ETS2 from 2028: how could the scheme affect diesel prices and transport costs?

ETS2 will become fully operational in 2028. Transport companies will not have to buy and surrender emissions allowances themselves. The legal obligations will apply mainly to fuel suppliers and distributors.

Carriers may still feel the financial impact.

Fuel suppliers will have to purchase allowances covering the emissions associated with the fuels they release for consumption. Some or all of that cost may eventually be reflected in the price of diesel, petrol and other fossil fuels.

For transport companies, ETS2 may therefore affect:

1. fuel costs,
2. cost-per-kilometre calculations,
3. freight rates,
4. fuel-surcharge clauses,
5. fleet budgets,
6. the profitability of long-term contracts.

The exact impact is still unknown. It will depend on the market price of allowances, how much of the cost fuel suppliers pass on to customers and wider developments in fuel and oil markets.

Companies do not need to predict one exact diesel price. They do, however, need to prepare for several possible cost scenarios.

Key points

1. ETS2 has been formally postponed from 2027 to 2028.
2. Fuel suppliers, not carriers refuelling their vehicles, will be directly responsible for compliance.
3. The first allowance auctions are expected to begin in January 2027.
4. EUR 45 per tonne of CO₂ is a market-intervention threshold, not a price cap.
5. At an allowance price of EUR 50 per tonne, the simplified additional cost could be around EUR 0.14 per litre of diesel.
6. The actual impact on pump prices may be lower or higher, depending on cost pass-through and market conditions.
7. Contracts covering 2027 and 2028 should already be reviewed.
8. Existing fuel-surcharge clauses may not fully address the new regulatory cost.

What is ETS2?

ETS2 is a new emissions trading scheme covering CO₂ emissions from fuel combustion in:

1. road transport,
2. buildings,
3. selected additional sectors, mainly smaller industrial activities not covered by the existing EU ETS.

It will operate separately from the current EU Emissions Trading System.

The scheme follows the cap-and-trade principle. A limit will be set on total emissions, and regulated entities will need to hold enough allowances to cover the emissions associated with the fuels they sell.

The number of allowances available on the market will gradually decrease. This is intended to increase the cost of using fossil fuels and support the transition towards lower-emission alternatives.

Unlike parts of the existing EU ETS, ETS2 will not provide free allowances. All allowances will be sold through auctions.

When will ETS2 begin?

ETS2 was originally expected to become fully operational in 2027. Its launch has now been formally postponed until 2028.

The postponement does not mean that the entire system is on hold. Monitoring, reporting and market preparations have already begun.

2025: emissions monitoring

Fuel suppliers began monitoring and reporting the emissions associated with fuels released for consumption.

2026: data verification

Annual emissions reports are to be checked by accredited verifiers.

January 2027: allowance auctions

The first ETS2 allowance auctions are expected to begin in January 2027. The European Energy Exchange, EEX, has been appointed as the common auction platform.

These early auctions are intended to provide market liquidity and create the first meaningful price signal before the scheme becomes fully operational.

2028: full operation

ETS2 is expected to begin fully affecting the settlement of emissions associated with fuels from 2028.

The European Commission plans to increase the number of allowances auctioned for 2028 emissions by 30% to support liquidity during the initial phase.

2029: first full settlement

Regulated entities will submit verified reports and surrender allowances covering emissions associated with fuels sold in 2028.

Who will buy the allowances?

Carriers will not buy an allowance every time they refuel a truck. They will not report emissions from individual vehicles in the EU registry either.

ETS2 will operate further up the fuel supply chain.

Fuel suppliers and distributors will be responsible for:

1. monitoring the amount of fuel released for consumption,
2. calculating the related emissions,
3. submitting annual reports,
4. buying allowances,
5. surrendering enough allowances to cover the reported emissions.

This is known as an upstream system because the obligation applies to the fuel supplier rather than the final user.

Why could diesel become more expensive?

Fuel suppliers will have to purchase allowances for the emissions produced when the fuel they sell is used.

They may include that cost in wholesale or retail fuel prices.

Several factors remain uncertain:

1. the ETS2 allowance price in 2028,
2. how much of the cost suppliers will pass on,
3. how quickly it will appear at filling stations,
4. whether it will be shown separately,
5. how taxes, margins and crude oil prices will affect the final amount.

For this reason, estimates of future diesel costs should be treated as budgeting scenarios rather than price forecasts.

How much could ETS2 add to the cost of diesel?

Burning one litre of diesel produces approximately 2.7 kg of CO₂. This allows companies to estimate the possible impact of different allowance prices.

