ETS2 was not postponed: what it could mean for fuel and heating costs

EU leaders have asked the European Commission to reassess the design, safeguards and wider effects of the EU’s new carbon market for buildings and road transport. They did not, however, approve a delay until 2030. As of 17 October 2026, the official timetable still points to ETS2 becoming fully operational in 2028. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2026/10/09/ets2-council-signs-off-on-rules-strengthening-the-market-stability-reserve/?utm_source=openai))

ETS2 will place a carbon cost on fossil fuels used in road transport, buildings and certain smaller industrial activities. Households and motorists will not trade allowances themselves. Fuel suppliers will carry the legal obligation, but may pass some or all of the cost through petrol, diesel, natural gas, heating oil and coal prices.

What EU leaders decided in October

The European Council conclusions adopted on 15 and 16 October called on the Commission to update its assessment of ETS2, focusing particularly on the system’s design and safeguards. The conclusions did not change the launch date or create a legal postponement. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2026/10/16/european-council-conclusions-on-competitiveness-the-next-multiannual-financial-framework-and-enlargement-and-reforms/?utm_source=openai))

A new assessment could eventually result in additional proposals. Any significant change would still have to pass through the relevant EU legislative process. Until that happens, households, governments and suppliers must work on the basis of the existing 2028 timetable.

The summit’s language therefore signals political concern about affordability and price volatility, rather than an immediate reversal of the policy.

How ETS2 reaches household bills

ETS2 is separate from the existing EU Emissions Trading System, commonly called ETS1, which principally covers power generation, energy-intensive industry and aviation.

The new system works upstream. Regulated fuel suppliers must monitor emissions connected with the fuels they release for consumption and surrender a corresponding number of allowances. The available allowance supply declines over time, creating an incentive to reduce fossil-fuel use. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2026/10/09/ets2-council-signs-off-on-rules-strengthening-the-market-stability-reserve/?utm_source=openai))

Consumers will not need carbon-market accounts, and most will not see an allowance purchase as a separate bill item. Instead, the cost may be incorporated into:

• petrol and diesel prices at filling stations;
• household natural-gas tariffs;
• heating oil, coal and other covered fossil fuels;
• transport, delivery and business costs that are later reflected in prices.

Electricity consumption is not directly charged under ETS2. Emissions from fossil-fuel power stations are generally covered by ETS1. Electricity prices can nevertheless be affected by generation costs, taxes, network charges and wider energy-market conditions.

How much could petrol, diesel and gas cost?

No precise increase can yet be stated. ETS2 allowances will have a market price, while the amount passed to consumers will depend on competition, supplier margins, taxation and national pricing structures.

Illustrative calculations can still show the scale of the direct carbon component. Using typical direct combustion emissions, the approximate pre-tax effect would be:

| Allowance price | Petrol | Diesel | Natural gas | | — | —: | —: | —: | | €30 per tonne of CO₂ | about €0.07 per litre | about €0.08 per litre | about €6 per MWh | | €45 per tonne of CO₂ | about €0.10 per litre | about €0.12 per litre | about €9 per MWh | | €60 per tonne of CO₂ | about €0.14 per litre | about €0.16 per litre | about €12 per MWh |

These are simplified illustrations, not retail-price forecasts. They show only the carbon cost associated with burning the fuel. VAT may increase the final amount in some countries, while other fuel-price components could rise or fall independently.

For motorists, the annual effect will depend heavily on mileage and fuel economy. At an additional €0.10 per litre, a vehicle using 700 litres a year would incur around €70 in extra direct fuel expenditure. A household consuming 12 MWh of natural gas would face about €108 before tax if the carbon component were €9 per MWh.

Actual outcomes will differ substantially between member states because fuel taxes, heating needs, building efficiency, public transport and household energy systems vary across the EU.

The €45 mechanism is not a price cap

The Council formally adopted stronger rules for the ETS2 market stability reserve on 9 October 2026. Among other changes, the mechanism doubles the release from 20 million to 40 million allowances when the carbon price exceeds €45 per tonne in 2020 prices. It also extends the reserve beyond 2030 and introduces a more gradual response when the number of allowances in circulation becomes low. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2026/10/09/ets2-council-signs-off-on-rules-strengthening-the-market-stability-reserve/?utm_source=openai))

The €45 reference value should not be understood as a guaranteed maximum price. Releasing additional allowances increases supply and is intended to limit excessive volatility, but it does not legally prevent allowances from trading above that level.

This distinction matters for household budgeting. The safeguards can soften market pressure, but they cannot provide a fixed retail price for petrol, diesel or heating fuel.

