Jan 26, 2026
EU carbon price revenues are adequate to help vulnerable households with heating costs.
The EU's new Emissions Trading System (ETS2) is expected to affect countries differently, but it should generate sufficient funds to assist the bloc's most vulnerable households facing increased heating expenses, according to a report by Bertelsmann Stiftung.
ETS2 will impose a price on carbon emissions from transport and buildings to decrease emissions via market mechanisms. This will raise costs for 103 out of 188 million households in Europe that depend on fossil fuels for heating. While most households can manage the added expenses, the report indicates that about 10 percent of impacted households would experience significant increases in their expenditures relative to their income, especially if the price starts at around 60 euros per tonne of carbon (EUR/t CO2).
In Germany and France, households are unlikely to notice a change since they already have similar carbon prices. In Sweden and Denmark, where national carbon prices exceed 60 EUR/t CO2, the ETS2 may even lower heating costs. The most vulnerable households are predominantly in eastern countries like Poland, Hungary, or Slovakia, and also in certain regions of Spain, Italy, or Greece. These households tend to have lower disposable incomes and pay a higher percentage of their income on heating. Typically, they live in single- or two-family homes, have larger family sizes, and often include more elderly or female members.
EU nations recently chose to postpone the implementation of ETS2 for transport and building emissions by a year to 2028 due to concerns that consumer costs would rise sharply. However, experts caution that delaying this initiative could hinder efforts to encourage climate-friendly investments among companies and individuals. The EU's Social Climate Fund is intended to provide financial aid to households, small businesses, and others through means like direct income support or grants for eco-friendly heating solutions. This fund will be partially funded by revenue generated from ETS2. It is the responsibility of member states to determine how to allocate funds from the Social Climate Fund and the remaining revenues from emissions trading.
ETS2 will impose a price on carbon emissions from transport and buildings to decrease emissions via market mechanisms. This will raise costs for 103 out of 188 million households in Europe that depend on fossil fuels for heating. While most households can manage the added expenses, the report indicates that about 10 percent of impacted households would experience significant increases in their expenditures relative to their income, especially if the price starts at around 60 euros per tonne of carbon (EUR/t CO2).
In Germany and France, households are unlikely to notice a change since they already have similar carbon prices. In Sweden and Denmark, where national carbon prices exceed 60 EUR/t CO2, the ETS2 may even lower heating costs. The most vulnerable households are predominantly in eastern countries like Poland, Hungary, or Slovakia, and also in certain regions of Spain, Italy, or Greece. These households tend to have lower disposable incomes and pay a higher percentage of their income on heating. Typically, they live in single- or two-family homes, have larger family sizes, and often include more elderly or female members.
EU nations recently chose to postpone the implementation of ETS2 for transport and building emissions by a year to 2028 due to concerns that consumer costs would rise sharply. However, experts caution that delaying this initiative could hinder efforts to encourage climate-friendly investments among companies and individuals. The EU's Social Climate Fund is intended to provide financial aid to households, small businesses, and others through means like direct income support or grants for eco-friendly heating solutions. This fund will be partially funded by revenue generated from ETS2. It is the responsibility of member states to determine how to allocate funds from the Social Climate Fund and the remaining revenues from emissions trading.