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Cost for Households of the Inclusion of Transport and Residential Buildings in the EU ETS
The PARIS REINFORCE project contributed to a new policy report by the Polish Economic Institute, in collaboration with ERCST and Cambridge Econometrics, on the inclusion of the Transport and Residential sector in the EU Emissions Trading System (ETS).
The EU ETS has proven to be an effective tool in driving emissions reductions. Installations covered by the ETS reduced emissions by about 35% between 2005 and 2019. The Commission has recently presented an impact-assessed plan to increase the EU’s net emissions reductions target to at least 55% by 2030. By June 2021, the Commission plans to present legislative proposals to implement the new target, including revising and extending the EU ETS to include buildings and transport. The two sectors might be included directly in the current EU ETS or a separate ETS might be established for them, with a possible incorporation into the EU ETS after the alignment of prices. However, some stakeholders have raised concerns. A recent study by Cambridge Econometrics found that extending the ETS to include transport and buildings would have little additional impact on emissions from these sectors, but would increase living costs for poorer households.
This report concludes that covering buildings and transport by the current EU ETS would involve the necessity to significantly increase the price if the system is to be effective in stimulating changes in the new sectors. It has also been pointed out that road transport emissions are already covered by more targeted schemes, like emission standards for cars.
The full report can be found here.
Maj, M., Rabiega, W., Szpor, A., Cabras, S., Marcu, A., Fazekas, D. (2021), Cost for Households of the Inclusion of Transport and Residential Buildings in the EU ETS, Polish Economic Institute, Warsaw.