challenges in the harmonization of trading systems
With the introduction of the Emissions Trading System 2 (ETS 2), the European Union has extended the existing EU Emissions Trading Directive (EU ETS Directive, 2003) to include the heating and transportation sectors. Contrary to the provisions of ETS 1, suppliers are responsible for ensuring compliance with the regulations. A corresponding federal law to implement ETS 2 is expected in 2024, and would take effect from 2027.
The scope of application and regulatory requirements of ETS 2 and the currently applicable Fuel Emissions Trading Act (BEHG) are not fully congruent. The parallel implementation of the introductory phase of ETS 2 and the BEHG will lead to uncertainties and additional costs for suppliers.
Energy supply companies are once again facing major regulatory and legal challenges, such as emissions calculation and reporting, contracting, and netting of ETS 1 and ETS 2 emissions, which must be resolved through processes and organization. In addition to the added expense of legal processing, there is still a lack of clarity regarding the transitional regulations from the BEHG in 2026 to ETS 2 in 2027, which make it more difficult to design legally compliant, contractual and IT-based billing.
To meet these challenges, energy suppliers need to start taking action today.