From pump to policy - EU ETS 2 and the road fuel market

This insight assesses the implications for road transport arising from the introduction of EU Emission Trading Scheme (ETS) 2. The scheme is a major expansion of the EU’s carbon pricing framework and is designed to tackle emissions from road transport, as well as residential and commercial buildings and other small industry sectors which are not covered by the original EU ETS. The scheme focuses on fuel suppliers rather than the producers or consumers of road transport fuels. The monitoring and reporting requirements for EU ETS 2 began at the start of this year, with the system due to become fully operational by 2027. Fuel suppliers will then need to purchase allowances at auction for every tonne of CO₂ in the fuels they sell. The scheme may encourage greater provision of forecourt EV charging as well as increased biofuel blending, to reduce the share of fossil gasoline and diesel as part of the overall provision of transport fuels.