ETS2 Gets a Price Brake and a Review
For two decades, the EU emissions trading system has made power plants, heavy industry and aviation pay for their carbon emissions. From 2028, a second system, ETS2, will extend that principle to heating buildings and road transport – areas where the cost lands directly on households. Amid concern about the burden on households, EU member states on 9 October 2026 gave final approval to a stronger price brake for the system. A week later, EU leaders went further: they did not postpone ETS2, but asked the Commission to reassess its impacts.
What ETS2 is
ETS2 was created in 2023 as part of the Fit for 55 package. It aims to cut emissions from buildings, road transport and smaller industrial sectors by 42% by 2030 compared with 2005 levels. The system will start a year late, in 2028.
Unlike the existing system, ETS2 applies not to emitters but upstream, to fuel distributors. They monitor and report the emissions from the fuels they sell and must surrender a matching number of allowances. The number of allowances available falls every year, creating an incentive to cut emissions. Distributors pass the cost on in the price of heating and transport fuels, so the ETS2 price directly affects households and hauliers.
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