European Union negotiators have reached agreement on overhauling the bloc's carbon market, its main policy tool for fighting global warming, the Czech EU presidency and the European Council said.

"The agreement ... will allow us to meet climate objectives within the main sectors of the economy, while making sure the most vulnerable citizens and micro-enterprises are effectively supported in the climate transition," Czech environment minister Marian Jurecka said in a statement.

At stake was the EU's ability to contribute to global efforts to fight climate change, and achieve its target to cut net greenhouse gas emissions by 55% by 2030 compared with 1990 levels.

Meeting that goal will require the EU carbon market to be reformed to cut emissions faster, which it does by requiring around 10,000 power plants and factories to buy CO2 permits when they pollute.

Negotiators were at odds over how quickly to end the free CO2 permits the EU gives industries to protect them from foreign competition.

Those permits will be wound down as the EU phases in a carbon border tariff designed to prevent domestic firms from being undercut by overseas competitors.

After 30 hours of talks that started on Friday, negotiators agreed to raise the overall target to cut emissions in the sectors covered by the European Emissions Trading System to 62% by 2030, the European Council, grouping the bloc's member states, said in a statement.

Negotiators also decided to rebase "the overall emissions ceiling over two years of 90 and 27 million allowances respectively, and increase the annual reduction rate of the cap by 4.3% per year from 2024 to 2027 and 4.4% from 2028 to 2030", the statement added.

A Social Climate Fund is to be established to support vulnerable households, micro-enterprises and transport users cope with the price impacts of an emissions trading system for buildings, road transport and fuels for additional sectors, according to the statement.

The provisional deal still needs to be formally adopted by the European Parliament and the European Council.

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Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability and Capital has described the provisional deal as "a really significant development."

Speaking to RTÉ News, Commissioner McGuinness said: "what we're talking about here is a massive transformation of the way we live, work and play.

"Particularly on the work side we're looking at industry in this agreement, looking at the heavily emitting sectors and they will be encouraged, carrot and stick, to change the direction to move away from being heavy emitters, to use new technologies and different energy sources to do that."

She said it is better that the change is accelerated now because of the energy crisis.

"I think the negotiators have done good work," she said.

"We will have to see for each sector the detail and how it will be implemented at sectoral level."

She added that the "illegal invasion of Ukraine by Russia requires us to step up very rapidly investment in renewable energy."