ETS2: Regulatory Phase Postponed to 2028 — What Companies Need to Know Now

The European emissions trading system for buildings, road transport, and other sectors will start later than planned: The obligation to surrender allowances under EU ETS 2 will not begin until January 1, 2028. For companies that place fuels on the market, this change has less impact than the headline suggests. Reporting requirements will continue unchanged, and national emissions trading will remain the system in which allowances are actually surrendered through the 2027 reporting year.

This article provides context for the postponement, summarizes the current deadlines, and outlines the costs that will be incurred in the national emissions trading system in the meantime.

As of August 2026

Key Points at a Glance

• The regulatory phase of EU ETS 2—that is, the start of the obligation to surrender allowances—will be postponed by one year to January 1, 2028.
• The reporting period is extended accordingly to cover the years 2024 through 2027. The emissions permit, monitoring plan, and verified emissions report remain mandatory.
• Through the 2027 reporting year, reporting and submission requirements will apply concurrently under the national emissions trading system in accordance with the Fuel Emissions Trading Act.
• Under the nEHS, allowances will be auctioned for the first time in 2026, within a legally defined range of 55 to 65 euros per allowance.
• Starting in 2027, the corridor will end: Allowances will be sold at a market-based fixed price that will initially be linked to the EU ETS 1.
• The first submission under EU ETS 2 is due on May 31, 2029, for the 2028 reporting year. So-called “early auctions” will begin as early as January 2027.
• It is not the consumers of fossil fuels who are obligated, but rather the companies that place these fuels on the market.

What is the EU ETS 2, and who is required to participate?

The EU-ETS 2 is a standalone emissions trading system for fuels used in the building and road transport sectors, as well as other areas not covered by the existing European emissions trading system. It was introduced as part of the Fit for 55 package and operates as an upstream system: the obligations apply to companies that place fuels on the market, not to their users.

According to the German Emissions Trading Authority (DEHSt), those responsible include wholesalers and manufacturers of fuels with wholesale distribution operations, as well as companies that import fuels into Germany. The decisive factor is the status as a liable party for energy tax under Section 3(19) of the Greenhouse Gas Emissions Trading Act. The majority of those previously subject to the BEHG thus also fall under the EU ETS 2.

Definition: Upstream System
In an upstream emissions trading system, the obligation to monitor, report, and surrender allowances lies at the beginning of the supply chain—with the entities that place fuels on the market. End users, such as building owners or fleet operators, bear the costs indirectly through the price of fuel but have no compliance obligations to the regulatory authority themselves. For calculation purposes, this means that CO₂ costs are reflected in the purchase price, not in a separate allowance account.

The scope is defined more narrowly than in the national emissions trading system because it is linked to the use of fuels. It covers buildings, road transportation, and other sectors, including the energy sector and industry not covered by the EU ETS 1, the manufacturing sector, and the construction industry. Sectors not covered include, among others, agriculture and forestry, rail transport, private aviation and shipping, as well as certain other areas. An opt-in provision for these sectors is included in the TEHG, but it requires approval from the European Commission.

Why doesn't the regulatory phase begin until 2028?

On November 5, 2025, the EU environment ministers agreed to postpone the start of the regulatory phase, and the European Parliament approved the decision on November 13, 2025. The postponement was formally implemented through Regulation (EU) 2026/667, which primarily governs amendments to the European Climate Law and is directly applicable in Germany.

In practical terms, this means two things. First, the reporting period under EU-ETS 2 is extended by one year through 2027. Second, the reporting and surrender obligations under the nEHS, as set forth in the Fuel Emissions Trading Act, will continue to apply during this period. The postponement therefore does not eliminate any obligations; rather, it extends a dual structure with which the affected companies have been operating since 2024 anyway.

What deadlines apply through 2029?

The most important distinction is between registration and surrender. Emissions for the years 2026 and 2027 need only be registered in the Union Registry; there is no obligation to surrender EU ETS 2 allowances for these emissions. Through the 2027 reporting year, the obligation to surrender allowances applies exclusively under the national emissions trading system.

