EU ETS II - A New Carbon Market. Explained.

EU ETS 2 - A New Carbon Market. Explained. 

A new carbon market is coming. Get ahead of it.

EU ETS 2 brings unified carbon pricing to fuels used in road transport, buildings, and additional industrial sectors; emitting sectors that have never priced carbon before. It's a distinct system from the ETS 1 you already trade with us, with its own rules, its own allowances, and its own pricing.

Viridian is preparing to bring EU ETS 2 to the same regulated, transparent venue you already use for EUAs and GOs.

What is Changing?

A second market. Same principles.

EU ETS 2 is not an extension of the carbon market you know. It's a parallel system, covering fuel combustion in buildings, road transport and additional sectors — mainly smaller industrial emitters the original EU ETS-1 never reached.

The obligation sits upstream. It's fuel suppliers and distributors who must hold allowances — not the households or drivers who ultimately use the fuel. Regulated entities buy allowances at auction and surrender them to cover the emissions embedded in the fuel they place on the market.

The Timeline

The EU ETS-2 Compliance Roadmap: Turn the Transition into a Strategic Advantage

A new era of European carbon pricing is here. While this represents a significant regulatory shift, a formal one-year postponement adopted by EU legislators has handed businesses a critical preparation window. Below is the definitive roadmap to ensure your business remains compliant, risk-managed, and ahead of the curve:

2025 — The framework is live. Regulated entities are actively monitoring their daily fuel flows and refining their reporting systems

2026 — The compliance cycle tightens. Emissions data gathered during 2025 must undergo independent, third-party auditing, with the first emissions reports due by April 30, 2026.

2027 — Early Auctioning & Market Liquidity: The primary market opens. Early auctions of EU ETS-2 allowances begin in January 2027, establishing market liquidity and giving proactive companies a prime opportunity to secure allowances and test trading operations before obligations kick in.

2028 — The system becomes fully operational. All fossil fuels released for consumption in covered sectors from January 1, 2028, are subject to carbon pricing.

2029 —  May 31, The ultimate milestone. Regulated entities must surrender their first batch of allowances to fully cover their verified emissions from the 2028 operational year.

Why Does This Matters for Your Business? 

The EU's decision to shift the start of the surrender phase from 2027 to 2028 is a strategic window of opportunity. It allows you to stress-test your monitoring system, establish relationships with accredited verifiers, and design a robust carbon procurement strategy before any financial liabilities are officially settled.

The Cost of getting it wrong

Non-compliance is expensive, and it's public.

If a regulated entity doesn't surrender enough allowances to cover its emissions, the penalty is steep: an excess emissions charge per tonne of CO2 short, and that's on top of still having to buy and surrender the missing allowances market price. 

The practical implication: the cost of being wrong isn't just financial. Getting your monitoring, reporting and hedging right early is materially cheaper than catching up after a missed surrender deadline.

Are you in Scope?

There's no simple tonnage cut-off. The test is different.

Unlike the original EU ETS, which exempts installations under a 20MW threshold, EU ETS 2 does not offer a straightforward minimum-volume exemption. The definitive test is whether your entity is legally registered as the debtor of national excise duties or energy taxes at the moment fuel is released for consumption. Holding that tax registration places you squarely in scope, regardless of your operational size (even if your specific fuel deliveries benefit from a national tax exemption)

In practice, that puts the obligation on refiners, importers and wholesale fuel distributors. A company-owned, company-operated fuel station is usually not the regulated entity itself: the fuel arriving at the pump has typically already had tax accounted for further upstream. The exception is a vertically integrated group where the same legal entity holds the tax registration and runs the retail site.

Because there is no single EU-wide automated screening tool, the practical compliance pathway is straightforward: verify your group’s national excise and energy tax registrations, and engage your National Competent Authority to confirm permit and registry obligations. If your group has any entity that imports, blends, or releases fuel for consumption, that's the thread worth checking first.

Why VIRIDIAN?

You can already trade EUAs and GOs with us on a regulated, transparent venue: live prices, no membership fees, no hidden costs, and MiFID II safeguards on every trade. EU ETS 2 is next.

We're building on the exact same foundations: 100% transparent all-in pricing, direct market access, and settlement structures designed to eliminate counterparty risk. We are extending this proven framework to a market that is still finding its feet—one where getting the compliance side right matters just as much as securing the best price.

"A new compliance market, the same trusted execution. Let’s make sure your desk is fully set up for ETS-2 from day one."