Czech Chamber of Commerce: ETS 2 changes will help, but ETS 1 needs a major overhaul

The changes to the planned ETS 2 emissions trading system, approved overnight by representatives of EU member states and the European Parliament, reduce the risk of major price fluctuations. This will make it easier for companies to plan investments. The Czech Chamber of Commerce said in a statement to ČTK. It welcomed the approved changes, while also stressing the need for a major overhaul of the current ETS 1 allowance system.

The agreed changes include a price cap of 45 euros (1100 koruna) per tonne of CO2 produced, with allowances from the Market Stability Reserve (MSR) automatically released once the cap is reached. The price cap was set at 2020 prices.

"If the ETS 2 system is fully implemented in the Czech Republic, we welcome the approved changes, as they strengthen the tools to protect the market from excessive allowance price volatility and reduce the risk of price fluctuations that would make it harder for companies and households to plan investments and budgets," said Zuzana Krejčiříková, vice-president of the Czech Chamber of Commerce.

At the same time, she stressed that alongside changes to the ETS 2 system, a major overhaul of the existing ETS 1 allowance system and its parameters is also needed. "For companies, transparent use of allowance revenues and the continuation of programmes that help mitigate the impact on their competitiveness, such as the Modernisation Fund, are also important," Krejčiříková added.

The EU introduced its emissions trading system (ETS 1) in 2005. It applies primarily to the energy sector, energy-intensive industry and aviation. It sets an overall limit on carbon dioxide emissions, and companies must surrender one allowance for every tonne of carbon dioxide they emit.

The planned ETS 2 system is intended to cover additional sectors, particularly road transport and building heating. It is scheduled to launch in 2028 and, according to critics, will also affect households and small businesses indirectly through higher fuel and energy prices. The introduction of ETS 2 is also to include a Social Climate Fund to mitigate the impact on low-income households.