Carbon pricing delay jeopardises EU support for vulnerable households and climate goals
Today, the European Parliament formally endorsed the one-year delay of the new EU carbon price for heating and transport fuels (ETS2) proposed by EU governments. The decision, baked into the political compromise on the EU’s 2040 climate target, undermines one of Europe’s most effective short-term climate tools, environmental groups have warned.
The European Environmental Bureau (EEB), Europe’s largest network of environmental NGOs, stressed that postponing ETS2 will weaken the EU’s ability to cut emissions this decade while shrinking funds meant to help vulnerable households in the transition.
The ETS2 was designed to curb emissions in heating and transport – two sectors that together account for over one-third of total EU emissions and have been far too slow to decline. Delaying its start from 2027 to 2028 brings more collateral damage than benefit, the EEB warns.
Luke Haywood, Head of Climate and Energy at the EEB, said:
“ETS2 has fallen victim to political horse-trading, and the EU is not gauging its consequences well. Postponing it buys time for fossil fuels, not for people.
It means less certainty for investors, fewer revenues to support vulnerable households, and higher risks of missing our 2030 climate goals, as emissions from transport and heating are falling far too slowly.
A one-year delay also means around €10 billion less for social climate investments. Every euro lost from the Social Climate Fund is a euro not spent helping families insulate their homes, switch to clean heating, or afford sustainable transport.”
Less money for social climate spending
The carbon price both discourages investments in polluting technology and funds the transition, raising vital revenues to help people move away from fossil fuels.
Postponing ETS2 by a year means no carbon allowances will be auctioned during that time, depriving the EU of roughly €50 billion in revenues over 2027–2032. Since the Social Climate Fund (SCF) receives about 25% of ETS2 income, its total size will automatically shrink by around €10 billion (16%), directly reducing the support available for households and communities most in need.
Governments that pushed for the delay now face a steeper climb. With only two years of active carbon market operation left this decade, they will have less time and fewer resources to meet their legally binding 2030 emission reduction targets. To compensate, they will need to accelerate other climate policies in transport and heating – such as phasing out gas boilers, boosting public transport, and expanding infrastructure for electric vehicles.
Countries with existing national carbon pricing schemes should consider evolving them into national carbon floor prices to provide greater certainty about carbon price levels.
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Notes for editors
