Following the partial success of the original EU Emissions Trading System (ETS1), the EU and its member states have turned to carbon pricing once again to reduce the emissions caused by road transport and buildings. The fuel powering our homes and vehicles cause a whopping 40% of the EU’s total greenhouse gas pollution.

ETS2 operates in a similar way to its forerunner, capping pollution in line with the EU’s emission reduction target on an annual basis before decreasing this limit year by year. These actions are projected to result in a 42% emission reduction by 2030 in buildings and road transport sectors compared to 1990 levels.

The scheme is set to begin in 2027, but is not without controversy, as the cost of applying the ‘polluter pays principle’ to these emissions will mostly be passed on to consumers. 

Together with civil society partners from the LIFE Effect project, Carbon Market Watch is campaigning for the ETS2 to deliver this much-needed climate action in a way that is socially fair and environmentally impactful. 

Member state governments have it within their locus to ensure that the vulnerable are not forced to bear the brunt of this policy by introducing complementary social climate measures that hasten societal decarbonisation while ensuring nobody is left behind.