Lawmakers strike deal ahead of EU carbon market vote

By Kate Abnett

BRUSSELS (Reuters) -Groups representing a majority of lawmakers in the European Parliament have struck a deal on climate change policies that they hope will pass a vote next week and avoid delays to Europe's green agenda.

The parliament dealt a blow to European Union climate policies last week, when it rejected an agreement on the bloc's carbon market amid disputes over how ambitious Europe's biggest emissions-cutting policy should be.

Socialist lawmaker Mohammed Chahim said he thought it could win a "big majority" when parliament votes on the carbon market reform again on June 22.

Failure to win support could delay deals on the EU's package of more ambitious climate proposals. EU countries and parliament will attempt to negotiate the final laws this year - but first, they must agree their negotiating positions.

The lawmakers' compromise would see parliament support a 63% cut in emissions covered by the EU carbon market by 2030 - versus the 61% proposed by the European Commission, which drafts EU laws, and the 67% supported in an early parliament deal.

The centre-right European People's Party (EPP), Socialists and Renew groups struck the deal. They represent more than 400 of parliament's 705 lawmakers.

EPP lawmaker Esther de Lange said it would deliver climate goals but reflected the "very difficult economic situation" facing industries that will face higher CO2 costs this decade - for example, by imposing two smaller "rebasing" cuts to the supply of carbon market permits, rather than one big cut upfront.

The deal would phase out the free CO2 permits industries receive, from 2027 to the end of 2032. This issue sunk the previous vote, when Socialist and Green lawmakers rejected the entire carbon market agreement over a 2034 phase-out they deemed too weak. The Commission had proposed 2035, while an early parliament deal backed 2030.

The lawmakers agreed industries would only lose their free permits if the EU successfully launches a carbon border tariff, a system designed to put EU and foreign firms on a level footing by imposing CO2 costs on imports of steel, cement and other carbon-heavy products.

(Reporting by Kate AbnettEditing by Robert Birsel and Mark Potter)