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Prague – The negative impacts of the upcoming EU ETS 2 emissions trading system can be mitigated by effectively capping the price of allowances. Households will thus be burdened with lower monthly costs averaging in the hundreds of crowns. This follows an analysis by PwC commissioned by the Ministry of the Environment. The results were presented at a press conference today. The new emissions trading system is set to expand to road transport and heating, and is expected to operate from 2027. The adoption of the new allowance system has been met with criticism from some experts and politicians.
After capping the allowance prices, their impacts on households, according to the analysis, will manifest in lower monthly costs in the hundreds of crowns. Setting an upper limit on the allowance price to ensure an average price of 45 euros is demanded by a Czech initiative supported by 19 other member states. “The European Commission is preparing a proposal based on this measure, which is realistically expected to be adopted this year,” said Petr Holub, the director of the climate protection section at the Ministry of the Environment.
According to the analysis, the absolute increase in expenses after the introduction of EU ETS 2 will more significantly affect high-income households, which have the highest expenses for heating with coal and for fuels. In this case, it concerns expenses for the average household amounting to 200 to 400 crowns per month. “Lower-income groups of households will feel the increase in absolute expenses for heating with coal and fuels less than households with higher incomes,” said Jan Brázda from PwC. The increase in expenses after the introduction of EU ETS 2, according to the analysis, would amount to 1.3 percent of the total consumption expenses of the average household.
For low-income households that heat with coal or natural gas, a Social Climate Fund is being established. The aim is to mitigate impacts and assist in the transition to more efficient and cleaner technologies. The Czech Republic plans to utilize approximately 52 billion crowns from it by 2032. The revenues from emissions allowances are also intended for investments in climate protection measures. These include, for example, reducing the energy intensity of buildings, developing renewable energy sources, or energy-saving technologies.
The original Czech goal was not to introduce these emissions allowances. However, a majority has not yet been achieved in the EU. (October 15)