Who is most exposed?

ETS2 will have uneven effects. Exposure is likely to be greatest for people who:

• rely on a petrol or diesel car and have no practical public-transport alternative;
• live in poorly insulated homes heated with gas, oil or coal;
• have low incomes but high unavoidable energy needs;
• operate small businesses dependent on road transport or fossil-fuel heating.

Residents of efficient homes, people using heat pumps or district-heating systems with low fossil-fuel exposure, and households with access to reliable public transport may face a smaller direct impact.

The policy’s effect also depends on how governments use auction revenue. Investment in insulation, cleaner heating and affordable mobility can permanently reduce fossil-fuel consumption, whereas untargeted short-term compensation may lower bills without reducing future exposure.

What support can households expect?

The Social Climate Fund is intended to address the social effects of ETS2 for vulnerable households, vulnerable transport users and vulnerable micro-enterprises. Its measures can include building renovation, cleaner heating, improved access to low-emission transport and, within limits, temporary direct income support. ([commission.europa.eu](https://commission.europa.eu/document/download/8915fc4b-5614-4082-b4cb-d308cf6aa0cf_en?filename=C_2025_881_1_EN_ACT_part1_v3.pdf&utm_source=openai))

Support will not be identical throughout the EU. Member states must translate the framework into national social climate plans, so eligibility rules, application procedures and funded measures will vary by country. The existence of an EU fund does not mean that every household will automatically receive a payment matching its additional fuel costs.

What consumers should watch before 2028

Three developments will determine the practical impact of ETS2:

1. The Commission’s updated assessment. This may lead to proposals for stronger safeguards or other changes, but the October summit did not itself amend the law.
2. National Social Climate Plans. These will show which households and transport users can obtain renovation, heating or mobility support.
3. The allowance market and supplier pricing. The eventual carbon price and the degree of cost pass-through will determine the effect on retail bills.

The immediate conclusion is straightforward: ETS2 remains scheduled for 2028, but its exact household cost is still unknown. The greatest financial risk will fall on consumers with high, difficult-to-reduce fossil-fuel use. For them, energy efficiency and access to cleaner transport or heating are likely to matter more than any single estimate of the future allowance price.

Sources

1. ETS2: Council signs off on rules strengthening the market stability reserve — https://www.consilium.europa.eu/en/press/press-releases/2026/10/09/ets2-council-signs-off-on-rules-strengthening-the-market-stability-reserve/
2. European Council conclusions on competitiveness, the next multiannual financial framework and enlargement and reforms — https://www.consilium.europa.eu/en/press/press-releases/2026/10/16/european-council-conclusions-on-competitiveness-the-next-multiannual-financial-framework-and-enlargement-and-reforms/
3. https://www.consilium.europa.eu/en/press/press-releases/2026/06/11/ets2-market-stability-reserve-council-and-parliament-reach-provisional-agreement/?trk=public_post_comment-text
4. https://www.consilium.europa.eu/en/press/press-releases/2026/02/18/market-stability-reserve-council-backs-measures-for-a-smoother-launch-of-ets2/pdf/
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8. Commission guidance on Social Climate Plans — https://commission.europa.eu/document/download/8915fc4b-5614-4082-b4cb-d308cf6aa0cf_en?filename=C_2025_881_1_EN_ACT_part1_v3.pdf
9. https://www.consilium.europa.eu/nl/meetings/european-council/2026/10/15/
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13. https://www.consilium.europa.eu/en/press/press-releases/?topic=122165
14. https://www.consilium.europa.eu/ro/press/press-releases/2026/06/11/ets2-market-stability-reserve-council-and-parliament-reach-provisional-agreement/
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17. ETS2: Council signs off on rules strengthening the market stability reserve – Consilium — https://www.consilium.europa.eu/en/press/press-releases/2026/10/09/ets2-council-signs-off-on-rules-strengthening-the-market-stability-reserve/?utm_source=openai
18. European Council conclusions on competitiveness, the next multiannual financial framework and enlargement and reforms – Consilium — https://www.consilium.europa.eu/en/press/press-releases/2026/10/16/european-council-conclusions-on-competitiveness-the-next-multiannual-financial-framework-and-enlargement-and-reforms/?utm_source=openai
19. users to alleviate the impact of the changes brought in by ETS2. The SCF’s targeted focus is an important overarching principle that must be followed in all key areas. — https://commission.europa.eu/document/download/8915fc4b-5614-4082-b4cb-d308cf6aa0cf_en?filename=C_2025_881_1_EN_ACT_part1_v3.pdf&utm_source=openai