ETS2 explained: why your heating bill is about to change

If you heat your home with gas, oil, coal or peat, your bill is about to include a new line. It's called ETS2, and it's the EU's way of putting a price on the carbon your boiler emits. It kicks in from 2027.

What ETS2 is

ETS2 is the Emissions Trading System, expanded. The original EU ETS has priced carbon from power plants, heavy industry and aviation since 2005. ETS2 extends the same model to buildings and road transport fuels: gas for domestic heating, heating oil, coal, road diesel and petrol.

Fuel suppliers buy carbon allowances for every tonne of CO₂ their products will emit, then pass that cost on at the pump or on the bill. It's not a new tax collected by Revenue — it's a new input cost baked into your fuel price.

What it costs you

The initial price cap is €45/tonne of CO₂ from launch, with the stability reserve designed to keep it near that level in the early years. By 2030, mid-range projections put it in the €55–€75/tonne range.

For a BER D gas-heated home burning ~15,000 kWh of gas a year, that's about 3 tonnes of CO₂. At €45/t that's €138 extra per year; at €65/t it's €200. For oil heating it's roughly 20–25% higher per kWh. For solid fuel (coal, peat), it's dramatically higher per kWh, though the volumes used tend to be lower.

How to cut your exposure

• Switch to a heat pump. A heat pump runs on electricity, which is in ETS1 (already priced in) and decarbonising fast. It cuts heating CO₂ by ~70% and effectively eliminates the ETS2 charge on your heating.
• Improve the envelope. Every kWh you don't burn is a kWh you don't pay ETS2 on. Attic and wall insulation payback periods get significantly shorter under ETS2.
• Don't switch oil to gas as a "transition". Both are inside ETS2. The upgrade path is now fossil → electric, not oil → gas.

The bigger picture

ETS2 isn't a surprise: it was legislated into the EU Fit-for-55 package. What's new is how close it is. 2027 is effectively one heating system replacement cycle away. Households who've already electrified don't see the charge. Households who haven't will see it every month.

The Energy Score estimates your specific ETS2 exposure based on your heating type and BER, and shows what a heat pump switch would avoid in 2027 and 2030 terms.