DeadlineWhat to DoSystemAnnually by April 30Submit a verified emissions report for the previous year: EU-ETS 2 (reporting period) and nEHS by July 31 of the audit year; submit an improvement report if the audit report contains nonconformities or recommendations; EU-ETS 2: April 30, 2027; enter emissions for the year 2026 in the Union Registry for the first time (no surrender obligation)EU-ETS 2: Starting in January 2027, early auctions of EU-ETS-2 allowances on the EEX; EU-ETS 2: By August 31, 2027, last opportunity to purchase additional 2026 allowances at 70 euros, limited to 10 percent of the account balance; nEHS: Jan.January 2028Start of the regular phase and thus the obligation to surrender allowancesEU-ETS 2May 31, 2029First surrender transaction for 2028 emissionsEU-ETS 2First time on April 30, 2029, last on April 30, 2031. Report on the pass-through of allowance costs to consumers, covering three reporting years. EU-ETS 2

With regard to account management, it should be noted that the Union Registry will include a section separate from the EU ETS 1 with its own account type, known as REHA accounts. The DEHSt intends to carry out a largely automated transfer of compliance accounts from the nEHS registry; however, account authorized persons must first set up their own access via the EU Login app. There are no plans to convert national allowances into EU ETS 2 allowances.

How much will a metric ton of CO₂ cost in the national emissions trading system in 2026?

Under the nEHS, allowances will be auctioned for the first time in 2026 instead of being sold at a fixed price. The law establishes a price range for the auctions, with a minimum price of 55 euros and a maximum price of 65 euros per allowance. If the quantity auctioned is insufficient, allowances will be available in subsequent sales at 68 euros.

The auctions will take place at the European Energy Exchange in Leipzig once a week on Wednesdays from 1:00 p.m. to 3:00 p.m. The first auction is scheduled for July 1, 2026, and the last is expected to be on October 28, 2026. The total auction volume for 2026 is 192,085,240 allowances, with 10,671,000 allowances allocated per session. The minimum price of 55 euros corresponds to the CO₂ price in 2025, meaning the increase over the previous year is capped.

There are three mechanisms that the Procurement and Controlling departments should be aware of. First, the 65-euro rule under Section 12, paragraphs 4 and 5, of the BEHV: If the winning bid price is at the maximum price, the allocated quantity per trading date may increase up to twice the original amount—the additionally allocated certificates are deducted from the total quantity, and the number of trading dates decreases accordingly. Second, the subsequent sales phase from November 3 through, tentatively, December 3, 2026, at 68 euros per certificate, with no quantity limit. Third, the supplementary purchase in 2027: Through August 31, 2027, up to 10 percent of the balance reported in the compliance account as of December 31, 2026, may still be purchased at 70 euros per certificate. This means that the effective upper limit for 2026 volumes is 70 euros, not 65.

There are two caveats to this calculation. First, the figures cited apply to the default values specified in the Emissions Reporting Regulation; due to the legally mandated blending of biogenic fuels, the actual surcharges for gasoline and diesel are lower, as no CO₂ price is applied to sustainable biogenic fuels. Second, the price corridor is an instrument of the national system. The EU ETS 2 provides for neither fixed prices nor a price corridor: there, the price is determined freely by supply and demand, supported by front-loading and the market stability reserve, but explicitly without a price cap.

What will the CO₂ price be in 2027?

The price corridor will end in 2027. The allowances will then be sold at a market-based fixed price that is no longer set by policymakers but is derived from an exchange price. Because the ETS2 regulatory phase has been postponed to 2028, a transitional rule applies for 2027: The price is linked to EU ETS 1, not to EU ETS 2.

Specifically, pursuant to Section 17 of the BEHV, allowances with the year code 2027 will be sold in the third and fourth quarters of 2027 based on the volume-weighted average price in EU-ETS 1 for the penultimate quarter of each respective period. Only for allowances with an annual identifier starting in 2028 does the linkage to the EU ETS-2 average price apply pursuant to Section 16 of the BEHV; these sales will begin in the third quarter of 2028. The applicable price will be published by the DEHSt at least two months before the start of each quarter, and there is no limit on the sales volume.

