EU Emission Trading Schemes extended to buildings

EU Emission Trading Schemes extended to buildings

In April, the EU co-legislators formally adopted the revision of the EU Emission Trading Schemes (EU ETS), first with a vote in Parliament (18 April) and then with a vote in Council (25 April). The provisional agreement in the Trilogue negotiations was reached in December 2022.

Launched in 2005, the EU ETS is a cornerstone of EU policies to tackle climate change. It is a carbon market based on a system of allowances that cover energy-intensive industries, the power generation sector, and the aviation sector.

The Commission’s proposal to review the EU ETS was presented in July 2021, as part of the ‘Fit for 55’ package. The new text raises the overall ambition of emissions reductions by 2030 in the sectors covered by the EU ETS from 43% to 62% compared to 2005 levels.

Moreover, Chapter IVa establishes a new, separate emissions trading system (EU ETS 2) for buildings, road transport, and additional sectors (mainly small industry), aiming for a 42% emissions reduction by 2030 (compared to 2005). It will apply to distributors supplying fuels to the buildings and road transport rather than end-users. The new system will start monitoring and reporting on emissions in these sectors from 2025 and will become fully operational in 2027 (or in 2028 in case of exceptionally high prices of oil and gas).

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