Poland and other member states want to reopen discussions on the ETS 2, the new emission trading system for fuels used for road transport and heating. Last month, the European Commission launched a stakeholder consultation to prepare for ETS reform, intending to present a draft proposal in Q3 of 2026.
After meeting her peers in the informal Environment Council on 29 April, Polish minister Paullina Hennig-Kloska told the press that she and other EU governments “expect [the review] to happen sooner than that”.
She mentioned the need to eliminate [price] volatility and avoid negative impacts on households. Veyt’s understanding is that she meant to refer to ETS2 rather than the general ETS review process. Even so, an accelerated review of ETS2 would mean either fast-tracking the whole review or somehow singling out ETS2.
The first ETS2 emission allowances will be issued in January 2027, which is also when member states will start offering them to the fuel providers that will be subject to the new system.
Until physical trading starts at auctions in 2027, we can have no certainty what the price will be. The annual supply is politically decided out to 2030, demand will depend on actual emissions, which again depend on the uptake of abatement technologies such as electric vehicles and heat pumps, something that will vary greatly among the member states.
In anticipation of the launch of the physical market, the ICE exchange will start offering ETS2 futures contracts on 6 May (next Tuesday). EEX will follow suit in July.
The ETS2 was created as part of the “Fit for 55” reform of the ETS Directive that was formally adopted in May 2023. Starting in January 2025, ministers from Poland, France, Estonia, Czechia, Slovakia, and Bulgaria have called for changes to the ETS2, pointing out that high ETS2 prices will affect households, something that could trigger a political backlash against climate policies. The statements have partly been for delaying the ETS2, and partly for various measures to keep prices down.
The recent statement by the Polish minister follows a series of similar comments and makes sense in the context of a meeting of European climate ministers. That said, it should probably also be read against the backdrop of the 18 May presidential election in Poland, and the incumbent government’s wish to be seen as proactively handling a policy instrument that is set to be deeply unpopular in Poland.
For more on the French idea of having a price corridor in ETS2, launched during a Council meeting on 27 March, see here. Interestingly, no group of countries have come out in clear support of a strong ETS2.
In the European Parliament, the political groups’ attitude to the ETS2 reflects to some extent where they are located on the political spectrum. The far-right is strongly opposed. The Greens and the centre-left are supportive but underline the need for disbursements from the Social Climate Fund to cushion the impact on households, especially in low-income member states (during the ETS revision negotiations in the previous parliament, the S&D group reluctantly accepted the ETS2 as part of the final compromise).
The centre-right EPP seems divided. Peter Liese (CDU, Germany), a lead spokesperson on climate and energy, and a key architect of the latest ETS reform, continues to support ETS2, but there are many EPP members from other countries less committed to defending it.
The group of ETS2 sceptical countries will likely continue to draw attention to their calls for adjustments to the EU ETS2, especially during the Polish presidency of the Council (Denmark takes over on 1 July). It seems less clear what they might achieve.
If the idea is to widen the scope of the ETS review, that should be feasible. The Commission wishes for it to focus on the Market Stability Reserve and selected topics related to the ETS1. It states very clearly it should not cover ETS2: ”As ETS2 will become fully operational in 2027, it is excluded from the scope of this initiative”. However, once the directive is opened, lawmakers cannot be hindered in ploughing into other fields as well.
Even so, with the draft legislative proposal scheduled for Q3 2026, and the whole process including trilogue likely to be completed in 2028, this gives little hope for those that want to delay or water down ETS2 before it comes into full operation in 2027.
If, on the other hand, these countries want a fast-track process on ETS2 only, they need to convince the Commission to single that out as separate legislative file (most likely a Parliament and Council Decision).
A revised and/or delayed start would surely threaten to derail the 2030 climate target – to reduce emissions across all sectors by at least 55% – for which both ETS1 and ETS2 sectors are required to contribute as planned. It would also further complicate an already difficult process of preparing a 2040 target proposal.
A new special legislative initiative on ETS2 revision would also upend the Commission’s planned work programme for 2025 and Climate Commissioner Hoekstra and Commission President von der Leyen are surely keen to avoid that. Whether the Commission can be swayed or not will likely depend on the number of member states that genuinely oppose the scheduled full start of ETS2.
The Commission is almost certainly trying to gauge the positions of the key political groups in the European Parliament. Any attempt to amend ETS2 will be in vain if it does not also have the support of the Parliament.
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