Czech government rejects ETS 2 system, Babiš says

The government today rejected the ETS 2 emissions allowance system, which covers carbon dioxide emissions from fuel combustion in buildings and road transport. Prime Minister Andrej Babiš (ANO) announced the decision after a meeting of the ANO, SPD and Motorists’ cabinet. However, ODS deputy chairman Martin Kupka believes that merely rejecting ETS 2 has no positive practical impact for Czechia.

The government will ask MEPs to build support for rejecting ETS 2. “We have unequivocally rejected transposing it into our legal system,” he said. “We will come forward with very specific solutions at the European Council summit on 12 February, which is due to discuss the European Union’s competitiveness,” the prime minister added.

Babiš did not want to specify the proposed solutions. “We have procedures for this, we want to write letters, and we are ready,” he said. He only noted that, for example, the intervention price for an allowance should be 25 euros (600 crowns).

Speaking at an afternoon press conference of the ODS parliamentary group, Kupka said that if the rejection is to achieve anything, concrete steps must be ready. According to him, Babiš did not say what specific action he intends to take to avert any negative impact on citizens. “Going forward, we urge the government to be proactive and ensure the smallest possible impact on Czech citizens, while recognising that it is not possible to charge headlong into a wall, as they appear to be doing so far,” Kupka said. Ultimately, he said, the government would expose Czechia to sanctions, and Czech citizens and businesses would be unable to draw any potential subsidies.

According to Senate President Miloš Vystrčil (ODS), the government’s decision on allowances is in line with the position taken by the previous cabinet. “Whether it is possible to reject the allowances entirely remains to be seen. Unfortunately, that does not depend only on what the Czech government thinks; it is a broader problem that we have to address at EU level,” Vystrčil said today.

In its resolution, the cabinet instructed the ministers of the environment and of industry and trade to seek support in the EU for scrapping the ETS 2 system. It also called on ministers to strengthen the tools available to protect households and businesses from high allowance prices if sufficient support for completely scrapping the system cannot be secured.

According to Babiš, the previous government of Petr Fiala (ODS) commissioned an analysis of ETS 2’s impact on Czechia in October. “The analysis shows that, with an emissions allowance price of 45 euros (1100 crowns), the impact on our citizens from 2027 to 2032 would be 154 billion crowns. If an emissions allowance cost 70 euros (1700 crowns), it would amount to as much as 205 billion crowns. That is unacceptable to us,” Babiš said.

Czechia is among a group of 19 countries calling for changes to the system at European level. The prime minister said he was aware of the initiative but did not expect an allowance price cap to be agreed.

The Council of the EU, which represents member states, and the European Parliament reached a provisional agreement last week on amendments to the bloc’s climate rules. These will include a target to cut greenhouse gas emissions by 90 percent by 2040 compared with 1990 levels. Representatives of the two institutions also agreed to delay the introduction of the ETS 2 emissions allowance system by one year, from 2027 to 2028. Babiš had previously said that the delay was far from sufficient and that his new government would demand a complete withdrawal from the system.