Experts: ETS 2 is an opportunity and a risk; support for Czech households and investment are key

Experts say that introducing the second pillar of the European Union Emissions Trading System (EU ETS 2) is an opportunity to decarbonise Czechia and reduce its dependence on fossil fuels, but that it also requires careful preparation and systematic support for households. Participants in a discussion at the Chamber of Deputies today agreed, including representatives of environmental organisations, technology manufacturers and the construction industry. According to a statement today by Prime Minister Petr Fiala (ODS), 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 to seek EU support for abolishing the system altogether.

The government does not yet have that support. The prime minister announced today, however, that Czechia had won the support of a qualified majority of EU countries for changes to the planned ETS 2 system. The new ETS 2 system is intended to extend emissions trading, for example, to road transport and building heating. Under current plans, it is due to take effect in 2027.

"It is a huge opportunity to get rid of our dependence on fossil fuels," said Tomáš Habel of the Association of Heat Pump Manufacturers and Daikin during today's discussion.

He said the aim should be for Czechia to use the revenue from emissions allowances as soon as possible while also preventing energy poverty.

Štěpán Chalupa, chairman of the Chamber of Renewable Energy Sources, also voiced support for EU ETS 2. In his view, the system will help strengthen Czechia's energy self-sufficiency and make clean technologies economically viable. "In sectors covered by emissions allowances, emissions fall 10 percent faster. Production is neither relocated nor reduced," added Tomáš Protivínský of the Facts on Climate initiative. EU ETS 2 is expected to cover up to 80 percent of emissions in the EU, and avoiding it could, he said, negatively affect individual countries' GDP and worsen the impacts of climate change.

Marta Gellová of Chance for Buildings also highlighted the importance of the new emissions allowance system for households. She noted that some residents are already paying more because of EU ETS 1, through district heating. Heating companies buy allowances and, she said, pass the costs on to end users. Households are also responding by saving energy and investing in efficiency measures, while revenue from emissions allowances is returned to them through the Modernisation Fund and the New Green Savings programme.

According to Jiří Vecka of the Czech Heating Association, introducing ETS 2 is essential to creating a level playing field in the heat market. He said that 35 percent of households in Czechia already pay for an EU ETS 1 allowance as part of their heating costs.

Power plants and industrial companies that produce greenhouse gases, such as carbon dioxide, currently buy emissions allowances. Each allowance permits the release of one tonne of carbon dioxide into the atmosphere, or an equivalent amount of another gas. EU member states are supposed to use the proceeds from their sale for climate protection measures.