EU Emissions Trading System for Buildings, Road Transport and Other Sectors (ETS2). Situation and concerns.

For ETS2 to work, fossil fuel prices need to rise. By increasing the cost of emissions, ETS2 can reduce the use of fossil fuels and incentivize low-carbon solutions. For the ETS to work, the price signal needs to be clear, especially in the case of ETS2, where studies have shown that the elasticity of demand is low with respect to variations in the costs of fuel for road transport and heating.