Veyt has relaunched its EUA2 forecast
Veyt has a new forecast for EUA2 prices, the units that will be used to comply with emissions stemming from burning fuels for road transport, heating of buildings, and small-scale industries. We expect the price to be around EUR 90/t in 2027, peak above EUR 200/t in 2033, and then decrease steadily towards the middle of the next decade.
As of 2025, fuel providers – the entities liable under the new system – are obliged to report emissions annually. The system will come into full operation in 2028 when they will also need to surrender emission allowances (EUA2s) to account for the CO2 inherent in the fuels they sell.
Once the auctions start in 2027, they will be able to purchase physical EUA2s (the actual allowances or permits). In the meantime, EUA2 futures contracts will be available. Last week, on 6 May, ICE launched a December 2028 futures contract. It settled on the first day at EUR €73.57/t after thin trading.
Essentially, ETS2 aims to put a cost on emissions from road transport and heating/cooling of houses/buildings. Most EU member states have struggled to incentivize a shift from internal combustion engines and gas-based heating. The Nordic countries (Finland, Norway, Sweden) represent some notable exceptions achieved through a combination of taxes and subsidies), but for political and/or financial reasons that approach is not available to all member states.
As part of the FF55 revision for 2030, the Commission insisted on making these two sectors subject to carbon pricing to spur abatement across Europe. European lawmakers were skeptical, fearing a repeat of the yellow vest protests in France in 2018, triggered by a proposed (later cancelled) hike in petrol taxes.
Eventually, they reluctantly agreed to create ETS2, a key element in the latest ETS revision that was formally adopted in May 2023. Throughout 2024 and 2025, we have seen mounting opposition to ETS2 from several member states and MEPs, all of whom are afraid of political backlash against the green transition.
Impact on transport
Veyt’s forecasted prices — if realized — would translate into major increases in petrol prices across the EU. For a selection of country-specific effects, see the graph below.
Under an assumption of 100% cost pass-through, all countries will experience the same absolute increase in petrol prices. However, countries with lower existing fuel taxes, such as Poland and Hungary, will see a significantly larger percentage increase.
The broader impact on consumers will also depend on the adoption rate of electric vehicles (EVs). A faster EV uptake would shield a larger share of consumers from ETS2-related price increases. As illustrated in the graph below, our model forecasts rapid EV adoption, with the EU-wide share rising to 26% by 2030 from just 2% in 2024. While ETS2 prices contribute to this acceleration, our analysis indicates that significant growth in EV adoption would occur even without ETS2, as can be seen from the increase we predict before the 2027 start of full compliance obligations.
That said, the pace of uptake will vary across countries. In the chart below, we highlight a selection of examples. Unsurprisingly, Norway—already a global leader in EV adoption—is projected to remain ahead, with 51% of cars expected to be electric by 2030. Germany will see a steady increase and serve as a proxy for the EU average, while Italy is expected to lag behind in comparison.
Impact on buildings
A similar pattern holds for the buildings sector. As shown in the first graph below, ETS2 price levels would drive a substantial rise in heating costs across Europe, with the largest percentage increases in countries with low existing energy taxes.
The overall impact will depend heavily on how quickly households transition to cleaner heating technologies. As shown in Figure 5, we expect a rapid increase in the EU-wide adoption of heat pumps—reaching 31% by 2030 from 11% today. Importantly, much of this growth occurs even before the ETS2 begins in earnest in 2027.
Figure 6 highlights national variation. Norway is again projected to maintain its lead, while countries like Germany follow the EU average and others, including Romania, lag behind.
Emissions
As shown in Figure 7, Veyt’s latest emissions forecasts show a significant reduction across all sectors subject to the ETS2 system between 2027 and 2040. Road transport, currently the largest emitting sector under ETS2, is projected to experience the most substantial decline, driven primarily by rapid EV adoption. Building emissions are also expected to decrease considerably, influenced strongly by the accelerated adoption of heat pumps and improved building efficiency measures. Meanwhile, small-scale industrial emissions under ETS2 are forecast to remain relatively low, experiencing a gradual decline.
Overall, emissions from road transport are anticipated to decrease from approximately 650 MtCO2 in 2027 to around 83 MtCO2 by 2040, a reduction of roughly 90%. Emissions from buildings will see a similarly strong downward trajectory, dropping from around 316 MtCO2 in 2027