Assuming the full allowance cost is passed on to the customer:

1. at EUR 50 per tonne of CO₂, the additional cost could be approximately EUR 0.14 per litre. For annual consumption of 30,000 litres, this would mean around EUR 4,050 in additional costs;
2. at EUR 75 per tonne, the additional cost could be approximately EUR 0.20 per litre, or around EUR 6,075 per year for 30,000 litres;
3. at EUR 100 per tonne, the cost could rise to approximately EUR 0.27 per litre, or around EUR 8,100 per year at the same level of consumption.

These are simplified calculations. They assume full cost pass-through and use a rounded emissions factor.

They do not account for:

1. biofuel content,
2. taxes and excise duties,
3. fuel composition,
4. supplier margins,
5. crude oil price movements.

The actual effect may therefore be different.

For a company using hundreds of thousands of litres of fuel each year, even a relatively small increase per litre may have a major effect on annual costs. It is worth modelling several scenarios for individual vehicles, routes and contracts.

Is EUR 45 a maximum allowance price?

No.

EUR 45 per tonne of CO₂ is often described as the maximum ETS2 price. This is incorrect.

The figure is a threshold that can activate a market-stabilisation mechanism. It is expressed in 2020 prices and will be adjusted for inflation.

Under the current rules, additional allowances may be released from the market stability reserve if the average price remains above the threshold for two consecutive months. Separate interventions are also possible when prices increase particularly quickly.

Releasing more allowances is intended to improve liquidity and reduce sudden price increases. It does not guarantee that the price will remain below EUR 45.

Could the stabilisation mechanism become stronger?

In June 2026, the Council of the EU and the European Parliament reached a provisional agreement on strengthening the ETS2 market stability reserve.

The proposed changes would increase the number of allowances released after the price threshold is exceeded from 20 million to 40 million in a single intervention. Up to 80 million additional allowances could be released during one year.

The agreement would also extend the operation of the reserve beyond 2030.

As of 31 July 2026, these changes still required formal adoption. They should not yet be described as legislation already in force.

What does ETS2 mean for transport companies?

ETS2 will add another variable to fuel-price calculations.

Diesel prices already depend on:

1. crude oil prices,
2. exchange rates,
3. taxes,
4. refinery costs,
5. supply and logistics,
6. geopolitical developments.

The market price of CO₂ will become an additional factor.

The main risk may not be the increase itself, but the delay between a rise in fuel costs and the carrier’s ability to adjust the freight rate.

A company that updates its fuel surcharge only once a quarter could spend several weeks operating at rates that no longer reflect its actual costs.

The impact should therefore be considered in:

1. transport quotations,
2. long-term customer contracts,
3. fuel-surcharge mechanisms,
4. route-profitability calculations,
5. fleet budgets,
6. vehicle-purchase and leasing decisions.

Why an existing fuel-surcharge clause may not be enough

Many contracts link transport rates to a diesel-price index. ETS2 may eventually be reflected in that index, but the mechanism may not fully match the carrier’s actual exposure.

Before 2028, companies should check:

1. which fuel-price index the contract uses,
2. how often the surcharge is updated,
3. whether a minimum change threshold applies,
4. which base price is used,
5. whether the clause works for both increases and decreases,
6. when a revised rate becomes effective,
7. whether the contract covers new emissions-related or regulatory costs.

Some contracts may require a separate ETS2 provision. Others may use a broader clause covering new mandatory charges that affect fuel prices.

The adjustment should not be based on one fixed amount per litre. ETS2 allowances will be traded on the market, so their price may change over time.

Contract and spot rates may react differently

Spot-market quotations may reflect higher fuel costs relatively quickly.

Long-term contracts usually react more slowly. The result will depend on the wording of the agreement, the frequency of indexation and the possibility of renegotiating the rate.

This may create a gap between the current cost of performing a transport operation and the price agreed several months earlier.

Freight forwarders and shippers should also consider this risk. If carriers cannot recover their costs, the consequences may include:

1. weaker cash flow,
2. reduced vehicle availability,
3. pressure to renegotiate rates,
4. less stable contract performance.

How should transport companies prepare?

1. Calculate fuel use by contract

Do not rely only on the company’s total annual fuel bill.

Calculate consumption:

1. per vehicle,
2. per route,
3. per customer,
4. per contract.

This will show which parts of the business are most exposed to an additional cost per litre.

2. Prepare several scenarios

Model the effect of allowance prices of:

1. EUR 50 per tonne,
2. EUR 75 per tonne,
3. EUR 100 per tonne.

The purpose is not to predict the market. It is to understand how much risk the company can absorb.

