Assessing the spatial and social distribution effects of carbon prices on car fuels of ETSII

The Emission Trading System 2 of the European Union (ETS2) will introduce uniform EU-wide carbon pricing for fossil car fuels, affecting a large share of households across the Union. A recent study on residential heating (Bertelsmann Stiftung 2026), using a synthetic EU population of 188 million households, shows that while roughly half of all households are affected, the majority can absorb the additional costs. However, a significant minority faces substantial financial burdens – particularly in Eastern and Southern Europe. The study further demonstrates that ETS2 revenues are, in principle, sufficient to cushion the most adverse distributional impacts. Beyond residential energy use, fossil car fuel consumption constitutes the second major sector covered by ETS2. Yet this sector has not been analysed with comparable granularity. Closing this gap is essential, not least because a comprehensive assessment is required to evaluate the full redistributive potential of ETS2 revenues. This project therefore aims to provide a detailed analysis of the regional and social impacts of carbon pricing in the transport sector, thereby enabling a more complete and policy-relevant evaluation of ETS2.