EU ETS 2 refers to the second phase of the European Union Emissions Trading System (EU ETS) from 2027 on, specifically designed to cover additional sectors not included in the original scheme. It aims to expand the scope of carbon pricing and strengthen the EU's climate goals by targeting sectors with significant but previously unregulated emissions. This extension is part of the EU’s broader climate strategy, including its "Fit for 55" package.
Key Features:
- Expanded Scope: EU ETS 2 primarily covers emissions from sectors like road transport and buildings, which were excluded in the initial phases of the EU ETS.
- Carbon Pricing Mechanism: Introduces a cap-and-trade system for these sectors, where emissions are limited, and companies must purchase allowances to cover their emissions.
- Climate Targets: Supports the EU’s target to reduce greenhouse gas (GHG) emissions by at least 55% by 2030 compared to 1990 levels.
Importance:
- Addressing Untapped Emissions: Targets high-emission sectors outside the traditional ETS scope, ensuring a more comprehensive approach to emission reduction.
- Incentivizing Efficiency: Encourages investments in cleaner technologies and energy-efficient solutions in road transport and buildings.
- Economic and Environmental Impact: Helps the EU meet its climate goals while creating economic incentives for sustainable practices.