A coalition of European Union (EU) member states is pushing to postpone the rollout of a contentious carbon market targeting emissions from road transport and buildings, citing fears of social and economic fallout, Bloomberg News has reported.
Led by Cyprus and supported largely by Central and Eastern European countries, the group plans to urge European Commission President Ursula von der Leyen to delay the start of the new emissions trading system (ETS2) until 2030, as outlined in a draft letter obtained by Bloomberg.
The ETS2 is currently set to become fully operational in 2027.
“We are compelled to convey our deep concern regarding the current design and implementation timetable,” the draft letter states. “The 2027 launch of ETS2 risks triggering unintended social, economic and political disruptions.”
Relevant: ETS2 Carbon Market Needs Certainty, Not Delays, IETA Warns
The objections come ahead of an EU leaders’ summit in Brussels this week, where climate targets through 2040 will be discussed.
The European Commission has proposed a 90% cut in greenhouse gas (GHG) emissions by 2040 compared to 1990 levels, but progress on climate goals has been hampered by political resistance and rising cost-of-living pressures.
The draft letter, which is still subject to change, does not mention the Social Climate Fund, a key mechanism intended to offset the impact of ETS2 on vulnerable households.
The fund, expected to be financed by revenues from ETS2, is scheduled to launch in 2026.
Concerns over the cost burden of ETS2 have been mounting. In June, 19 member states called for stricter price-control measures in the system, warning that energy and transport costs could spike for consumers.
According to BloombergNEF, carbon prices under ETS2 could climb to $174 (€149) per metric ton by 2029—an increase of over 80% from current rates applied to industry and power producers.
The EU already operates a carbon pricing system—the EU ETS—for sectors including manufacturing, aviation, and maritime transport.
Read more: CFP Energy Executes First-Ever EU ETS2 Futures Trade, Ushering in Early Carbon Hedging
