The ETS 2 will become operational in 2027. Although it will be a cap and trade system like the existing EU ETS, the ETS 2 will cover emissions upstream. It will be fuel suppliers, rather than end users such as households or car users, that will be required to purchase and surrender allowances to cover their emissions. The ETS 2 cap will be set to bring emissions down by 42% by 2030 compared to 2005 levels.

All emission allowances in the ETS 2 will be auctioned, and a share of the revenues will be used to support vulnerable households and micro-enterprises through a dedicated Social Climate F