EU Changes ETS2 Rules to Prevent Fuel Price Spikes

The European Union has agreed to strengthen price controls for its forthcoming Emissions Trading System 2 (ETS2), which will charge for emissions from heating and transport fuels from 2028.

The system is intended to encourage households and businesses to switch to cleaner technologies. Several member states have warned, however, that the scheme could significantly increase fuel and energy costs and deepen opposition to climate policy.

Negotiators from the European Parliament and member states agreed that if the price of allowances rises above €45 ($52) per metric ton of CO2, 40 million allowances will be released from the market stability reserve. The mechanism can be triggered twice a year, allowing up to 80 million extra allowances to be added annually.

Revenue from the scheme will be used to help households pay energy bills, support the purchase of electric cars and fund energy-saving home renovations.

The new rules also extend the market stability reserve beyond 2030. The agreement still needs formal approval from the European Parliament and EU member states before entering into force.

(reuters, mja)