Prague – The negative effects of the forthcoming EU ETS 2 emissions trading system can be alleviated by effectively capping allowance prices. As a result, households are projected to face lower monthly expenses, averaging in the hundreds of crowns. This is based on an analysis conducted by PwC for the Ministry of the Environment, with findings revealed at a press conference today. The new emissions trading system, which will extend to road transport and heating, is expected to be implemented by 2027. The introduction of this allowance system has garnered criticism from various experts and politicians.
By capping allowance prices, the analysis indicates that households will experience reduced monthly costs in the range of hundreds of crowns. A Czech initiative, supported by 19 other member states, advocates for an upper limit on allowance prices, aiming for an average price of 45 euros. “The European Commission is preparing a proposal based on this measure, which is realistically anticipated to be adopted this year,” stated Petr Holub, director of the climate protection section at the Ministry of the Environment.
The analysis reveals that the overall increase in costs following the introduction of EU ETS 2 will predominantly affect high-income households, which typically incur the highest expenses for coal heating and fuel. Specifically, average household expenses are estimated to rise by 200 to 400 crowns per month. “Lower-income households will experience a lesser increase in their absolute expenses for coal and fuel heating compared to higher-income households,” noted Jan Brázda from PwC. The projected increase in expenses due to EU ETS 2 would represent 1.3 percent of the total consumption expenses for the average household.
To support low-income households relying on coal or natural gas for heating, a Social Climate Fund is being established to help mitigate impacts and facilitate the transition to more efficient and cleaner technologies. The Czech Republic aims to allocate around 52 billion crowns from this fund by 2032. Additionally, revenues from emissions allowances will be directed towards investments in climate protection initiatives, such as enhancing building energy efficiency, promoting renewable energy sources, and advancing energy-saving technologies.
Initially, the Czech Republic aimed to avoid implementing these emissions allowances; however, a majority consensus has yet to be reached within the EU. (October 15)
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