European CO2 Taxation to Raise Heating Costs by Up to 30 Percent by 2028

The European Union is advancing its decarbonisation strategy through the implementation of a new CO2 tax that will directly impact heating costs in buildings and industrial sectors. Originally scheduled for 2027 the European Commission postponed its enforcement to 1 January 2028 to provide additional adaptation time for member states, businesses and consumers.

The measure known as the Emissions Trading System for buildings and road transport introduces a carbon price linked to the use of fossil fuels such as natural gas and gas oil. Unlike the existing system that mainly taxes large industrial plants and the electricity sector this new scheme targets fuel suppliers who must buy emission rights for the CO2 released during thermal and mobility uses. The economic impact is then passed automatically to consumers through energy bills.

Initial estimates suggest a carbon price of around 45 euros per tonne of CO2. This will raise fuel costs by approximately 10 to 15 euros per megawatt-hour. Given current prices this increase could lead to a rise of between 20 and 30 percent in the overall cost of thermal energy for residential tertiary and industrial buildings reliant on gas or gas oil boilers. Such a scenario introduces substantial economic uncertainty and underscores the need for stable decarbonised energy alternatives.

In this context sustainable district heating networks are emerging as a strategic solution to mitigate the effects of rising CO2 costs and fossil fuel dependencies. These centralised infrastructures supply heat to multiple buildings utilising renewable sources including biomass that is 100 percent renewable and sustainable under European renewable energy directives. They drastically reduce emissions and remove the direct exposure to taxes surcharges and emission trading markets associated with fossil fuels.

Rebis district heating networks which mainly rely on local biomass managed responsibly and operated efficiently exemplify a proven model of energy transition applied to heating. As a renewable and emissions-neutral source according to European regulations these systems are decoupled from carbon pricing offering public authorities companies and communities long-term cost predictability.

Beyond environmental benefits connecting to a sustainable heat network eliminates the need for new boilers reduces maintenance costs and enhances supply security. It also promotes local economic development through the responsible utilisation of forest resources.

With the imminent implementation of the new CO2 tax strategic planning for building and urban energy systems is essential. Investing in renewable district heating infrastructure not only helps meet European climate objectives but also shields consumers from regulatory and market volatility. Solutions like Rebis model are poised to become crucial components of the new energy landscape based on efficiency sustainability and stability in the long term.