EU puts billion-tonne carbon cap on buildings and road transport

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🗞️ Driving the news: The European Commission has capped greenhouse gas emissions for road transport and building heating at just over one billion tonnes annually under the new ETS2 system, set to launch in 2027
• Emissions allowances will be auctioned, with the cap shrinking yearly to achieve a 42% reduction by 2030 compared to 2005 levels
• This measure aims to cut emissions in two stubbornly high sectors but risks driving up fuel and heating costs

🔭 The context: ETS2 follows the success of the EU's original Emissions Trading System, which accelerated the transition from coal to renewables
• Road transport and buildings remain significant emitters, with household emissions dropping just 12% from 2015-2022 and road transport accounting for 20% of the EU’s emissions
• Critics warn the system could face public resistance unless accompanied by effective social policies

🌍 Why it matters for the planet: ETS2 is critical for the EU to meet its 2040 climate target of cutting emissions by 90% below 1990 levels
• It aims to make renewable energy more competitive while funding social climate initiatives
Without it, the EU lacks alternatives to drive necessary emissions reductions in these sectors

⏭️ What’s next: The ETS2 cap will tighten annually, while the Social Climate Fund (€86.7 billion) aims to mitigate costs for vulnerable households
• Member states must adopt complementary measures to limit emissions and prevent soaring carbon prices
• The European Commission plans to propose a legal 2040 emissions target next year

💬 One quote: “Without the ETS2 there is no alternative in place for lowering emissions in buildings and road transport at the required rate,” - Eleanor Scott of Carbon Market Watch

📈 One stat: A carbon price of €45/tonne could add €0.10 per liter of petrol; auction revenues could surpass €200 billion

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