Czech Republic wins qualified-majority EU support for emissions allowance revision

The Czech Republic has won the support of a qualified majority of EU countries for changes to the planned ETS 2 emissions allowance system. The proposal includes, for example, capping the price of allowances and modifying the system for trading them. Prime Minister Petr Fiala (ODS) said this at a press conference today. According to him, the government does not want to introduce the new allowance system because it would lead to further increases in fuel and housing costs. It will therefore continue seeking EU support for abolishing the system entirely. However, it does not yet have that support.

The new ETS 2 emissions allowance system is intended to extend allowance trading to areas including road transport and building heating. Under current plans, it is due to take effect from 2027. Experts say the system could significantly increase household spending on energy and fuel.

"We will not introduce new emissions allowances because we do not want to expose people to higher fuel or housing costs. People must not bear the cost of nonsensical ambitions. On the contrary, we are working to amend and abolish the whole thing," Fiala said.

According to him, the Czech Republic launched an EU initiative in recent months aimed at revising the new allowance system. "Today, we succeeded in gaining the support of a qualified majority of European Union countries for a fundamental change to emissions allowances, so that we can be sure there is no risk of a significant increase in housing and fuel costs, the prime minister said.

According to him, the government is proceeding in stages under its initiative and will continue seeking EU support for postponing or completely abolishing the ETS 2 system.

According to Environment Minister Petr Hladík, the proposal for revising the new allowance system, for which the Czech Republic has now gained support, includes five main changes to the system. The probably most important of these would be capping the price of allowances at 45 euros per tonne of carbon dioxide. Other changes include modifying the allowance trading system, launching so-called preliminary allowance auctions as early as 2026, regularly publishing key data and forecasts within the system, and extending the allowance reserve.

According to Fiala, the initiative's aim is for the European Commission to incorporate these proposals into the system this autumn.

At present, emissions allowances are purchased by power plants and other industrial companies that release greenhouse gases, such as carbon dioxide, into the atmosphere. One allowance entitles a company to emit one tonne of carbon dioxide into the atmosphere, or an equivalent amount of another gas. EU countries are required to use allowance revenues for climate protection.