On November 5, 2025, the EU environment ministers agreed on a central adjustment of European climate policy: they want to Begin of the new Emissions Trading System for Buildings and Road Transport (European UnionETSII) for one year on2028Move. The system was originally planned for 2027 and is intended to price CO₂ emissions in these sectors across Europe through tradable certificates and eventually replace national CO₂ taxes. Due to the energy price clause, the EU Commission would have had until July 15, 2026, to delay the introduction of the system anyway. The new proposal to postpone the EU ministers means the EU Parliament approval but now very likely.
With the delayed introduction, the ministers are responding to persistently high energy prices and to demands from some member states, particularly from Central and Eastern Europe, which are calling for a more gradual transition. At the same time, the Council reaffirmed the overarching goal of reducing European greenhouse gas emissions by 90 percent by 2040 compared to 1990 levels. The decision is part of the planned EU Climate Target Law 2040, which is to be voted on in the European Parliament by the end of the year.
EU ETS II has structural significance
The EU ETS II is the second expansion phase of the European emissions trading system, which currently covers energy-intensive industries and the power sector. The new market segment is intended to cover transport and the heating of buildings in the future – areas where national solutions have applied until now. In Germany, this affects national emissions trading according toBEHG, which will now likely be extended for another year.
As of January 1, 2026, in Germany so far an auction-based CO₂ levy is planned as a transitional arrangement. In this system, certificate prices are intended to be within a specified price range between55and65Euro to move per ton, with a repurchase price of 68 euros if auction volumes are exhausted. Whether the still fixed CO₂ certificate price of 55 euros will be extended by one year or the transitional regulation will now apply for two years will have to be decided in the coming weeks.
Affected companies will therefore have to calculate their CO₂ costs based on auction results in 2026 or 2027, which entails increased price uncertainty. Only with EU ETS II from 2028 onwards will the CO₂ certificate price be determined completely freely based on supply and demand on the European market. So far, various studies have calculated CO₂ costs of [X] when the system is introduced in 2027 200 to 350 Euro per ton. Whether this expected price explosion will be weakened by the postponed introduction of the EU ETS II remains to be seen.
Reasons for postponing ETS II
Several political and economic factors contribute to this decision:
- Sustainably high energy prices since 2022 are burdening households and smaller businesses in the EU.
- Countries like Poland, the Czech Republic, and Hungary are demanding more time to prepare social compensation for lower-income households.
- The Social Climate Fund, which is intended to create precisely this compensation, will be launched in 2026 and requires additional administrative lead time.
- National authorities must adapt their reporting systems, data standards, and billing mechanisms to the upcoming EU standard.
Die Politik erhofft sich durch die Verschiebung eine geordnetere Implementierung, ohne den langfristigen Pfad zur Dekarbonisierung zu verändern. Dies zeigt zugleich, dass sie sozioökonomische Durchführbarkeit zunehmend als integraler Bestandteil europäischer Klimapolitik versteht.
Impacts on the CO₂ Market
The decision also affects expectations in the carbon market. Analysts now expect the average CO₂ price in the established EU ETS I (industry and power sector) to remain stable in the short term, and the delay of ETS II to buffer initial prices somewhat. However, in Germany's national Emissions Trading System (nEHS), experts anticipate a CO₂ price at the upper limit (65 euros) until 2028, as market participants are already pricing in the EU-wide scarcity that will be secured from 2028 onwards. New forecasts and analyses in the coming weeks will examine the effect of the postponed start of EU ETS II on CO₂ certificate prices more closely.
The postponement of ETS II to 2028 raises two additional questions that urgently need to be clarified by policymakers:
- What is happening with the Social Climate Fund, which is actually supposed to provide around 86 billion euros annually from ETS revenues starting from 2026 to relieve low-income households and promote energy efficiency programs?.
- Is the timeline for the fusion of ETS I and ETS II, originally planned for 2031, now also in danger?
Delayed Launch of the EU ETS II as a Political Balancing Act
While the postponement of ETS II is not a blatant step backward in European climate policy, it is perhaps a necessary intermediate step. It allows for the stabilization of the technical infrastructure and accompanying social instruments without changing the long-term direction. Provided this is successful and the effects are not merely postponed by one year, it is a positive sign for the economy in Europe. The year 2028 remains anchored in law as a binding starting point – the EU maintains its course towards climate neutrality, combined with economic realism.