New EU Carbon Market Set To Hammer Households And Small Businesses

The European Union is set to introduce a new emissions trading system, ETS2, in 2027, which will cover carbon dioxide emissions from buildings, road transport, and small industry. The system aims to provide a market incentive for investments in building renovations and low-emissions mobility to help the EU reach its 2050 climate neutrality goal. Unlike the existing EU ETS, ETS2 will be an upstream "cap and trade" system, requiring fuel suppliers to monitor and report their emissions. Although end consumers won't pay directly, fuel suppliers are likely to pass on the higher costs due to carbon emissions trading. According to BloombergNEF's analysis, the price of CO2 could jump to $161 per metric ton in 2029, more than double the current price. This could hike costs for road transportation by 27% and bills for home heating by as much as 41%. The report warns that ambitious targets and high costs risk making households and small businesses the losers. The EU hopes that ETS2 will help reduce emissions in sectors that have so far been insufficient in their efforts to meet the 2050 climate goal. The system is scheduled to become fully operational in 2027, with the carbon price set to provide a market incentive for low-emissions investments. The European Commission believes that ETS2 will help put the EU on a firm path towards its 2050 climate neutrality goal.