EU Tightens ETS2 Price Cap, Releasing 40 Million Permits Above €45 a Ton
Updated
Updated · Reuters · Jun 10
EU Tightens ETS2 Price Cap, Releasing 40 Million Permits Above €45 a Ton
3 articles · Updated · Reuters · Jun 10
Summary
EU negotiators agreed that if ETS2 permit prices rise above €45 per ton of CO2, 40 million permits will be released from a stability reserve—double the previous 20 million.
The reserve can now be triggered twice a year, allowing up to 80 million extra permits annually, and it will continue beyond 2030 instead of expiring then.
The tougher controls answer warnings from countries including France and the Czech Republic that the new market could lift heating and transport fuel bills and fuel backlash against climate policy.
ETS2 is due to start in 2028, making fuel suppliers buy permits for emissions from heating and transport; revenues are meant to help households with bills, electric cars and home-efficiency upgrades.
The deal still needs approval from the European Parliament and EU member states, with the European Commission set to present a broader ETS2 review in July.
As the EU's new carbon tax looms, will its €65 billion social fund be enough to prevent widespread public backlash in 2028?
With a €45 carbon price cap, can the EU accelerate its green transition or just delay a major consumer cost shock?
The EU ETS2 Rollout: Balancing a 43% Emissions Reduction by 2030 with Market Stability and Social Justice
Overview
The European Union Emission Trading System II (ETS2) is a major expansion of the EU’s climate policy, aiming to drive the shift to cleaner energy in road transport, buildings, and light industry. Approved as part of the 'Fit for 55' package, ETS2 supports the EU’s climate neutrality goal. Its monitoring phase began in 2025, with full operation set for January 2027. Under ETS2, fuel suppliers—not end consumers—are responsible for reporting emissions and managing allowances. This system is designed to balance ambitious climate targets with market stability, ensuring a smoother transition to a low-carbon economy across all member states.