ETS2 revenue simulation tool

From 2028, suppliers of fossil fuels for road transport, buildings and small industries in the European Union will be required to purchase and surrender allowances to cover their downstream emissions in the new emissions trading system (ETS2). The revenues will be split among the Member States (MS) to be used for climate action and social measures. A share of these revenues will flow into the Social Climate Fund (SCF) from 2027 to 2032 and be split among countries according to a predefined solidarity principle with the aim to support vulnerable households and micro-enterprises. The SCF amounts will be released based on the national Social Climate Plans (SCP) submitted by MS to the EU Commission. 

Alongside uncertainties about the future carbon price – regularly projected by various actors and which depends on several factors such as effective emissions reductions by the countries and mechanisms foreseen in the Market Stability Reserve (MSR) – public debate focuses on the revenue and their use. The ETS2 and SCF revenue should be spent to reduce emissions in a socially fair way while shielding the vulnerable population from potential negative impact. Discussing this issue requires having visibility on the funds available yearly in each country and how much specific support measures would cost, based on assumptions such as the amount and number of beneficiaries.

Agora Energiewende has developed this Excel tool to support these discussions with a solid factual basis. The tool estimates, for each Member State: the revenues available each year between 2027 and 2032 under different price scenarios; the share of the SCF within those revenues; and the portion that widely discussed support measures would require based on input assumptions.