A new emissions trading system called ETS2 will start as of September 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 or persons covered by ETS2 must submit a monitoring plan for approval to the Danish Energy Agency, which is the Competent Authority, before September 1st, 2024. The Danish Energy Agency will then issue discharge permits, after which the monitoring and reporting of emissions will begin as of January 1st, 2025, where ETS2 account opening will start as well. The companies and individuals covered will have to open accounts in the existing EU ETS Registry. ETS2 accounts are named "Regulated Entity Holding Account", REHA. 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 Agency will contact the companies and individuals concerned to start the process of opening their Regulated Entity Holding Account.
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
The Danish Energy Agency has planned Roadshows about ETS2, where the Danish Business Authority will also participate to give an introduction to the Emissions Trading System. At these roadshows The Danish Business Authority will, among other things, tell 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. At the same time, we will also provide information about the upcoming process to open a Regulated Entity Holding Account. You will find dates, more details and link for registration on The Danish Energy Agency´s website.
The Danish Business Authority will hold an ETS2 webinar on August 27th, 2024. At this webinar, the Danish Business Authority will give a more in-depth introduction to the Danish part of the EU ETS Registry, how the Registry works, what types of allowances are in the Registry and who can trade with these etc. At the same time, we will also inform about the upcoming process to open a Regulated Entities Holding Account. Details of this webinar and how to register will be sent out well in advance of the event.