Poland wants to delay the expansion of the ETS emissions trading system to include transport and construction by three years, according to an EU source. However, the change would not affect the launch of the Social Climate Fund, which would finance, among other things, the insulation of buildings during the deferral period.

From 2027, a new, expanded emissions trading system covering, among others, transport and construction is expected to apply in the EU.

However, some countries want to delay this expansion for fear of imposing additional charges for heating and fuels. Czech Prime Minister Petr Fiala announced that the Czechs will seek to postpone the inclusion of transport and construction in the ETS system by one year.

An EU source told a small group of journalists that Poland has gone further by proposing a delay in the implementation of the new system by three years – until 2030. Poland wants the Social Climate Fund to be up and running by 2027 as originally planned, providing support to citizens and businesses most affected by the expansion of the ETS to include buildings and transport.

Ultimately, the Fund is to be financed from the sale of allowances auctioned. During the three-year deferral period, Poland proposes to fund the Fund with money from other sources, such as loans from the European Investment Bank. During this time, beneficiaries could allocate additional funds for investments in building insulation and transport decarbonization.

“It’s about giving time for additional mitigation of price pressures,” journalists in Brussels were told.

The ETS directive allows for a one-year delay in the implementation of the new system, provided that the average price of gas in the first half of 2026 is higher than in February and March 2022, or if during this period the average price of oil is twice as high as the average oil price of the previous five years. However, this would mean a return to the prices seen during the crisis following Russia’s invasion of Ukraine in 2022, which is unlikely.

Any change will therefore require an amendment to the already existing directive. “Such an amendment can be carried out – as was recently done with deforestation – at lightning speed,” suggested the interlocutor. This refers to the regulation on deforestation, the provisions of which were to apply from 1 January 2025. It imposes on importers and producers of goods such as wood, rubber, coffee, or soy the obligation to provide evidence that they are not obtained from areas deforested especially for cultivation.

The European Commission proposed the change in October this year. Already in November, it was approved by both the European Parliament and the member states in the EU Council. As a result of the amendment to the regulation, its provisions will be applicable from early 2026 at the earliest (micro- and small enterprises received more time to adapt to the new requirements). (19.03.2024)