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New publication for the European Commission on decarbonising the heat supply

Tilia May 31, 2023 No Comments

“Stakeholder views on the proposed EU Emissions Trading System (ETS) covering buildings” (Galindo Fernández, M; Moss, J & Oger, A)

Buildings account for 40% of the total final energy consumption in the EU and 36% of energy-related greenhouse gas (GHG) emissions. Improving energy efficiency in buildings and decarbonising the energy supply is a top priority for the EU, as highlighted in the EU Green Deal, NextGenerationEU and REPowerEU strategies.
In 2021, the Fit-for-55 package proposed a new separate Emissions Trading System (ETS) covering buildings and transport for 2025, often referred to as the ETS 2. This study gathers the viewpoints of different stakeholders on the ETS 2 and identifies potential issues and areas of work for policymakers. It focuses on four key questions: i) the role of the ETS 2 within the policy framework; ii) the relevance of covering the buildings and transport sectors under a unique ETS 2; iii) the impact of the ETS 2 in achieving a level playing field in the heating sector, and iv) suggestions to avoid adverse distributional effects and negative social impacts.
The report presents and summarises the stakeholder views. One of the findings shows stakeholders broadly agree there is a lack of common level playing field between different heating solutions, as taxes, levies and carbon prices are not coherently applied and benefit fossil-fuelled solutions. The existing EU Emissions Trading System covers only 30% of heating solutions, and residential taxes and electricity levies are generally significantly higher than those on natural gas. While stakeholders agree on the latter, they hold different views on the optimal policy path to tackle this situation, and on the relevance of the ETS 2.

This study, published in November 2022, is already the fourth report that Tilia has produced for the EU Commission.
Link to the study: https://publications.jrc.ec.europa.eu/repository/handle/JRC130665

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