European lawmakers are considering changes to the ETS 2 emissions trading system that could exempt residential buildings and cap the price of carbon permits at 45 euros (approximately 1100 Czech koruna) per tonne of carbon dioxide, based on current year prices. The proposal, approved Wednesday by the European Parliament’s Environment Committee (ENVI), is spearheaded by Czech Member of the European Parliament (MEP) Danuše Nerudová (STAN), representing the European People’s Party (EPP).
A Two-Phase System
ETS 2 is the second phase of the European Union’s emissions trading system, originally intended to cover road transport and buildings. The proposed amendments aim to protect households from significant fluctuations in carbon permit prices. The system works by motivating companies to reduce emissions; they must purchase permits for each tonne of carbon dioxide they release, incentivizing investment in cleaner technologies.
The European Parliament is scheduled to vote on the proposal during a plenary session in Strasbourg later this month. Following approval, negotiations will begin with the Council of the EU, representing member states, with a potential resolution by summer. Nerudová reported receiving around one hundred amendments and described the past three months as filled with intensive negotiations.
The proposal secured broad support, including from MEPs from the populist “Patriots for Europe” faction, with 58 votes in favor, nine against, and nine abstentions. Nerudová’s proposal also supports releasing more permits from the Market Stability Reserve (MSR), while also suggesting the current measures are insufficient to mitigate the social impacts of ETS 2.
Czech Positions and Concerns
The former Czech government, led by Prime Minister Petr Fiala (ODS), was among 19 countries advocating for changes to the system and stronger price controls within ETS 2 to protect households. But, the current government led by Andrej Babiš (ANO) outright rejects the system.
Jana Nagyová (ANO), a shadow rapporteur from the “Patriots for Europe” faction, stated the proposal is “better than the current state,” while acknowledging it isn’t fully satisfactory. She noted that, as the current ruling party in the Czech Republic, ANO “must be a little more constructive.”
What Happens Next?
If approved by the full Parliament and agreed upon by the Council of the EU, the ETS 2 system, slated to begin in 2028, could initially apply only to areas beyond residential buildings, such as road transport and smaller heating plants. The European Commission is also planning a review of ETS 1 in July, which could further shape the future of emissions trading in the EU. Further negotiations will be crucial to determine the final form of the regulations.
Frequently Asked Questions
What is the ETS 2 system?
ETS 2 is the second phase of the European Union’s emissions trading system, intended to cover sectors like road transport and buildings, and aims to reduce emissions by making companies pay for their carbon output.
What is the proposed price cap for carbon permits?
The proposal suggests capping the price of carbon permits at 45 euros (approximately 1100 Czech koruna) per tonne of carbon dioxide, based on current year prices.
What is the role of Danuše Nerudová in this process?
Danuše Nerudová (STAN) is the rapporteur for the proposal and has been instrumental in securing its approval within the European Parliament’s Environment Committee (ENVI).
How will these changes impact the cost of heating for European households?
