August 9, 2026

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The European Post

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August 9, 2026

Newsletter

The European Post

Policy • Diplomacy • Strategic Insight

LATEST
New EU Gas Market Rules Take Effect With Consumer SafeguardsDeforestation Regulation Holds Its December Deadline Despite CutsDigital Omnibus Delays Europe’s High-Risk AI Deadline to 2027Europe’s Schools Confront a Widening Basic Skills GapRule of Law Report Finds Progress but Trust Still LagsIRIS2 Gains 66 Satellites as Brussels Signs the Rollout DealNature Restoration Plans Come Due as Member States Race a DeadlineECB Rates Hold at 2.25 Percent as Frankfurt Waits on the DataEU Budget Talks Turn to Cohesion as Ireland Takes OverWildfire Response Stretches Europe’s Emergency Fleet ThinCan Europe’s Quantum Plan Match Its Big Ambitions?Armenia Edges West as Moscow’s Grip Slips AwayEurope Inherits the World’s Aid Bill It Cannot Fully PayAir Passenger Rights Get Their First Overhaul in Two DecadesErasmus Opens a 5 Billion Euro Round for Skills and MobilityCeuta Crisis Pushes the EU Toward Faster Migrant ReturnsBulky Parcels Face a Packaging Crackdown From August 12Can Europe Build Its Drone Wall Before 2030 Arrives?Indonesia’s Trade Deal With Europe Nears Its Final SignatureEurope Leans on Beijing to Keep Climate Talks Alive Before AntalyaNew EU Gas Market Rules Take Effect With Consumer SafeguardsDeforestation Regulation Holds Its December Deadline Despite CutsDigital Omnibus Delays Europe’s High-Risk AI Deadline to 2027Europe’s Schools Confront a Widening Basic Skills GapRule of Law Report Finds Progress but Trust Still LagsIRIS2 Gains 66 Satellites as Brussels Signs the Rollout DealNature Restoration Plans Come Due as Member States Race a DeadlineECB Rates Hold at 2.25 Percent as Frankfurt Waits on the DataEU Budget Talks Turn to Cohesion as Ireland Takes OverWildfire Response Stretches Europe’s Emergency Fleet ThinCan Europe’s Quantum Plan Match Its Big Ambitions?Armenia Edges West as Moscow’s Grip Slips AwayEurope Inherits the World’s Aid Bill It Cannot Fully PayAir Passenger Rights Get Their First Overhaul in Two DecadesErasmus Opens a 5 Billion Euro Round for Skills and MobilityCeuta Crisis Pushes the EU Toward Faster Migrant ReturnsBulky Parcels Face a Packaging Crackdown From August 12Can Europe Build Its Drone Wall Before 2030 Arrives?Indonesia’s Trade Deal With Europe Nears Its Final SignatureEurope Leans on Beijing to Keep Climate Talks Alive Before Antalya

Europe’s Carbon Market for Homes and Cars Buys a Year

Xherdan Shaqiri
Senior Research Fellow, Energy and Climate

For a policy that was supposed to demonstrate the European Union’s seriousness about extending carbon pricing into the corners of the economy that ordinary households actually feel, the second Emissions Trading System has had an unusually public wobble. Originally due to start charging fuel suppliers for the emissions associated with heating homes and driving cars from 2027, ETS2 was pushed back a year, to 2028, after the Council and Parliament agreed the postponement in March 2026. Auctions of allowances will still begin in January 2027 to build up market liquidity, but the point at which the scheme actually bites, when its costs start showing up in the price of heating oil, natural gas and petrol, has now moved to 2028.

The postponement followed two years of warnings from a coalition of mostly central and eastern European governments, Poland prominent among them, that launching a new carbon price on home heating fuels at a moment when households were still absorbing the inflationary aftershocks of the energy crisis risked a political backlash that could undermine support for climate policy more broadly. The argument was not that carbon pricing for buildings and transport was wrong in principle, several of the same governments have supported the broader 2040 climate target, but that the sequencing mattered: introducing a new household-facing cost before the Social Climate Fund and national compensation schemes were operational risked repeating, at EU scale, the kind of fuel-price protests that have destabilised climate policy in individual member states before.

The delay arrives at a moment when the EU’s climate architecture is otherwise moving from negotiation to implementation. The amended European Climate Law, adopted by the Council in March 2026, sets a binding interim target of a 90% reduction in net greenhouse gas emissions by 2040 against a 1990 baseline, with a ceiling on the use of international carbon credits, capped at roughly 5% of 1990 EU net emissions and available only from 2036, to ensure that at least 85% of the reduction comes from action inside the EU. That target now needs to be translated into the sectoral instruments, an updated Emissions Trading System for industry and power, the Carbon Border Adjustment Mechanism, and ETS2 itself, that will actually deliver it. ETS2’s slippage is therefore not an isolated hiccup; it is the first concrete sign of how much political friction the implementation phase is likely to generate compared with the relatively abstract target-setting phase that preceded it.

There is a structural irony in the postponement. ETS2 is designed to cover roughly 75% of the EU’s emissions once combined with the existing industrial and power-sector system, precisely because buildings and road transport are where emissions have proven stubbornly resistant to reduction through regulation alone, vehicle efficiency standards and building renovation requirements have moved the needle far more slowly than equivalent measures in the power sector. A carbon price was meant to supply the missing incentive. Delaying that price by a year does not remove the emissions gap it was designed to close; it simply pushes the political reckoning, and the associated revenue that was earmarked to fund the Social Climate Fund’s household support measures, into a tighter window before 2040.

For governments in the EU’s east and south, where heating systems remain more carbon-intensive and households spend a larger share of income on energy, the additional year is likely to be used to argue for further adjustments, either to the price trajectory once auctions begin or to the scope of compensation available under the Social Climate Fund. For the Commission, the challenge is to avoid a precedent in which headline climate commitments survive intact while every instrument designed to implement them gets renegotiated piecemeal. The 2040 target’s credibility, both with markets pricing in long-term decarbonisation and with the public asked to bear its costs, will depend on whether the postponed start of ETS2 in 2028 holds, or whether it becomes the first of a series of slippages that quietly hollow out the timeline without anyone formally revising the target itself.

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