The European Union is undertaking a major reform of its emissions trading system. Starting in 2028, the new EU ETS 2 mechanism will extend emissions allowance trading to building heating and road transport. While the system has so far mainly applied to large-scale energy producers, industry, and aviation, it will now also affect smaller fossil fuel consumers. Formally, the obligations will fall on fuel suppliers, who will be required to purchase emissions allowances through auctions. In practice, the implications will favor renewable energy sources.
What Is EU ETS 2
ETS 2 introduces the “polluter pays” principle to sectors where emissions reductions have so far progressed slowly:
- individual residential heating,
- commercial and public buildings,
- road transport.
Electricity generation and district heating remain outside the EU ETS 2 system, as their emissions are already regulated under the existing EU ETS 1 framework. Households using biomass (wood or pellets) or renewable energy sources will not be included in the system.
The objective is to reduce emissions in these sectors by 42% by 2030 compared to 2005 levels.
Impacts on Slovakia
Slovakia is among the countries more sensitive to the potential consequences of introducing EU ETS 2. The main reasons are the high share of households heated by natural gas and an aging vehicle fleet.
The preliminary estimate of Slovakia’s emissions under EU ETS 2 is approximately 13 million tonnes of CO₂ annually, with transport remaining the dominant source.
Available analyses also indicate that:
- road transport accounts for approximately 57% of EU ETS 2 emissions,
- gas heating represents nearly 28%,
- the remainder comes from solid and liquid fuels used in households.
The strongest pressure is therefore expected in reducing emissions from transport and individual heating systems.
Social Climate Fund
As these measures are costly and may increase fuel and commodity prices, Slovakia is expected to receive approximately €1.5 billion from the Social Climate Fund to mitigate the impacts.
The funds are intended to support:
- building renovation and insulation,
- heat pumps and renewable energy sources,
- low-emission transport and public mobility.
The effectiveness of how these resources are used will be critical in limiting the growth of energy poverty.
Conclusion
EU ETS 2 represents not only an environmental measure, but also an economic transformation of how the energy and transport sectors operate. Countries with a higher dependence on fossil fuels, including Slovakia, are likely to experience its impacts more strongly. The key question will be whether the available financial resources lead to genuine energy modernization or merely to temporary, uncoordinated, and unsustainable measures aimed at suppressing rising costs.