ETS2: The new carbon cost every building investor should watch closely

Think of ETS2 as a “carbon cost” on fossil energy use, applied not directly to you, but to your suppliers. It works through a cap-and-trade system: fuel suppliers (for gas, oil, and transport) will be required to buy CO₂ emission allowances from the EU—allowances that become scarcer, and more expensive, every year as the quota declines by 5.38% annually, - making fossil fuels progressively more expensive.

And while the suppliers carry the administrative burden, the financial impact will be passed on to consumers—including building owners, asset managers, facility operators, and fleet users.

To help mitigate the social impact, a portion of ETS2 revenues will be directed into the Social Climate Fund, aimed at supporting vulnerable households and small businesses during the energy transition.

To better assess the financial impact of ETS2, we conducted an internal case study based on the average size and energy consumption of the buildings we’ve analysed since the launch of Pulse. 

For a typical office building of 12,700 m², heated with gas and consuming approximately 74 kWh/m² per year:

📍 Estimated cost increase in 2027:

• €8,500 at a CO₂ price of €45/ton up to €18,900 at €100/ton

As carbon pricing tightens, these figures underline the urgency for proactive energy strategies—especially in gas-reliant assets.

Here’s how investors can get ahead of ETS2 before the carbon costs hit:

✅ Assess your portfolio’s Scope 1 exposure: Gas heating, diesel generators, thermic fleets—map the risks.

✅ Plan for electrification: Switch to heat pumps, solar production, and Building Management Systems that optimize consumption.

✅ Invest in holistic revalorisation: Combine energy upgrades with comfort, well-being, and certification improvements (BREEAM, WELL, taxonomy alignment).

✅ Partner with an expert: PULSE offers A-to-Z support to evaluate, revalorise, and guarantee performance—financially and environmentally.