At Swan Energy, we are pleased to introduce a new compliance service to support operators under the ETS2, in addition to our existing services under the EU ETS. Over the coming weeks, we will be publishing a series of articles to help build a clearer understanding of the ETS2 scheme covering who it applies to, how it will be rolled out, and how certain Competent Authorities have approached the European Commission with proposals to adjust aspects of the allowance surrender process and purchasing obligations.
What is ETS2?
ETS2 is a new carbon pricing mechanism introduced by the European Union to address greenhouse gas emissions in sectors that were previously outside the scope of the original EU ETS. Specifically, ETS2 targets emissions arising from fuel combustion in buildings, road transport, and certain additional sectors (predominately small industrial sectors). Its implementation marks a significant expansion of the EU’s climate policy tools and is a central part of the EU’s broader strategy to meet its climate targets under the European Green Deal, “Fit for 55” package and Regulation (EU) 2018/842.
ETS2 differs from the initial ETS scheme as it has adopted an upstream approach through regulating fuel suppliers rather than end users. The following fuels are regulated under the Directive:
- (un)leaded petrol
- Gas Oil
- Kerosene
- LPG
- Natural Gas
- Heavy Fuel Oil
- Coal and Coke
- Any other product intended for use, offered for sale or used as motor fuel or heating fuel as specified in Article 2(3) of the Energy Taxation Directive (ETD). This includes any fuel additives used as motor fuel, certain bio-based fuels, and any other hydrocarbons for heating purposes, except for peat.
The scheme is being introduced in phases across the jurisdictions shown above, with key milestones occurring in 2025, 2026, 2027 and 2028. However, each scheme year follows a set timeline, where verified emissions reports are due by April 30th and, where applicable, allowance surrender obligations are met by May 31st. Full implementation of the scheme is scheduled for 2027, marking the start of allowance auctions and surrendering obligations.
For a deeper dive into how the scheme will function and who will be affected, look out for our next blog post: “Who Will ETS2 Impact? What Stakeholders Need to Know.”
Find out more about the ETS2 consultancy service we offer here and for any queries, please email us on info@swanenergy.co.uk or call us on 01484 843867.
