The European Union has agreed to stronger price controls on its second emissions trading system (ETS2), which will put a price on CO2 from heating and transport fuels starting in 2028. Negotiators doubled the size of the market stability reserve from 20 million to 40 million permits, triggered when prices exceed 45 euros per ton. The reserve can be activated twice per year, allowing up to 80 million extra permits annually to stabilize costs. The changes address concerns from EU governments that the new carbon price could increase household fuel bills and fuel political backlash. France and the Czech Republic were among those pushing for tighter safeguards. The reserve will now extend beyond 2030, and permit release volumes will taper more gradually when circulating permits fall below 260 million. The agreement still needs approval from the European Parliament and member states before taking effect in 2028. The European Commission plans a wider review of ETS2 in July. Proceeds from the scheme are meant to help households with energy bills, electric vehicle purchases, and home efficiency upgrades.
