In short: From 2028 a new EU-wide carbon price will apply to the fuels used to heat buildings: natural gas, heating oil, LPG and coal. The second EU emissions trading system (ETS2) was due to start in 2027 but has been postponed by one year. Fuel suppliers will have to buy allowances for the CO2 their fuel emits and will pass that cost on. As a rough guide, our own calculation shows that every €10 per tonne of CO2 adds about 0.2 cents per kWh of gas and about 2.7 cents per litre of heating oil, before VAT. Electricity is not covered by ETS2, which makes heat pumps relatively cheaper to run.
Last reviewed: October 2026. Based on Directive (EU) 2023/959 (which created ETS2), information from the European Commission and the Council of the EU, and the German Bundestag decision of 15 October 2026 on the national carbon price. Calculations are our own and are marked as such.
What ETS2 is
The EU has had an emissions trading system for power plants and heavy industry since 2005 (ETS1). In 2023 the EU decided to create a second, separate system for fuel combustion in buildings, road transport and small industry. Unlike ETS1, ETS2 works “upstream”: it is not the homeowner or the car driver who needs allowances, but the company that releases the fuel for consumption, such as a gas supplier or a heating-oil distributor. Fuel suppliers have been monitoring and reporting their emissions since 2025.
The total number of allowances is capped and falls every year, in line with the EU target to cut emissions from these sectors by 42 % by 2030 compared with 2005. Fewer allowances against steady demand means a rising price over time.
When it starts: 2028, not 2027
The original start date for trading and surrendering allowances was 2027. In the negotiations on the EU's 2040 climate target, EU countries agreed to postpone the start by one year to 2028. Germany, which already has a national carbon price on heating fuels, therefore keeps its own system one year longer: on 15 October 2026 the Bundestag voted to keep the German price corridor of €55 to €65 per tonne for 2027 as well.
In October 2026 the Council also adopted changes to the ETS2 market stability reserve, so that more allowances can be released when prices rise quickly. Together with a price-stability mechanism already in the directive, this is intended to prevent sharp price spikes in the first years. Nobody can reliably predict the ETS2 price in 2028; treat any forecast with caution.
What it could mean for your heating bill
Natural gas emits roughly 0.18 to 0.2 kg of CO2 per kWh (depending on whether the kWh is measured on gross or net calorific value), heating oil about 2.65 kg per litre. Our own calculation, before VAT:
| Carbon price per tonne CO2 | Natural gas per kWh | Heating oil per litre | Home using 15,000 kWh gas per year |
|---|---|---|---|
| €45 | approx. 0.8–0.9 cents | approx. 12 cents | approx. €120–135 |
| €60 | approx. 1.1–1.2 cents | approx. 16 cents | approx. €160–180 |
| €100 | approx. 1.8–2.0 cents | approx. 27 cents | approx. €270–300 |
For comparison: the EU average household gas price in the second half of 2025 was €12.28 per 100 kWh (Eurostat). A carbon price of €60 per tonne would add roughly 9 to 10 % to that average. In countries with very cheap gas, such as Hungary at €3.40 per 100 kWh, the relative increase would be far larger. Our guide Energy prices in Europe 2026 compares the countries.
Some countries already tax carbon in heating fuels. Under the directive, countries with a national carbon tax at least as high as the ETS2 price can, under conditions, temporarily exempt fuel suppliers until the end of 2030. How your country handles the transition is a national decision.
The Social Climate Fund
Part of the ETS2 revenue goes into the Social Climate Fund, which EU countries can use from 2026 onwards to support vulnerable households and micro-enterprises, for example with direct income support, building renovation or the switch to clean heating. Each country submits a social climate plan describing its measures. Instalpunt does not arrange subsidies; your national or regional energy agency is the place to ask.
What you can do now
- Keep your current system efficient. A worn circulation pump, a scaled heat exchanger or a faulty temperature sensor raises fuel use. Fixing them costs little compared with the fuel they waste.
- Use the time until 2028 to plan. If your boiler is old, compare the cost of repairs with a planned switch; see Repair or replace your boiler.
- Check whether a heat pump suits your home. Electricity is outside ETS2; the running costs depend on the ratio of electricity to gas prices in your country and on your radiators (see Heat pump with radiators).
- Know the rules on new systems. Subsidies for stand-alone fossil boilers have ended EU-wide; see EU heating rules.
Spare parts for Vaillant, Bosch, Viessmann, Remeha, Ferroli and other brands are in our spare parts catalogue and on the brand pages.
Frequently asked questions
When does ETS2 start?
Trading and the obligation for fuel suppliers to surrender allowances start in 2028. The original start year of 2027 was postponed by one year. Suppliers have been reporting their emissions since 2025.
Do I have to buy carbon allowances as a homeowner?
No. ETS2 applies to fuel suppliers, not to households. You pay indirectly, because suppliers pass the cost on in the price of gas, heating oil and other fuels.
How much will ETS2 add to my gas price?
By our own calculation, every €10 per tonne of CO2 adds about 0.2 cents per kWh of gas before VAT. At €60 per tonne that is roughly 1.1 to 1.2 cents per kWh. The actual ETS2 price will be set by the market from 2028.
Is electricity covered by ETS2?
No. Power generation is already covered by the existing EU emissions trading system (ETS1). ETS2 covers fuels burned in buildings, road transport and small industry.
Will there be support for households?
Yes, through the Social Climate Fund, which is financed largely from ETS2 revenue. EU countries decide how to use it in their social climate plans, for example for income support or clean heating.
Sources
- Directive (EU) 2023/959 amending the EU ETS and establishing ETS2, EUR-Lex: eur-lex.europa.eu
- European Commission, ETS2 for buildings, road transport and additional sectors: climate.ec.europa.eu
- Regulation (EU) 2023/955 establishing the Social Climate Fund: eur-lex.europa.eu
- Eurostat, household gas prices second half 2025: ec.europa.eu/eurostat
- Deutscher Bundestag, national carbon price 2027 (15 October 2026): bundestag.de