Cyprus has become one of the initiators of a joint appeal by 10 European Union member states to the European Commission, calling for a review of the new ETS2 emissions trading system, which is scheduled to come into force in 2028.
According to the signatories, the introduction of the new carbon pricing mechanism would lead to further increases in fuel and heating costs, placing an additional financial burden on millions of Europeans at a time of persistent inflation, high energy prices, and an unstable global economy. Alongside Cyprus, the letter was signed by Italy, Poland, Bulgaria, the Czech Republic, Estonia, Greece, Hungary, Romania, and Slovakia.
The joint statement argues that European citizens should not bear additional costs associated with climate policy under the current economic and geopolitical circumstances.
What Is ETS2 and Why Cyprus Opposes It
ETS2 is part of the EU-wide Fit for 55 climate package, which aims to reduce greenhouse gas emissions across the European Union by 55% by 2030. The new system extends carbon emissions trading to fuels used in road transport and building heating.
Formally, fuel suppliers will be responsible for paying for emissions. However, virtually all experts expect these additional costs to be passed on to consumers through higher prices for petrol, diesel, heating oil, natural gas, and other energy sources, inevitably increasing expenses for both households and businesses.
The cost of emissions will not be fixed. Instead, it will be determined through European auctions based on supply and demand. The European Union has introduced a mechanism intended to keep the price at around €45 per tonne of CO₂, although analysts warn that the actual price of allowances could be significantly higher if demand remains strong.
Why the Issue Is Especially Important for Cyprus
For Cyprus, the introduction of ETS2 could be particularly sensitive. The island relies almost entirely on imported petroleum products, while private vehicles remain the primary means of transportation for most residents. In addition, Cyprus is among the EU countries where energy poverty remains one of the most pressing social issues. High electricity bills, air conditioning costs during the summer, and heating expenses in winter already place considerable pressure on household budgets.
To mitigate these effects, the European Union has established the Social Climate Fund, designed to support the most vulnerable households while financing home energy-efficiency improvements, public transport development, and the transition to cleaner energy sources. However, according to the countries behind the appeal, the planned financial support is currently insufficient to offset the expected increase in costs.
Could the New System Be Revised?
A complete cancellation of ETS2 is not currently under consideration. However, the initiative by the 10 EU member states could significantly influence future negotiations. The signatories are calling not only for changes to the new ETS2 system but also for a broader review of the existing ETS framework. In particular, they advocate retaining a larger number of free emissions allowances for industry, whereas the European Commission proposes granting such benefits only to companies actively reducing their carbon emissions.
Not all member states share this position. Germany and Sweden, for example, regard ETS2 as a key instrument for achieving the EU's climate objectives and support maintaining the current reform timetable. Nevertheless, the group of 10 countries carries enough political weight to influence the debate. In fact, it was pressure from member states that already delayed the launch of ETS2 from 2027 to 2028.
The final decision on the future of the system will be taken jointly by the governments of the European Union and the European Parliament. For Cyprus, the outcome of these negotiations will be particularly important, as it will directly affect future fuel prices, heating costs, household expenses, and the competitiveness of the island's economy.
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