EU ETS2 - the extension of the EU Emissions Trading System to the buildings and transport sectors, as well as to industrial companies not covered by ETS1 - was originally planned to start operating in 2027. As the regulation is expected to increase household energy costs, it is considered a socially and politically sensitive measure. On November 5, the member states and the EU agreed to postpone the launch of the system by 1 year, mainly citing the high-inflation environment, so that it will now start operating in 2028. In addition, the EU is strengthening the regulatory instruments that are intended to ensure price stability for emission allowances (quotas) in the future ETS2 market and to support the smooth introduction of the system. Postponing the regulation therefore unfortunately delays the effective reduction of carbon emissions in these sectors; at the same time, however, with appropriate safeguards in place, it may help prevent households from developing resistance to climate policy objectives and enable the successful operation of ETS2.

A system similar to ETS2 has already been operating in Germany and Austria for several years, providing good practices and experience for future implementation at the European level. The aim of this paper is to demonstrate what the introduction of ETS2 would imply in Hungary under the current market and regulatory environment, and what level of price increases the affected consumers would face. The analysis is based on actual data from the past 1-year period; therefore, the maximum market price set for ETS2 emission allowances - which under the regulation is 45 euros per tonne of CO2 at 2020 prices - is also taken into account at its current value.