Cool Heating Coalition has signed a letter calling on policymakers to establish a lending facility for member states for revenue generated by the forthcoming EU Emissions Trading System for road transport and buildings (ETS2).
The letter was organised by coalition members Carbon Market Watch, and co-signed by other members such as EEB, ECOS, REScoop.eu and E3G, aligned civil society organisations and representatives of progressive industry.
The ETS2 is a new emissions trading system that will cover and address CO2 emissions from buildings, road transport and additional sectors not covered by the existing EU ETS. ETS2 incentivises emissions reductions through a “cap and trade” system, which limits the amount of emissions through permits which get traded by polluters in an open market. By reducing the total number of pollution permits available every year, the policy accelerates the decarbonisation of buildings and roads in a cost-efficient manner.
The ETS2 will become operational in 2027, and provide considerable revenue for financing climate and social measures in EU member states, through the Social Climate Fund (SCF) and wider ETS2 revenue. In preparation for the rollout of ETS2, EU member states will have access to limited funds (EUR 4 billion) in 2026 to start their investments.
The joint letter calls on EU policymakers to make more financing available before the start of the ETS2 by setting up a lending facility that extends loans to member states for investment-related spending starting before 2026. The loans would be guaranteed by future ETS2 revenue and based on SCF spending principles.
The ETS2 is one of the crucial tools at our disposal for decarbonising heating and cooling. Enabling member states to access funding in preparation for the rollout of ETS2 will be crucial to ensuring the climate impact of ETS2 is maximised in a socially just way.
