In a move aimed at curbing carbon emissions across the European Union, a new emissions trading system (ETS2) for heating buildings and road transport is set to be implemented starting in 2027.
A recent study by the Swiss University of Basel, the University of Stuttgart, and Germany’s Potsdam Institute for Climate Impact (PIK) has revealed that this initiative could lead to a significant increase in natural gas bills for average Belgian households, raising costs by hundreds of euros annually.
The EU’s Emissions Trading System (ETS), which was established in 2005, requires airlines and certain factories to purchase allowances to cover their carbon dioxide emissions.
This pricing structure has indirectly affected consumers, as the costs of emissions are passed on in the form of higher ticket prices, for instance.
The upcoming ETS2, however, will expand this approach to include buildings, road transport, and additional sectors, primarily targeting small industries not currently encompassed by the existing EU ETS.
From 2027 onward, suppliers of fossil fuels—including natural gas, fuel oil, petrol, and diesel—will be required to buy emission rights corresponding to the CO2 emissions generated by their products.
This change is part of the EU’s broader goal to reduce emissions by 42% by 2030, compared to levels recorded in 2005.
Significant Financial Impact on Households
The financial repercussions of ETS2 could be staggering. According to the projections from the study, the cost of emissions allowances is expected to be between €45 and €80 per tonne of CO2 in the initial years.
However, from 2030 onwards, these costs could soar, with estimates suggesting prices may reach €200 per tonne.
Ruben Baetens from the Research Institute for Energy and Society at KU Leuven has emphasized the implications for households, stating that “this corresponds to an additional €812 per year for an average family heating their home with natural gas.”
Moreover, the study predicts that households using fuel oil may see an increase of €0.62 per liter, translating to an extra cost of €620 for a 1,000-liter order.
Drivers filling their vehicles with petrol or diesel could face an increase of €0.50 per liter at the pump, adding €25 to the cost of a standard 50-liter fill-up.
As a result of these changes, the majority of Belgian households, which currently rely on natural gas for heating, are poised to experience a substantial financial burden.
Baetens noted, “An average family heating with gas will have to pay more than half extra on an annual basis. This is coming our way, but little is communicated from the political side. Even though people need to know about it.”
Encouraging Transition to Cleaner Alternatives
The primary aim of the ETS2 is to incentivize households and businesses to transition to more environmentally friendly options, such as electric vehicles and heat pumps for home heating.
However, it remains uncertain whether this transition can occur swiftly enough to impact the market for emissions allowances positively.
Experts express concern that vulnerable populations may bear the brunt of these increased costs, raising fears of potential public unrest akin to the yellow-vest protests seen in France in recent years.
“This is, of course, all very sensitive. If this is organized poorly, new yellow-vest protests are very likely,” Baetens warned.
Despite the challenges, the funds generated from the sale of emission rights are intended to flow back into EU member states and regions.
The EU mandates that these revenues be used to support families and organizations affected by the new system. Notably, a quarter of this revenue must be allocated to a social climate fund designed to assist socially disadvantaged individuals.
The establishment of this fund is also highlighted in the coalition agreement of the new Flemish Government, underscoring the need for proactive measures to cushion the impact of ETS2 on vulnerable communities.
Preparing for the Transition
As the implementation of ETS2 approaches, there is an urgent call for individuals and businesses to prepare for the impending changes.
Baetens emphasized that those planning renovations or considering the replacement of gas boilers in the coming years will need to make crucial decisions. “You might put in a new gas boiler in 2027, which will have become too expensive to use in 2030,” he cautioned.
While the shift from natural gas to electricity aligns with environmental goals, Baetens noted that public confidence in Belgian policy is waning due to a perceived lack of action over the past decade.
He stated, “The problem is that Belgian policy has been promising it for a decade, but has still not implemented it. That is why public confidence is currently very low.”
The ETS2 is poised to reshape Belgium’s energy landscape, with the potential for significant cost implications for households across the nation.
As the EU seeks to reduce harmful emissions and transition towards greener energy sources, it will be crucial for both policymakers and citizens to navigate these changes with transparency and support to mitigate the financial burden on vulnerable populations.
In conclusion, the introduction of the ETS2 system represents a critical juncture for Belgium in its efforts to combat climate change.
With the potential for increased household expenses, it is imperative that the government communicates these changes effectively and provides support to ensure a just transition for all citizens.
As the clock ticks down to 2027, stakeholders across the board must engage in dialogue and action to prepare for a more sustainable future.
