At the initiative of Cyprus and a group of other EU member states, the European Council conclusions now include a reference calling for a review of the framework governing the new EU Emissions Trading System for road transport and building heating, known as ETS2.
Nicosia is pressing for a balance between climate goals and competitiveness, seeking a more flexible and socially fair approach for small and island states and proposing a postponement of ETS2’s launch from 2027 to 2030. Government sources say Cyprus supports the green transition, but with realism and social fairness, especially for small, island and peripheral economies.
Why the timing matters
Cyprus is already heavily burdened by the existing emissions trading system for industry and power, given its reliance on fossil fuels. Extending carbon pricing to road fuels and heating through ETS2 is expected to add pressure. Under ETS2, fuel suppliers must purchase CO₂ allowances via auctions, costs that are likely to be passed on to consumers.
The coalition and proposed fixes
Alongside Cyprus, countries including Poland, Italy, the Czech Republic, Malta, Bulgaria, Romania, Slovakia and Estonia argue for suspending or delaying ETS2 until 2030. The extra time, they say, would allow technical improvements to the mechanism, early rollout of Social Climate Plans to support vulnerable households, and space for energy prices and inflation to stabilise.
Following this intervention, the Council conclusions invite the European Commission to propose additional price-stabilisation measures that factor in social and economic impacts.
As an island state, Cyprus highlights the need for energy storage capacity, support for SMEs adapting to green requirements, stronger interconnections with the European grid, and scaled renewable deployment within geographic constraints. It also calls for recognition of island challenges such as higher emissions from natural disasters and limited CO₂ absorption due to smaller forest cover.
Social climate fund must come first
Cyprus backs setting a quantified 2040 emissions-reduction target, provided it is realistic and achievable, based on detailed impact assessments per member state and accompanied by adequate support and funding.
The EU’s Social Climate Fund is intended to finance energy-efficient home renovations, clean transport and subsidies for vulnerable households during the transition. Cyprus stresses that the fund should be operational before ETS2 takes effect to avoid burdening households and small businesses without proper preparation.
Source: CNA