Starting in 2027, the EU’s new ETS2 (Emissions Trading System 2) will introduce a carbon price on fossil fuels used in building heating and transportation. While the costs will primarily fall on suppliers, including fuel and heating distributors, small and medium-sized enterprises (SMEs) are expected to feel the impact. However, a recent report by WiseEuropa titled “Fishing Rod or Fish? Support for Polish SMEs in Light of ETS2” argues that the burden on Polish SMEs may be less drastic than it initially seems—provided the right support mechanisms are put in place.
ETS2: Aiming to Cut Emissions in Transport and Buildings
Transport and buildings account for over 40% of greenhouse gas emissions in the European Union. ETS2 will extend the existing carbon trading system to cover gasoline, diesel, and heating fuels like gas and coal. According to Transport & Environment, this extension could generate around €300 billion in revenue between 2026 and 2032. The goal is to accelerate the transition away from fossil fuels.
Under the “polluter pays” principle, companies will need to purchase allowances annually for every ton of CO₂ they emit. But unlike the original ETS—which directly involved major emitters like factories—ETS2 makes fuel suppliers responsible for emissions permits, not households or SMEs.
“This approach reduces the administrative burden on citizens while still raising the cost of carbon-intensive fuels for households and small businesses,” explains Krzysztof Fal, Program Development Director at WiseEuropa and author of the report.
The ETS2 framework aims to reduce emissions from transport and building sectors by 42% by 2030 compared to 2005 levels. To achieve this, the European Commission announced in December 2024 that emission allowances under ETS2 will decrease by 5.38% annually starting in 2028.
Uneven Impact Across the EU – Poland at Risk
The effect of ETS2 will not be evenly distributed across Europe. According to WiseEuropa, Central and Eastern European countries—including Poland—are likely to bear a heavier burden, both socially and economically. Households and SMEs in these regions tend to rely more heavily on fossil fuels for heating and transport.
Projections suggest that, by 2030, heating with coal or gas will become 83% more expensive, while gasoline and diesel prices could rise by about 85%. Still, these increases are significantly lower than those experienced during the energy crisis, when electricity prices rose 215%, coal by 140%, and crude oil by 25%, according to the Polish Economic Institute (PIE).
“ETS2’s impact on fuel and heating costs for SMEs will be milder than the energy crisis,” notes Fal.
“However, that doesn’t mean less support is needed. Many of today’s prices are already inflated by past crises, and SMEs are still vulnerable to even modest increases.”
What Support Do SMEs Really Need?
The WiseEuropa report explores whether all SMEs should receive support under ETS2 and in what form. Options include:
- Non-repayable grants
- Preferential loans
- Consulting programs to educate business owners about cost-saving strategies and green investments
ETS2 will affect sectors differently. Transport businesses, companies with large sales fleets, and the HoReCa (hotels, restaurants, catering) industry are expected to be most vulnerable. Given limited public funds and legal constraints, WiseEuropa recommends prioritizing non-financial support and reserving direct financial aid for the most affected businesses.
“Support shouldn’t be uniform. It should depend on a company’s exposure and financial performance. Businesses must demonstrate that higher fuel costs are significantly impacting their operations and not simply the result of poor financial management,” says Fal.
Linking Support to Long-Term Transformation
Crucially, SMEs seeking public assistance should have a clear decarbonization plan. During the energy crisis, only a small percentage of micro and small businesses invested in their own energy sources or switched to electric vehicle fleets. According to PIE, very few SMEs used the crisis as an opportunity to innovate or cut their emissions.
“Support should be conditional on companies having a roadmap for reducing or eliminating their reliance on state aid,” stresses Fal.
“Policymakers should ensure that a lack of technical knowledge does not disqualify SMEs from receiving support. There’s a need for advisory and educational programs to help them prepare viable plans.”
Priority for Regions Dependent on SMEs
The report’s final recommendation is to target aid toward regions most dependent on small and medium-sized enterprises. These local economies could face the harshest consequences if SMEs are left to absorb the costs of ETS2 without proper support.
Conclusion
ETS2 is set to reshape the cost structure of fuel and heating across Europe, especially for SMEs. While the financial burden may not match that of the energy crisis, the systemic nature of ETS2 requires a strategic response. Support programs—especially those promoting long-term transformation—will be vital to helping Polish SMEs survive and thrive in a low-carbon economy.
Source:
WiseEuropa Report: “Wędka czy ryba? Wsparcie dla polskich MŚP w związku z wprowadzeniem ETS2”
(“Fishing Rod or Fish? Support for Polish SMEs in Light of ETS2”)
