The Commission has proposed including the road transport and buildings sectors into the Emissions Trading System from 2026 (known as the “ETS2”). The regulated entities will be the upstream providers of fuel, i.e., the oil majors such as Total, Shell, BP, Eni and Repsol.

This legal analysis considers whether the oil majors can be required to absorb part of the ETS2 cost and concludes that the EU has the right to pass on carbon price to oil majors. Moreso, there are at least two options the EU could use to do so.