A new emissions trading system called ETS2 will start as of January 1st, 2024.
The ETS2 is part of The European Green Deal, which aims to help EU Member States to achieve their emission reduction targets.
ETS2 will be a ‘Cap and Trade’ system like the existing EU Emissions Trading System /ETS1). However, ETS2 will be independent from the existing ETS1, which already includes stationary installations, aviation and maritime. ETS2 is a part of the 2023 revisions of the EU ETS Directive, Directive 2003/87/EC.
Who is covered by ETS2?
ETS2 will include CO2 emissions from regulated entities such as fuel combustion in the construction industry, road transport and additional sectors which are mainly small industries and thereby not covered by the existing EU ETS1. Those who will be covered by ETS2 can both be companies and individuals who are registered as fuel suppliers and pay excise duties, will be obligated to buy and surrender allowances to cover their CO2 emissions. End users such as households or car users will not be covered by ETS2.
Accounts and Registration
The companies and individuals covered by ETS2 will have to open accounts in the EU ETS Registry. ETS2 accounts are named "Regulated Entity Holding Account", REHA.
Before a REHA account can open, the ETS2 company must submit a monitoring plan for approval to the Danish Energy Agency before September 1st, 2024. The Danish Energy Agency is the Competent Authority. The monitoring plan must be submitted via the EU Reporting Tool, which the Danish Energy Agency will give you access to. The Danish Energy Agency will then issue discharge permits, from September 1, 2024, after which the monitoring and reporting of emissions will begin as of January 1st, 2025, where ETS2 account opening will start as well. As soon as the Danish Energy Agency has prepared the discharge permits and the Danish Business Authority has received information from the Danish Energy Agency, the Danish Business Authority will contact the companies and individuals concerned to start the process of opening their Regulated Entity Holding Account in the EU ETS Registry. However, ETS2 accounts will start from January 1, 2025.
For questions regarding the monitoring plan, EU Reporting Tool, discharge permit etc., please contact The Energy Agency via ets2@ens.dk.
Changes to the ETS2 Account Opening Process
Please note that there are possible changes to the existing EU ETS Directive, which may have an impact on ETS2 account opening date and process. At present, the Danish Business Authority is awaiting more information from the EU Commission. The Danish Business Authority will contact all the affected companies directly when it is time to open the ETS2 accounts in the EU ETS Registry. Additional information will follow as soon as we have more information regarding the ETS2 account opening.
ETS2 Allowances
ETS2 allowances will be independent from what is used today on ETS1. This means that ETS2 customers cannot trade with ETS1 customers. Only account holders with Trading Accounts can trade allowances with both ETS2 allowances, as well as with ETS1 allowances. Please note that ETS2 allowances will become operational in 2027, where the unique ETS2 allowances will be released as of January 1st, 2027. This means that it will not be possible to use ETS2 accounts for trading until January 1st, 2027 – only after the release on January 1st, 2027.
ETS2 Compliance
ETS2 compliance obligations will be as of May 31st each year. The first time there will be ETS2 compliance will be May 31st, 2028.
Information Meetings
In April and May 2024, The Danish Energy Agency hosted Roadshows about ETS2, where the Danish Business Authority also participated to give an introduction to the Emissions Trading System. At these roadshows The Danish Business Authority told in general about the Danish part of the EU ETS Registry, how it works, what types of allowances are in the Registry and who can trade with these, etc. The Danish Business Authority also provided information about the upcoming process to open a Regulated Entity Holding Account. You will find the presentations from the Roadshows on The Danish Energy Agency´s website.