ETS II: postponement to 2028?

Originally, the new Emissions Trading System II (ETS II) was supposed to start in 2027. Now a postponement to 2028 is on the cards. For many German companies that are already covered by the national emissions trading system (nEHS), this raises questions about competitive fairness and planning security.

In this article you will find all the important information about ETS II.

What is ETS II?

The new European emissions trading system ETS II extends CO₂ trading to buildings, transportation and small industrial facilities. The aim is to also include those sectors in the pricing of emissions that are not yet covered by EU emissions trading (ETS I). This is intended to further expand climate protection in Europe and regulate CO₂ emissions more comprehensively.

Reasons for the postponement of ETS II

In 18 hours of marathon negotiations on November 5, 2025, the EU member states reached a political agreement to postpone the start of ETS II until 2028.
This option was already included in the ETS II Directive: the European Commission may postpone the start if gas or crude oil prices remain above a defined threshold until mid-2026. What is therefore new is not the option itself, but the decision to actually make use of it.

Formal confirmation from the Commission is still pending. The postponement will only become legally binding once it officially implements the decision.

Political classification

The postponement of ETS II is linked to the ongoing negotiations on the European climate targets for 2040. The EU has agreed to set the target slightly lower than originally planned.

Germany, represented by Environment Minister Carsten Schneider, agreed to make the agreement possible. An important topic in the talks was how much of the planned emission reductions could be achieved by purchasing international climate certificates – i.e. through projects outside the EU. Germany wanted to set strict limits here: a maximum of three percentage points of the reduction should be achieved in this way.

Until it is finally clear when ETS II will start, Germany is planning a transitional solution: an auction-based CO₂ levy will continue to apply in 2026. This is intended to ensure that there is a price effect for emissions in the meantime.

Effects on companies

For many German companies that are already active in the national emissions trading system (nEHS), the postponement primarily brings uncertainty.

• Distortion of competition: Companies in countries without comparable CO₂ pricing have cost advantages.
• Planning uncertainty: The unclear situation makes investment decisions more difficult.
• Lack of market signals: Without a reliable start date, incentives for decarbonization strategies remain weak.

Austria also operates a national emissions trading system. Other countries such as Ireland or Norway will probably not participate in the initial phase due to high national energy taxes or existing regulations.

What companies can do now

1. Continue to plan strategically for ETS II: Companies that are already affected by the national emissions trading system (nEHS) can continue to use many processes and structures. Those who plan scenarios at an early stage avoid later adjustment costs and can prepare investments in a targeted manner. It is important to clearly define internal responsibilities and systematically expand reporting on energy consumption and emissions.
2. Support industry initiatives: The details of ETS II have not yet been finalized. Associations and industry initiatives therefore play a key role in introducing practical solutions and pushing for fair competitive conditions.
3. Take advantage of subsidy programs: Even if the introduction of ETS II is delayed, there are numerous subsidy opportunities for climate-friendly technologies and efficiency measures. Those who take advantage of these funds now can reduce emissions and cost risks before CO₂ prices rise further.