All but one European Union member state have fallen foul of the date to enter the new Emissions Trading System for road transport and buildings (ETS2) in the national law books. This delay sends completely the wrong signal, argues Eleanor Scott.
Over the summer, the European Commission was kept busy launching an infringement action against the 26 member states who have failed to introduce important climate legislation to create a new Emissions Trading System (ETS2) to cover buildings and road transport before the deadline.
While member states often delay transposing EU legislation, the failure to transpose the ETS directive raises doubts about how serious the majority of EU governments are about living up to their climate targets and deploying ETS revenue into climate investment to reduce emissions and to combat energy and transport poverty through the Social Climate Fund.
The extended ETS directive entered into force in June 2023 and the deadline for transposition passed on 30 June 2024. All but one member state failed to notify the Commission of measures taken to introduce the ETS2. Only Austria took the necessary transposition measures in time, while Germany made some progress, publishing a draft proposal to transition Germany’s national fuel emission trading system to the ETS2.
The ETS2 will put a price on the carbon emissions from buildings and road transport. By doing so, it will create an incentive for slashing emissions in these two polluting sectors. It would also open up a new source of decarbonisation funding using ETS2 revenue, which would amount to an estimated €260 billion between 2026 and 2032, assuming an average carbon price of €45 per tonne of emissions. To reduce the risk of increases in energy and transport poverty as a result of increased fuel prices caused by the ETS2, the Social Climate Fund was created to deliver €86.7 billion in support across direct investment, temporary income support and technical assistance from 2026-2032.
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