What is ETS2 and which sectors it covers (fuels for road transport and buildings)
ETS2 is the EU’s second cap-and-trade system, separate from the “legacy” EU ETS. It puts a price on CO₂ linked to the combustion of fuels used in buildings, road transport, and some additional sectors, including small industrial emitters not covered by ETS1.
The key point is that the system works “upstream”. Obligations do not fall on households, property owners, or fleet managers, but on fuel suppliers that place products on the market for the covered uses. In practice, they are the regulated entities that must surrender allowances equivalent to the emissions generated by the fuels sold.
This creates a fairly clear B2B map of the actors affected. At the center are fuel and energy suppliers and distributors, importers and wholesalers, utilities, and operators connected to heat for buildings. The impact, however, moves along the chain: logistics and fleets see it in fuel prices, real estate in heating costs, and ESCOs in the business case for efficiency.
On the “market” side, ETS2 should be read as an allowances market with a cap that declines over time and auctions as the main allocation channel. Price dynamics depend on how much energy transport and buildings consume and how quickly efficiency and electrification improve, including heat pumps and zero-emission vehicles. The 2030 target is a 42% reduction versus 2005 levels for ETS2 sectors.
When ETS2 starts and how the “upstream” CO₂ price will work for fuel suppliers
The timeline is already a market issue. ETS2 was designed to start in 2027, but an EEA briefing reports that in November 2025 EU co-legislators agreed to a one-year delay, with a start in 2028 instead of 2027. The delay pushes the price signal back, but gives more time to prepare structural measures and the national plans linked to the Social Climate Fund.
The price is built on a simple rule. Suppliers must buy allowances and then surrender them in quantities equal to the emissions associated with fuels sold for the covered uses. That carbon cost tends to be passed through in B2B pricing, either as a separate component or as part of the price formula, and can then reach the end consumer.
Volatility is not a side issue. ETS2 includes stabilisation mechanisms, including a Market Stability Reserve (MSR) that can intervene in case of supply imbalances or rapid price increases, with the aim of reducing the risk of sustained volatility and providing more predictability for investments.
For those buying fuel and transport services, the practical point is risk management. If the carbon cost is passed through, contractual pass-through clauses and indexation models that separate the ETS2 component from the rest of the energy price become central. And it becomes more urgent to reduce the emissions base: efficiency, electrification where possible, and operational choices that cut consumption.
The Social Climate Fund: how resources will be used and who may benefit
The Social Climate Fund (SCF) is the “social safety valve” linked to the introduction of ETS2. It is in force and operational from 2026 and, according to the Commission, covers the 2026–2032 period with an indicated total envelope of €86.7 billion, combining EU resources and national contributions.
The mechanism runs through Social Climate Plans. Each Member State must submit a plan with measures and investments to soften the impact on the most exposed groups: vulnerable households, micro-enterprises, and vulnerable transport users. This is where concepts such as energy poverty and transport poverty come in, which vary significantly from country to country because vulnerability criteria are defined at national level.
The spending categories are also relevant for B2B. The guidelines cite interventions such as building renovations, replacing boilers with heat pumps, access to low-emission mobility with charging infrastructure, and support for public transport and forms of micromobility. For companies, this can translate into calls and incentives affecting light fleets, depot charging, and works on sites and facilities.
Conditionality and timing matter as much as the headline figures. The Fund combines ETS2 auction revenues and national co-financing, and what makes the difference is the speed at which calls are launched and the ability to turn resources into visible measures. For those selling retrofit solutions, technologies, and energy services, commercial planning depends on these windows.
Which political and social-acceptance risks could slow the market (e.g., pressure to suspend or reform the system)
The most obvious risk is social backlash. ETS2 affects fuels and heating, so it is perceived as a cost-of-living issue. This can fuel pressure for delays, corrective measures, or stronger interventions on price and volumes, especially during periods of high energy prices.
The delay is not just theoretical. The EEA reports that EU co-legislators have already agreed to a one-year postponement, from 2027 to 2028. In the same framework, ETS2 also includes the option to delay the start if oil and gas prices are excessively high, precisely to avoid energy shocks worsening inequalities.
A second risk is “technical” reforms that nonetheless move the market. The Commission has proposed targeted adjustments to the MSR decision to support a smoother start. Even without going into the details, the message for anyone doing planning is clear: stabilisation and supply rules can change, and expectations on price change with them.
For companies, regulatory uncertainty translates into harder choices. Hedging, multi-year contracts, and investments in fleet decarbonisation require a credible trajectory. Typical defensive strategies include review clauses, rolling forecasts, and an internal carbon budget that makes exposure visible.
Expected impacts on fuel prices, inflation, and strategies for logistics companies and fleets
The impact on fuel prices is the most immediate channel. A technical note cited by the Slovak ministry reports estimates in the range of about €0.07–€0.13 per litre (excluding VAT) under certain ETS2 price assumptions in the initial period, clarifying that pass-through depends on the allowance price, taxes, margins, and competition.
Converting from €/tCO₂ to cents per litre can be understood with a simple “rule of thumb” based on emissions factors. A popular article reports indicative values of about 2.3 kgCO₂ per litre for petrol and 2.6 kgCO₂ per litre for diesel. From there you can build a carbon surcharge model: CO₂ price per tonne, multiplied by the tonnes implicit in a litre, and then translated into cents.
For the supply chain, the effect cascades. If freight and last-mile transport costs rise, the costs of on-site services and delivered goods rise too. In contracts, this pushes towards indexation mechanisms that separate the fuel component and the ETS2 component, with frequent updates.
Fleet strategies play out through familiar levers. ETS2 strengthens the economic case for efficiency, electrification, and, more broadly, shifting towards lower-carbon-intensity options. Operationally, telematics, eco-driving, route and load optimisation, and energy and charging choices aligned with real-world use become more important.
ETS2 vs the voluntary market: does it make sense to use carbon credits for transport, and with what integrity limits
The distinction needs to be stated unambiguously. ETS2 is compliance: a legal obligation based on allowances purchased and surrendered by regulated entities. Voluntary carbon market credits are something else: instruments used for claims and to finance reductions or removals, but they do not replace the ETS2 obligation.
A sensible use case in transport is neutralising residual emissions, when some routes cannot be electrified in the short term, or to respond to customer requests on Scope 3. Here, however, quality matters more than marketing.
The integrity limits are the classic ones: additionality, permanence, leakage, and double counting. In transport, extra caution is needed with projects based on weak “avoided emissions” claims. An internal policy should require due diligence, transparency on standards and vintage, and a clear audit trail.
Reputational and legal risk is real. Claims such as “carbon neutral delivery” are under scrutiny, so it is better to use precise wording, distinguish between reduction and offsetting, and document MRV and verification.
Tokenisation can help with traceability, not with intrinsic quality. Putting a credit in digital form can improve serialisation, proof of retirement, and auditing, but it does not automatically make a project valid. Quality remains in the methodology and the standard; the token is only the container.
