EU ETS2 Verification
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ETS 2 First Verification Cycle Complete: Lessons from Early Implementation
ETS 2 verifications have now been completed for the first reporting cycle, marking an important milestone in the expansion of the EU carbon market to transport and building fuels.
Despite external headwinds, mostly due to recent volatility in global oil and gas markets, many fuel suppliers and distributors have successfully submitted their first officially verified ETS 2 reports. However, the verification process revealed recurring data quality and MRV readiness issues that will require attention before the second cycle.
ETS 2 requires companies placing energy products on the market for use in transport and buildings to monitor, report, verify, and ultimately surrender allowances corresponding to their emissions. The system mirrors many of the core principles of the EU ETS (ETS 1), extending similar compliance obligations to a new set of market participants.
In principle, ETS 1 and ETS 2 follow a comparable compliance framework:
This alignment ensures consistency across the broader EU emissions trading framework and facilitates a future integration of the two systems.
However, ETS 2 introduces several important differences:
In addition, emissions sources are structured into “streams”, typically defined by fuel type. This requires companies to establish clear data flows and methodologies for each product category.
Emissions under ETS 2 are calculated using a standardized approach:
tCO2e=Activity Data (GJ)×Scope Factor×Emission Factor (CO2e/GJ)×Biomass FractiontCO_{2e} = Activity \ Data \ (GJ) \times Scope \ Factor \times Emission \ Factor \ (CO_{2e}/GJ) \times Biomass \ FractiontCO2e =Activity Data (GJ)×Scope Factor×Emission Factor (CO2e /GJ)×Biomass Fraction
While the formula itself is straightforward, its application in practice has proven challenging for many first-time participants.
The first year of ETS 2 implementation has highlighted several recurring challenges:
The gap between regulatory expectations and operational readiness was particularly pronounced among smaller fuel distributors and first-time participants in EU carbon regulation. Companies that engaged verifiers during the monitoring plan approval phase rather than waiting until year-end verification demonstrated measurably stronger MRV readiness.
As a result, early engagement with verifiers has proven critical in ensuring smooth and timely verification.
The standard deadline for submission of verified emissions reports is April 30th. However, some Member States, including France, have introduced transitional delays. These postponements, ranging from several months to up to a year depending on product type, reflect the practical challenges of onboarding a large number of new regulated entities.
The current phase of ETS 2 should be understood as a transitional period, with regulators placing greater emphasis on system readiness and data quality rather than strict enforcement. This environment is expected to evolve rapidly over the coming cycles, with:
Over time, ETS 2 is expected to become a significant cost driver in the transport and buildings sectors, pushing companies to integrate carbon accounting into commercial operations, pricing strategies, and supplier contracts. There is also ongoing discussion around a potential convergence of ETS 1 and ETS 2 after 2030. Such a development would create the largest carbon market globally, further reinforcing the importance of robust monitoring and verification practices.
Normec Verifavia is accredited as an independent verification body under ETS 2 and successfully verified emissions reports for over 10 companies in the first reporting cycle. This experience provided direct insight into both the practical challenges faced by new market participants and the evolving expectations of national competent authorities.
Contact our ETS 2 verification team to discuss how we can support your second-cycle preparation and help avoid the common issues that extended first-cycle verification timelines.