Two points are important for planning. First, the price for 2027 cannot be quantified today because it will only be determined based on EU ETS-1 trading from the penultimate quarter—those making calculations should therefore use a range and the DEHSt publication dates rather than a target value. Second, allowances with a year code starting in 2027 are valid for the entire trading period, whereas the 2026 allowances can only be used for the 2026 reporting year and prior years. This distinction determines the extent to which procurement can be brought forward.

What obligations are already in effect during the reporting phase?

The reporting period is not a non-binding preparatory phase. Entities subject to EU ETS 2 require an emissions permit under Section 4 of the TEHG and must submit a monitoring plan for approval. Based on this, they must report on the previous year’s emissions annually by April 30. The emissions report must be verified.

Newly appointed responsible parties must apply for an emissions permit without delay, no later than the end of the day on which they begin their duties. The monitoring plan must be submitted no later than the end of the first following calendar month. In many cases, a site visit is not required for verification; the verification requirement is waived entirely only for responsible parties who use exclusively tax-exempt coal pursuant to Section 37(2), first sentence, item 3 of the Energy Tax Act (EnergieStG) as fuel or heating material.

DEHSt deliberately built its data collection system on top of the existing nEHS structure to avoid duplicate entries. The monitoring plan and emissions report are created using shared applications within the form management system. Organizations that have properly set up their data management for the national emissions trading system can limit the additional effort required for EU ETS 2. Those who haven’t set it up properly will realize this at the latest during verification—companies regularly have the same experience when establishing their corporate carbon footprint.

What distinguishes the EU ETS 2 from national emissions trading?

Both systems operate at the same point in the supply chain and, at their core, track fuels placed on the market that are subject to energy tax. The differences lie in pricing, the scope of the fuels covered, and the registry landscape. Three points in particular are relevant for the transition.

Characteristics: EHS under BEHGEU-ETS 2 Pricing: 2026 auction within a range of 55 to 65 euros, sale at 68 euros, additional purchase in 2027 at 70 euros; Starting in 2027, a market-based fixed price linked to the EU-ETS 1; Free price formation, no fixed prices, no range, no price cap; Covered Fuels: Fuels placed on the market that are subject to energy tax within the scope of the BEHG; Additionally, other energy products, such as petroleum coke under Section 23 of the Energy Tax Act (EnergieStG), as well as coal exempt from energy taxSectoral ScopeNot tailored to specific sectors of useLimited to buildings, road transport, and other defined sectorsRegistersEHS registry, national allowancesUnion registry, REHA accounts, no conversion of national allowancesPrice StabilizationStatutory price corridorFrontloading and market stability reserve

The shift from a politically set price corridor to market-based pricing is the real turning point from a business perspective, and it will take place in two stages: in 2027 through linkage to EU ETS 1, and starting in 2028 through EU ETS 2. As long as the price corridor remains in effect, the upper limit on CO₂ costs is known and can be factored into calculations. Starting as early as 2027, this certainty will no longer apply. Anyone making investment decisions today regarding heating systems, vehicle fleets, or process heat should therefore base their calculations on price scenarios rather than a fixed value—methodologically, this corresponds to the approach we are familiar with from the MACC analysis for prioritizing mitigation measures.

Revenue from the auction is earmarked for specific purposes. Through an EU-administered Climate Social Fund, a total of 65 billion euros is to be raised from the auctioning of EU ETS 2 allowances to provide relief to particularly hard-hit households, micro-enterprises, and transportation users. The remaining revenue remains with the member states.

Our Assessment

The postponement provides a respite in terms of cost impact, but not in terms of data processing. Anyone who treats the reporting phase as a delay will lose precisely those three years during which the monitoring plan, volume delineation, and interfaces between energy tax and emissions data can be fine-tuned without financial risk. Starting in 2028, any inaccuracy in volume reporting will directly affect the number of allowances that must be surrendered.

