Analysts: Pricing emissions from transport and building heating is a logical step

Introducing a system of emissions allowances for road transport fuels and building heating in the EU is a logical step towards achieving the bloc’s climate targets, analysts contacted by the Czech News Agency (CTK) agreed. Fuel and heating prices will rise, but they say the increases will not be crippling.

MEPs approved carbon pricing for building heating and road transport in 2023, with the new system setting a price on greenhouse gas emissions from these sectors in 2027. The measures are intended to bring the EU closer to its target of cutting greenhouse gas emissions by at least 55 percent by 2030 compared with 1990.

„If we are talking strictly about the Czech Republic, greenhouse gas emissions from transport have risen by more than 60 percent since 1990, which is obviously no small increase and contrasts with other sectors, where these emissions are falling,“ Oldřich Sklenář of the Association for International Affairs told CTK.

According to analyst Kateřina Kolouchová of Facts About Climate, passenger transport accounts for the largest share of this increase and is the third most energy-intensive sector in the Czech Republic. She said a new emissions allowance system is therefore needed. „We want to encourage households and users of passenger transport to switch to low-carbon or zero-emission alternatives,“ she said.

According to existing studies, building operations account for more than 40 percent of energy consumption in the EU, while related emissions make up around 36 percent. In Europe, this sector also has the greatest potential for energy savings, Sklenář said.

„Emissions related to building operations have so far declined only gradually, while those related to transport have risen. I doubt that governments have the tools, as well as the political will, to initiate sufficiently rapid emissions cuts in these sectors by other means,“ Tomáš Jungwirth Březovský, also an analyst at the Association for International Affairs, told CTK.

He said virtually everyone would feel the effects of introducing the allowance system for transport fuels and building heating. „Anyone who drives a car with an internal combustion engine will pay a crown or two more for petrol or diesel, and anyone with a gas or coal boiler at home will also see a modest price increase,“ he said. The exception, he said, would be households connected to district heating, which already pay for emissions allowances in their bills.

„The expected price increases will not be substantial or crippling, but of course it is the state’s responsibility to protect the most vulnerable households from falling into energy or transport poverty, „ he added.

The Social Climate Fund is intended to help with this, but it should primarily cover investment costs, for example for insulation and replacing heating systems, as well as investments in electric passenger cars.

„We therefore need to discuss whether housing benefits and social assistance in their current form will adequately address the situation of people at risk. In any case, the government should communicate openly about the planned changes and prepare both public authorities and citizens for them—and in my view, that is nowhere near happening sufficiently,“ Jungwirth Březovský said.

According to Sklenář, the emissions allowance system for transport fuels and building heating is about levelling the playing field. „At present, we have an emissions allowance system that covers, for example, power plants, heating plants, heavy industry, and air and maritime transport,“ he said. The current system, he said, covers 38 percent of the EU’s greenhouse gas emissions; with the introduction of the new emissions allowance system, a further 47 percent should be covered. In the future, therefore, more than 85 percent of greenhouse gas emissions should be subject to some form of pricing.