Support to the revised EU Emissions Trading System

Support to the revised EU Emissions Trading System

The European Commission supports the implementation of the revised EU Emissions Trading System (ETS) in four Member States, namely Belgium, Croatia, Finland and Romania. 

Context 

Under the European Climate Law, EU Member States committed to becoming climate-neutral by 2050. As a first milestone, the EU aims to reduce its net emissions by at least 55% by 2030, compared to 1990 levels. The EU ETS plays a crucial role in achieving this goal cost-effectively, and the 2023 revision of the ETS Directive aligned the system with this target.

The EU ETS is based on a “cap and trade” principle. The cap refers to the limit set on the total amount of greenhouse gases that can be emitted by installations and operators covered under the scope of the system. This cap is reduced annually in line with the EU’s climate target, ensuring that overall EU emissions decrease over time. By 2023, the EU ETS has helped bring down emissions from European power and industry plants by approximately 47%, compared to 2005 levels.

Some of the key changes agreed in the 2023 revision of the ETS Directive include:

• The cap has been tightened to bring emissions down by 62% by 2030, compared to 2005 levels. This covers emissions from maritime transport, which have been included in the EU ETS (ETS1) from 2024.
• More resources have been mobilised to support people and businesses in the green transition. Member States have committed to using all EU ETS revenues (or financial equivalent) towards climate action and a just, green transition. The Innovation Fund and Modernisation Fund budgets have been increased accordingly.
• A new emissions trading system, called ETS2, has been created to cover emissions from buildings, road transport and additional sectors. The new system will become operational in 2027 and complement other European Green Deal policies in these sectors.

Support delivered  

The project aims to assist beneficiary Member States to effectively implement ETS1 and ETS2. 

In Croatia and Romania, the support will help to extend ETS1 to the maritime sector, establishing robust administrative processes, and ensuring compliance with the latest Directives. This includes providing targeted training programs, developing monitoring and reporting systems, and supporting enforcement activities. 

In Belgium, Croatia, Finland, and Romania, the project will additionally assist in implementing ETS2 by strengthening policy frameworks, designing training modules, and establishing inter-agency coordination mechanisms. These efforts aim to support the identification of regulated entities responsible for emissions in buildings, road transport, and additional sectors, and to ensure these entities are prepared to participate in the ETS auction processes.

Expected results 

The project is expected to improve the capacities of the beneficiary Member States to implement ETS1 and ETS2, with the aim of further reducing greenhouse gas emissions in the maritime, road transport and building sectors.