New study provides toolbox for early decarbonisation in ETS2 sectors

The European Commission has published a new study to support Member States in preparing for the launch of the new EU Emissions Trading System for buildings, road transport and small industry (ETS2), which will become fully operational in 2027.

The study highlights 21 case studies from different Member States to promote early decarbonisation in the covered sectors. These measures were selected for their cost-effectiveness, scalability, replicability, and short-term impact, with a particular focus on benefits and opportunities for low- and-middle income households. In addition, the study identifies three further measures with strong future potential.

By showcasing concrete real-world case studies, from energy-efficient housing renovations to clean mobility solutions, the report illustrates how Member States can use resources effectively and deliver targeted decarbonisation outcomes even before ETS2 enters into force. For example, it recommends measures such as a reduced VAT rate on electricity used in heat pumps, or on the purchase of heat pumps, to make clean heating more financially attractive for citizens.

This study complements an earlier Commission study on support measures for vulnerable households, who will benefit directly from the upcoming Social Climate Fund.

Background: About ETS2

Created as part of the 2023 revision of the EU ETS Directive, ETS2 will cover CO₂ emissions from fossil fuel use in buildings, road transport and small industry, sectors where emissions have so far been difficult to reduce. Like the existing EU ETS, ETS2 will operate on a cap-and-trade system.

ETS2 is designed to cut emissions in the covered sectors by 42% by 2030 compared to 2005 levels. All allowances will be auctioned, with revenues used for climate and social measures. A dedicated Social Climate Fund will channel over €87 billion to support vulnerable households and micro-enterprises, while the rest of the revenues must be spent by Member States on climate action.

With ETS2 set to start in 2027, this new study provides timely guidance for Member States to design and implement additional measures that will ensure a fair and effective transition in the years ahead.

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A study of supporting measures promoting decarbonisation in the sectors covered by ETS2

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