On 15th September 2025, ZERO hosted the online ETS Talk as part of the LIFE Effect project, titled “Making ETS2 Work: New Evidence from the Czech Republic, Poland, and Bulgaria.” The session presented how the EU’s new carbon pricing system for buildings and road transport, the ETS2, is set to impact households in central and eastern Europe, and what policies are needed to ensure fairness and protect vulnerable groups.

The discussion was grounded in the study “People behind the policy: Social impacts of EU ETS2 in Bulgaria, Czechia, and Poland”, coordinated by AMO. This research provides a clear picture of which social groups are most likely to be affected by ETS2, evaluates draft National Social Climate Plans (NSCPs), and identifies policy gaps across the three countries. Two central questions guided the study:

1. Which groups are likely to be most affected by ETS2? 
2. What are the gaps in the National Social Climate Plans?

Watch the ETS Talk here:

Key insights from the study

Targeted funding for vulnerable groups
Support from the Social Climate Fund (SCF) and ETS2 revenues should prioritise energy-poor households and those most at risk of bearing disproportionate carbon costs. Effective targeting requires careful consideration of local housing conditions, whether single-family homes, multi-family units, or rental properties.

Supporting long-term transformation
While direct financial assistance is crucial to shield vulnerable households from rising energy costs, long-term investments are equally important. Improving energy efficiency and deploying low- or zero-carbon technologies are key steps toward achieving climate-neutral buildings.

The need for deep renovations
To truly reduce energy bills, deep retrofits of underperforming buildings are essential. ETS2 revenues should be directed toward areas with the highest energy-saving potential, ensuring that funds have a meaningful and lasting impact.

Policy design and implementation
As ETS2 carbon prices rise, higher energy efficiency standards and technological upgrades for heating systems will be necessary. Funding strategies must extend beyond current NSCP timelines to support ambitious renovations and long-term energy transitions.

Expert perspectives from the region

The session featured a presentation by Viktoria Noka (Oeko Institut), followed by a dynamic discussion with experts from the three countries:

• Svetoslav Stoykov (Za Zemiata, Bulgaria) 
• Rebeka Hengalová (Europeum, Czechia) 
• Michal Wojtylo (Reform Institute, Poland) 

Each speaker shared unique national perspectives, highlighting public reactions to ETS2 and exploring pathways for a stronger, more equitable system. Among the key discussion points were:

• Lessons from Green Deal communication strategies for effective ETS2 outreach. 
• Balancing direct payments to citizens with investments in deep renovations. 
• The complexities of distribution mechanisms, deciding who receives funds, in what form, and for how long. 
• Data protection considerations and their impact on targeting vulnerable households. 
• The trade-offs between direct payments and long-term investments, with evidence suggesting that direct transfers alone often have limited impact on accelerating energy transition. 

A Path Forward

The session underscored that while financial support is vital, the ultimate goal must be structural change in the building sector. Only by combining well-targeted compensation with sustained investment in renovations and low-carbon technologies can ETS2 achieve a fair and effective transition toward climate neutrality.