We believe two points are being underestimated. First, the expanded scope of application: Companies that have so far only reported BEHG-covered fuels must verify whether additional energy products or coal exempt from energy tax fall within their scope of application. This verification should take place during the reporting phase, not in the year of the first filing. Second, the report on cost pass-through: It requires a reliable allocation of certificate costs to the prices passed on to customers. The underlying EU regulation has not yet been adopted, but the data foundation for this is being established in the pricing and billing systems that are being configured today.

For companies outside the scope of those subject to the regulation, ETS2 remains relevant nonetheless because it affects fuel prices. Those who want to keep track of heating, their vehicle fleet, and process energy do not need a compliance structure to do so, but rather a robust consumption database and a climate strategy in which CO₂ costs are factored into planning. We have described how emissions trading for stationary installations and the CO₂ border adjustment mechanism relate to one another in our article on EU ETS 1 and CBAM, as well as on the interaction between the two instruments.

Conclusion

The postponement of the ETS2 regulatory phase to January 1, 2028, gives affected companies an additional year during which they must report but are not yet required to surrender EU ETS2 allowances. The obligations themselves remain in place: the emissions permit, approved monitoring plan, and verified emissions report due by April 30 remain unchanged, and the surrender obligation continues under the national emissions trading system through the 2027 reporting year, inclusive.

The clock is ticking faster for costs than for the obligation to pay. The statutory price range applies only to 2026; starting in 2027, the price will be derived from the EU ETS 1 average, and starting in 2028, from the EU ETS 2 average. The familiar cap on CO₂ costs will thus be eliminated one year before the first obligation to pay takes effect.

Those who want to make the most of this time should focus on three areas: clearly delineating fuel quantities between nEHS and EU-ETS 2, reviewing the expanded scope of application, and preparing for the migration of accounts to the Union Registry. The quality of the quantity data will then determine how effectively the emissions burden can be planned.

Sources

1. German Emissions Trading Authority (DEHSt): EU ETS Phase 2 (2024–2027) (as of July 14, 2026) — https://www.dehst.de/DE/Themen/nEHS/EU-ETS-2/eu-ets-2-berichtsphase-2024-2026/eu-ets-2_artikel.html
2. German Emissions Trading Authority (DEHSt): EU ETS 2 Outlook for 2028 (as of June 24, 2026) — https://www.dehst.de/DE/Themen/nEHS/EU-ETS-2/eu-ets-2-ausblick/eu-ets-2-ausblick_node.html
3. German Emissions Trading Authority (DEHSt): Sales and Auctions in the National Emissions Trading System (as of May 19, 2026) — https://www.dehst.de/DE/Themen/nEHS/Verkauf-Versteigerung/verkauf-versteigerung_node.html
4. German Emissions Trading Authority (DEHSt): What does the new auction phase in the national emissions trading system, starting in 2026, mean for consumer prices? FAQ nEHS 063 (accessed in August 2026) — https://www.dehst.de/SharedDocs/FAQ/DE/nehs/063-nEHS-versteigerung-ab-2026.html
5. German Emissions Trading Authority (DEHSt): Postponement of the Start of the Regular Phase of the EU ETS 2 (December 16, 2025) — https://www.dehst.de/SharedDocs/news/DE/euets2-verschiebung.html
6. Publications Office of the European Union: Regulation (EU) 2026/667 amending the Regulation setting a Union interim climate target for 2040 (accessed in August 2026) — https://eur-lex.europa.eu/legal-content/DE/TXT/?uri=OJ:L_202600667
7. Federal Ministry of Justice: Fuel Emissions Trading Ordinance (BEHV) (accessed in August 2026) — https://www.gesetze-im-internet.de/behv/BEHV.pdf
8. Federal Ministry of Justice: Greenhouse Gas Emissions Trading Act (TEHG) (accessed in August 2026) — https://www.gesetze-im-internet.de/tehg_2025/index.html
9. Federal Ministry of Justice: Energy Tax Act (EnergieStG) (accessed in August 2026) — https://www.gesetze-im-internet.de/energiestg/

About the Author

Dr. Florian Niedermeier is a consultant at Five Glaciers Consulting and assists companies with carbon accounting, data quality, and regulatory compliance in climate management. He is available to answer questions about this article at florian.niedermeier@fiveglaciers.com.