EU ETS 2 – how fuel suppliers are affected by the new rules

Do you sell or supply fuels for transport or for heating buildings? If so, you are affected by the EU's new emissions trading system. Christer Nilsson, audit manager at RISE, will tell you everything you need to know about ETS 2.

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– Producers and suppliers of fuels will be required to keep track of their volumes and flows. Most of them probably already do this, but now the results must be reported in annual emissions reports and reviewed by an independent, accredited party, says Christer Nilsson.

Results must be reported in annual emissions reports and reviewed by an independent, accredited party.

How should emissions be reported correctly?

Anyone covered by EU ETS 2 must set up a monitoring plan. This plan acts as a guide for those carrying out checks. Before it can be used, the monitoring plan must be approved by the Swedish Environmental Protection Agency. The plan describes the fuels that the company will sell, how volumes will be measured and documented, and the amount of carbon dioxide that will be emitted per unit of fuel.

Every year, companies must enter their data into the Reporting Tool, an EU system. The figures in the Reporting Tool then form the basis of the report that we review. 'For many companies, getting to grips with this will be quite a journey,' says Christer Nilsson.

Put simply: Emission allowances must be purchased, and a monitoring plan must be drawn up and approved by the Swedish Environmental Protection Agency. Figures must also be entered into a digital system. Finally, an independent, accredited party must review the emissions report generated by the system.

RISE is a Swedish-accredited verifier that reviews and verifies emission reports for both ETS 1 and ETS 2. Once a report has been approved by RISE, the approval is entered into the Union Registry, which is a database for emission allowances.

What are the consequences of not meeting the requirements?

Anyone covered by ETS 2 who does not comply with the rules will face sanctions and will be banned from purchasing new emission allowances. In practice, this will result in the shutdown of operations. Christer Nilsson therefore recommends that affected companies make use of the information and training materials provided by the relevant Swedish authorities, such as the Swedish Environmental Protection Agency and the Swedish Energy Agency.

I think we can expect to continue learning how to understand and handle the rules over the next one, two or three years.

About ETS 2:

ETS 2 is the EU's new Emissions Trading Scheme. It is being introduced to reduce carbon dioxide emissions from sources such as road transport and buildings.

Decided: 2023

Start: 2027

Purpose: Lower emissions and accelerate the climate transition in more sectors.

Unlike the current EU ETS 1, ETS 2 does not directly cover industrial companies; rather, it covers fuel suppliers, who are expected to pass on the cost to industrial companies. This revenue will partly finance the EU's Social Climate Fund, supporting households and small businesses during the transition.

The EU ETS 2 scheme is a key part of the EU's 'Fit for 55' package, which aims to reduce emissions by at least 55 per cent by 2030 compared to 1990 levels.

Christer Nilsson

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