The EU will provide details today on how it aims to expand its carbon market, already the world’s biggest, to make it compatible with a stricter climate target for 2030. Much of the ambitious EU plan to accelerate its shift away from fossil fuels — dubbed “Fit for 55” as it aims for a 55% cut in emissions — has already been reported, including a push to eliminate combustion-engine cars and to slap a levy on imports of steel, cement and aluminum. The most sweeping reform of the EU Emissions Trading System in its 16-year history will be a central element of the broader package. Of course, today’s fanfare is just a starting point. Most of the plans will need approval from the European Parliament and from member states in the EU Council, with each institution entitled to propose amendments. The legislative process usually takes around two years, even if it goes relatively smoothly. - Ewa Krukowska and Kevin Whitelaw

What’s Happening

Hungary Holdup | EU finance ministers approved national pandemic stimulus plans from a dozen members yesterday, but Hungary was not among them. The Commission is withholding approval of the country’s recovery plan over what it says are insufficient safeguards against corruption, but Prime Minister Viktor Orban’s government says the bloc is improperly using the process to punish it for the country’s new LGBTQ law.

Virtual Euros | European Central Bank policymakers will decide today whether to move to an exploratory phase for the creation of a digital euro. President Christine Lagarde reckons it could take about two years, which means ordinary euro-zone citizens could be holding a virtual central-bank currency by the middle of this decade, if the plan advances.

Leadership Standoff | The EU’s top financial-markets regulator is still without a leader even though Steven Maijoor’s mandate came to an end in March. Some European lawmakers are pushing for a female candidate to chair the Paris-based European Securities and Markets Authority, which sets trading standards for the bloc on shares, bonds, derivatives and 
commodities.

Court Fight | Poland’s top court will resume its hearing tomorrow on whether EU laws should take priority over the country’s constitution, as Prime Minister Mateusz Morawiecki aims to fend off lawsuits over the country’s alleged erosion of democratic standards. Separately, the EU Court of Justice is set to rule tomorrow on whether a new disciplinary regime for judges breaches the bloc’s rules.

Tehran Delay | Nuclear talks between world powers and Iran aren’t likely to resume until after the Islamic Republic installs its new president next month. That all but eliminates the chances of an early resurrection of their accord struck six years ago and a jump in Iranian oil exports.

In Case You Missed It

More Shots | More than half of adults in the EU are now fully vaccinated, according to Commission President Ursula von der Leyen, a key milestone as Europe tries to balance reopening with efforts to contain the highly contagious delta variant. “The more are vaccinated, the more free we can be again,” German Chancellor Angela Merkel said during a visit to the country’s public-health institute.

Ukraine Supply | Merkel said Europe will do “everything we can” to ensure that gas supplies continue to flow through Ukraine even after the construction of the disputed Nord Stream 2 pipeline between Germany and Russia. The nearly completed link will be front and center during Merkel’s first meeting with U.S. President Joe Biden in Washington tomorrow.

Dividend Caution | The ECB could take steps to ensure that lenders avoid paying excessive dividends later this year, when it will “most likely” lift a cap on payouts, a top official said. The remarks by Margarita Delgado, a member of the bank’s supervisory board, dampen the possibility of a surge in payouts as European economies shake off the worst of the pandemic.

European Chips | Leuven, Belgium, is home to a relatively unknown semiconductor research organization that is now at the center of political and industry attention as countries scramble to address a global shortage of chips. The Commission is consulting Interuniversity Microelectronics Centre, or imec, on its plans to build out chip capacity.

Chart of the Day

A key indicator of a post-Covid recovery: Champagne exports have surged 43% so far this year after demand fell drastically in 2020, according to French government statistics. Shipments to the U.S. — the world’s largest importer — rose 74% in the first five months of the year compared to the same period in 2020, while exports to China saw the strongest post-pandemic bounce among top importers at 153%. “The recovery was expected, but not at this level,” said Charles Goemaere, the general manager of the French lobby group Comite Champagne.

Today’s Agenda (All times CET)

• 2 p.m. Mairead McGuinness, the EU’s financial services commissioner, speaks on “Financing Europe’s Green Recovery” at a virtual event hosted by Bloomberg