The European Commission decided to open an infringement procedure by sending a letter of formal notice to 26 Member States for failing to fully transpose into national law the provisions of the revised EU Emissions Trading System Directive (EU ETS) related to new emissions trading system (ETS2). The revised EU ETS (Directive (EU) 2023/959 amending Directive 2003/87/EC) entered into force in June 2023. As part of the revision of the ETS Directive, a new emissions trading system was created, separate from the existing EU ETS, to gradually extend carbon pricing to new sectors of the economy to support their emissions reductions.
The revised Directive also provides for the allocation of emissions trading revenues to the new Social Climate Fund, which will start operating in 2026, to provide dedicated funding to Member States to support the most affected vulnerable groups, especially households in energy or transport poverty. This new system, which will start in 2027, will cover and address the CO2 emissions from fuel combustion in buildings, road transport and industry not covered by the existing EU ETS (mainly small industry).
Member States are working on transposition measures, but 26 Member States (Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden) have not communicated full transposition into national law of the provisions of Directive (EU) 2023/959 related to ETS2, by the deadline of 30 June 2024. The Commission is, therefore, sending letters of formal notice to the concerned Member States, which now have two months to respond and address the shortcomings raised by the Commission. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion.
For more information, please see here.