A timeline of future EU Emissions Trading System (EU ETS) policy milestones follows, including phases of ETS for EU shipping as it was published by carbon market watch in
22-04-2024 :
Begin 2024-End 2027
Shrinking cap
The EU ETS’s cap (limit on total emissions) falls by 4.3% annually. This so-called linear reduction factor was at 2.2% from 2021-2023 and only at 1.74% from 2013-2020.
Beginning 2024
Municipal waste incineration
The monitoring, reporting and verification of emissions from municipal waste incineration becomes obligatory.
2024
Start phasing out of aviation freebies
A quarter of the free allowances awarded to airline flights within the EU to be eliminated. That means airlines receive 75% of these freebies.
2024
Phase in of shipping
For ships travelling within the EU, the proportion of emissions covered increases stepwise, starting at 40% in 2024 and reaching 100% in 2026. For ships travelling between EU and non-EU ports, only 50% of the emissions are covered until a revision in 2028. Additionally, only CO2 emissions and cargo and passenger ships of over 5,000 gross tonnage will be included at the beginning.
Oct 2024-end 2025
CBAM transition
The transition period for the Carbon Border Adjustment Mechanism starts. This means that monitoring, reporting and verification takes place, but no CBAM certificates have to be bought yet. A report on scope extension as well as a report and a legislative proposal on the possible exemption of export goods is expected in the second half of 2024.
End 2024
Review of Modernisation Fund
The European Commission will review the areas in which the Modernisation Fund will invest and the basis on which the investment committee will make its recommendations.
Begin 2024-end 2027
Putting a cap on ETS2
The initial linear reduction factor for the cap on the ETS for buildings and road transport set at 5.1% annually.
Begin 2025-end 2027
Other aviation emissions
Airlines start to monitor, report and verify their non-CO2 emissions, such as nitrogen oxides (NOX), contrail-cirrus clouds, sulphur dioxide (SO2), particulate matter (soot) and water vapour.
2025-2026
Further phasing out of aviation freebies
Flights within the European Economic Area lose 50% of their free allowances in 2025 and all of the rest in 2026.
2025-2026
ETS for EU shipping II and III
The ETS for shipping expands to cover 70% of emissions within the EU in 2025 and 100% in 2026.
Begin 2025-end 2026
Ship in North Sea Port (Ghent, Belgium)
Offshore shipping
Monitoring, reporting and verification requirements for all offshore ships and for smaller general cargo ships (between 400 and 5,000 gross tonnage) start.
30 June 2025
ETS2: National social climate plans
Deadline for member states to submit their final plans on how to spend their share of the Social Climate Fund.
Q4 2025
CBAM impact
Release of a review and legislative proposal on the impact of the Carbon Border Adjustment Mechanism on the least-developed countries.
Begin 2025-end 2026
ETS2 auctioning
The auctioning-related monitoring, reporting and verification of the ETS for buildings and road transport commences.
First half 2026
MSR review
The European Commission releases its review of the Market Stability Reserve.
Second half of 2026
Review of ETS Directive
The European Commission publishes its review of the ETS Directive, the legislation outlining the functioning of the Emissions Trading System.
Second half of 2026
Waste incineration
The European Commission publishes a report and legislative proposal on the possible inclusion of waste, by 2028, incineration facilities.
2026
CBAM phase in
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors begins. The phase in/phase out amounts to 2.5%.
2026
Social Climate Fund
The Social Climate Fund launches with the aim of raising up to €86.7 billion.
Start 2026
End of aviation freebies
Except for 25 million allowances for non-fossil aviation fuels and the innovation fund, no more free allowances are allocated to the aviation sector.
Second half 2026-first half 2027
Carbon removals
EU decides on the potential inclusion of carbon removals in the EU ETS.
2027
CBAM phase in II
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 5%. A CBAM review takes place in the second half of the year.
Second half of 2027-2028
Potential expansion of ETS for aviation
Flights between the European Economic Area and airports outside the EEA are up for potential inclusion.
2027-2028
Expansion of ETS for shipping
The ETS for shipping expands to include offshore ships larger than 5,000 gross tonnage and to potentially include smaller offshore and general cargo ships.
2027
ETS2 starts pricing emissions
The ETS for buildings and road transport starts pricing emissions and raising auctioning revenue, unless energy prices are high, in which case start to be delayed by a year. This is accompanied by a soft pricing ceiling if the carbon price rises above €45 a tonne.
Second half of 2027
Review of ETS2
The European Commission reviews ETS2 in terms of its effectiveness, administration and practical application. If necessary, the Commission presents a legislative proposal to implement changes.
End 2027
Complete review of CBAM
The European Commission carries out a complete review of CBAM. This includes an assessment of progress made in international negotiations on climate change, as well as the impact on imports from developing countries.
End 2027-first half of 2028
Non-carbon emissions from aviation
The European Commission uses data from the monitoring, reporting and verification of non-CO2 emissions since 2025 to decide on whether or not to include such emissions under the EU ETS.
2028
CBAM phase in III
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 10%.
2028-2031
Shrinking cap II
The EU ETS’s linear reduction factor falls by 4.4% annually.
2028
Potential inclusion of waste
Emissions from municipal waste incineration and landfills up for consideration.
Early 2028
Aviation freebies
The European Commission evaluates whether the handing out of free allowances to support non-fossil aviation fuel uptake should stop in 2030 or should be continued until 2034.
2028
Potential expansion of ETS for shipping
The shipping emissions covered by the ETS expands to cover journeys between EU and non-EU ports if the International Maritime Organisation fails to establish effective mechanisms for reducing the sector’s climate impact.
2028-2031
Shrinking ETS2 cap
The initial linear reduction factor for the cap on the ETS for buildings and road transport rises to 5.38% annually.
2029
CBAM phase in IV
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 22.5%.
2029
Potential expansion of ETS for aviation
The ETS for aviaion may be expanded to flights between EEA and non-EEA airports in the event that the International Civil Aviation Organisation (ICAO) fails to reform the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to make it comply with the goals of the Paris Agreement.
Early 2029
Social Climate Fund review
Member states have to review their national social climate plans (NSCPs).
End 2029
Removing ETS2 ceiling
Potential end of price ceiling for ETS for road transport and buildings.
2030
CBAM phase in V
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 48.5%.
Second half 2030
CBAM matches EU ETS
The aim, scope and coverage of the Carbon Border Adjustment Mechanism fully aligns with the Emissions Trading System.
2031
CBAM phase in VI
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 61%.
2032
CBAM phase in VII
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 73.5%.
2033
CBAM phase in VIII
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 86%.
2034
CBAM phase IX
The phasing in of the Carbon Border Adjustment Mechanism and the phasing out of free allowances for CBAM sectors continues. The phase in/phase out amounts to 100%.
source: carbonmarketwatch.org
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