions as industries have an incentive to reduce their emissions and invest in climate-friendly technologies, the European Parliament said. 

By 2030, emissions in the ETS sectors are to be reduced by 62 percent compared to 2005, one percentage point more than the Commission had proposed. To achieve this reduction, there will be a one-time EU-wide reduction of 90 million tons of CO2 equivalent in 2024 and 27 million tons in 2026, combined with annual quota reductions of 4.3% in 2024-27 and 4.4% in 2028-30, the European Parliament statement said, in part.

The Parliament and the Council will have to formally approve the agreement before the new law enters into force.