3. Review contracts covering 2027 and 2028

Pay particular attention to contracts that fix transport rates for several months while updating fuel costs only quarterly or less frequently.

4. Address regulatory costs directly

Make sure the contract explains how new mandatory emissions-related costs will be treated.

Otherwise, the customer and carrier may disagree over whether ETS2 is already covered by the existing fuel surcharge.

5. Use a transparent adjustment mechanism

The customer should know:

1. which data source is used,
2. how the calculation works,
3. how often it is updated,
4. when the revised rate takes effect.

A clear mechanism is easier to accept than an unexplained price increase.

6. Follow the auctions from 2027

The first auctions will offer a more realistic market reference than current estimates.

However, the initial price in 2027 will not guarantee the price that applies during full operation in 2028.

7. Include ETS2 in fleet decisions

Not every transport company can immediately replace diesel trucks with zero-emission vehicles. Range, payload, charging infrastructure, route type and financing all matter.

ETS2 should still be included in total cost-of-ownership calculations for vehicles and leasing agreements that will remain in use after 2028.

Will transport companies receive financial support?

ETS2 will be connected to the Social Climate Fund, which is intended to reduce the social and economic effects of higher energy and transport costs.

The fund will mainly support vulnerable households, transport users and selected micro-enterprises. Funding may cover measures such as:

1. access to low- and zero-emission vehicles,
2. mobility solutions,
3. investments that reduce fossil-fuel use.

This does not mean that every small transport company will qualify.

Access will depend on national Social Climate Plans, programme criteria and the way each Member State distributes the funds.

The European Commission and the European Investment Bank have also launched an ETS2 Frontloading Facility worth up to EUR 3 billion. This funding will be made available to Member States for earlier investment in the decarbonisation of buildings and road transport.

It will not be paid directly to every transport business.

The main risks

Relying on one price forecast

The allowance price in 2028 remains unknown. A budget based on one scenario may provide false confidence.

Treating EUR 45 as a price cap

The threshold can activate the release of additional allowances, but it does not legally limit the market price.

Updating rates too slowly

Quarterly or six-monthly indexation may not respond quickly enough to changes in fuel costs.

Leaving regulatory costs out of contracts

If the agreement does not explain how a new cost will be handled, the carrier may be forced to absorb it.

Assuming funding will cover the increase

EU and national programmes will have specific conditions. They should not be treated as guaranteed compensation for the transport sector.

Waiting until 2028

The first price signals will appear during auctions in 2027. Contracts and fleet decisions made earlier may still be in force after the scheme becomes fully operational.

eXportsy’s view

ETS2 is not only a topic for 2028.

Contracts negotiated in 2027, leasing agreements signed today and fleet plans covering the next few years may all extend into the period when the scheme is fully operational.

The allowance price and its exact impact on diesel remain unknown. The mechanism and direction of change are already clear.

The safest approach is not to assume one specific increase. Transport companies should prepare several cost scenarios, review their adjustment clauses and identify the contracts most exposed to higher fuel prices.

FAQ

When will ETS2 become fully operational?

ETS2 will become fully operational in 2028. Emissions monitoring started earlier, and the first allowance auctions are expected in January 2027.

Will carriers have to buy ETS2 allowances?

No. The direct obligations will apply mainly to fuel suppliers and distributors. The allowance cost may, however, be reflected in fuel prices.

Is EUR 45 the maximum allowance price?

No. It is a threshold that may activate the release of additional allowances. It is not a legal price cap.

How much could ETS2 add to diesel prices?

There is no single certain figure. Assuming full cost pass-through, an allowance price of EUR 50 per tonne of CO₂ corresponds to approximately EUR 0.14 per litre, EUR 75 to around EUR 0.20 and EUR 100 to around EUR 0.27.

The actual impact may be different.

Will ETS2 replace existing fuel taxes?

No. ETS2 will be an additional cost mechanism. Diesel prices will still depend on excise duties, VAT, crude oil prices, refinery costs and supplier margins.

Will small transport companies receive support?

Not automatically. Selected micro-enterprises may qualify under national programmes, but detailed eligibility conditions will depend on each Member State.

What should a transport company do first?

Calculate fuel consumption for individual contracts, model several allowance-price scenarios and check whether existing clauses allow the new cost to be reflected in transport rates.

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This article is for information purposes only and does not constitute legal or financial advice. The ETS2 framework and the rules concerning the market stability reserve may change. Companies should check the latest legal position before making contractual or investment decisions.