Back to resources overview

Impacts of extending the ETS to transport and buildings

Buildings Transport
| 01.07.2020

The European Commission has been consulting the public about whether to extend the Emissions Trading System (EU ETS) to include road transport and the heating of buildings. The ECF supported an analysis by Cambridge Econometrics into the implications of such a policy approach.

Photo 1527815733652 66e7a48899e8

The study found this would have little additional impact on emissions from these sectors, but would significantly increase living costs for poorer households. Low-income households are least able to invest in new technologies – either for cars or heating appliances – before the end of the life of their current investments. While waiting for these products to reach end-of-life, they will face substantially higher running costs for both heating and transport.

The study also found that extending a single ETS to cover these sectors would substantially alter the balance in the system. Since the demand for transport and heating fuels is relatively inelastic, other sectors would need to do more to compensate. A substantially higher ETS allowance price would be required in the short term than under the current ETS, which would impact on the competitiveness of all industries covered by the scheme.