The deal raises the ambitions of the current EU carbon market, phasing out free "pollution rights" awarded to industry.
At the same time, it plans to charge for emissions from heating buildings and road transport, with a price cap to avoid burdening families, according to a statement by the European Parliament on the agreement which was reached after about 30 hours of hard talks.
To cover carbon dioxide (CO2) emissions, electricity producers and energy intensive industries (steel, cement, etc.) in the EU must currently purchase "pollution permits" under the EU Emissions Trading Scheme (ETS), created in 2005 and applicable to 40% of the continent's emissions.
Under the terms of the agreement, the pace of reduction of proposed allowances will be accelerated, with a reduction of 62% by 2030 compared to 2005 (and the previous target of 43%), meaning that the industries concerned will be obliged to reduce emissions by 62%.
The carbon market will be gradually extended to the maritime sector, emissions from flights within the European space, for which the free allowances currently allocated will be abolished, and from 2028 to waste incineration sites (subject to a favourable study by Brussels).
In exchange for introducing a "carbon tax" at borders, the EU will gradually phase out the free emission allowances handed out to date to European manufacturers to allow them to compete with non-European companies.
At least 48.5% of these free "rights to pollute" will be abolished by 2030 and will disappear completely by 2034, a timetable which has been the subject of heated dispute between MEPs and Member States.