ETS2 (buildings, road transport and additional sectors (other small industry))

What is ETS2?

What type of fuels are covered under ETS2?

Who are the Regulated Entities?

What next?

Further information


What is ETS2?

ETS 2 is a new EU carbon trading scheme, which will address the carbon dioxide (CO2) emissions from fuel combustion in the road transport sector, buildings, energy, manufacturing and construction industries.  

Companies regulated by the EU ETS (fuel suppliers are the regulated entities) must acquire carbon allowances to cover the emissions arising from the fuels supplied annually to the above sectors. They can buy these on the carbon market or through the EU ETS auctions.  

These carbon allowances only exist electronically. The companies regulated by the EU ETS must open Union Registry accounts to hold these carbon allowances. The Union Registry is like an online banking system which holds carbon allowances instead of money. 

For ETS 2, there will be no free allocation. Auctioning revenues are to be used to finance the Social Climate Fund (SCF) or by the Member State for climate and social purposes. 

The Environmental Protection Agency (EPA) is the National Competent Authority for Ireland for ETS2, responsible for implementing and administering the national and EU regulations on the permitting of regulated entities and their Monitoring, Reporting and Verification obligations. 

The monitoring and reporting requirements and the obligation to hold a permit commence on 1 January 2025. 


What type of fuels are covered under the EU ETS2

The EU ETS Directive has identified the fuels covered under ETS2 as follows:

  • (un)leaded petrol,
  • gas oil,
  • kerosene,
  • LPG,
  • natural gas,
  • heavy fuel oil,
  • coal and coke;
  • any other product intended for use, offered for sale or used as motor fuel or heating fuel as specified in Article 2(3) of the Energy Taxation Directive (ETD). This includes any fuel additives used as motor fuel, certain bio-based fuels, and any other hydrocarbons for heating purposes, except for peat.

That means the following types of fuels are currently excluded from the ETS2:

  • Peat;
  • Waste used as fuels (hazardous or municipal waste used as fuel, as explicitly excluded from the ETS2 scope in Annex III of the Directive);
  • Waste-derived fuels (mostly used in ETS1 installations);
  • Solid biomass (e.g. wood-based fuels);
  • Charcoal from wood.

The Monitoring & Reporting Regulation - General guidance for ETS2 regulated entities (MRR) outlines some guidelines regarding the special case of biomass in ETS2, which we are setting out below but it is best to discuss further with the EPA by emailing :

According to Annex III of the EU ETS Directive, the release for consumption of fuels for which the emission factor is zero, is not considered in the scope of ETS2. The emission factor is zero only for biomass that complies with the sustainability and greenhouse gas emission-saving criteria established by RED II.

To identify whether entities supplying fuels containing biomass should be identified as ETS2 regulated entities, the following step-by-step approach can be applied:

  1. If the entity supplies mixed fuels (fossil/biogenic) or fossil fuel streams and biogenic fuel streams, the regulated entity should apply for GHG emissions permit for ETS2 and monitor and report all fuel streams. This includes the obligation to demonstrate compliance with the RED II criteria, 

  2. If all the fuels that an entity supplies can be proven RED II compliant, and thus zero-rated, to the satisfaction of the competent authority or if there is no obligation to prove RED II compliance for a certain biofuel, bioliquid or biomass fuel, then the entity does not have to apply for a GHG emissions permit for ETS2.

Image of cars sitting in traffic in a town or village



Who are the Regulated Entities?

ETS 2 will be different to ETS1. It is an “upstream” system, which means the focus will be on the fuel-supplier (i.e. the regulated entity) rather than the final fuel consumer (car owner/householder etc).

Article 3(ae) of the ETS Directive defines the ETS2 regulated entities and  can be summarised as follows:

  • The authorised keeper of a tax warehouse (relevant for liquid fuels, in particular transport fuels) pursuant to Article 3(11) of the Excise Directive (ED),  who is liable to pay the excise duty pursuant to Article 7 of the ED. 
  • If the above is not applicable, any other person liable to pay the excise duty pursuant to Article 7 of the ED or Article 21(5) first and fourth subparagraph Energy Taxation Directive (ETD) (mostly relevant for natural gas and solid fuels)
  • If neither of the above are applicable any other person that has to be registered by the relevant competent authorities of the State for the purpose of being liable to pay the excise duty under the ETD, including any person exempt from paying the excise duty. 
  • If all of the above are not applicable, or if several persons are jointly and severally liable for payment of the same excise duty, any other person designated by the competent authority for ETS2.

In simple terms, the regulated entities are generally the fuel suppliers who pay the excise duties (including the carbon tax).

What next? 

The Environmental Protection Agency (as National Competent Authority) will provide further advice and guidance to those regulated entities in the coming weeks and months.  

The timeline is laid out as follows:


When? Who? What?
By 31st August 2024 Regulated Entity Submit to competent authority a Monitoring Plan for approval and open a registry account (See EU Guidance on Monitoring))
Before 1st January 2025 National Competent Authority Approve Monitoring Plan and issue Greenhouse Gas permit
30 April 2025 Regulated Entity Submit report on historic emissions (2024) - non-verified
1st January 2025 (and annually thereafter) Regulated Entity Start of monitoring period
31st December 2025 (and annually thereafter) Regulated Entity End of monitoring period

Each regulated entity must report their historical emissions for the year 2024 by 30th April 2025. They may require a Registered Entity Holding Account (REHA) in order to enter data on the Union Registry (UR) Following the initial report of their historical emissions, all regulated entities will be required to submit verified emissions report by 30th April each year thereafter. 

A webinar on ETS2 was held in May which provided an introduction to the workings of EU ETS, ETS2, the compliance cycle and the timeline for Regulated Entities to comply with. You can access the recording at the link below:

If you have any questions or think you may be a regulated entity, please contact us at 


Further Information & Contact Details


If you have any queries, you can contact us at