Due to the amendments to the Law on Pollution, prices of fossil fuels are expected to rise — however, this increase will occur across the entire European Union (EU), and member states can offset costs by expanding local energy resources and reducing fossil fuel consumption, the Ministry of Climate and Energy (KEM) told the LETA news agency.
On the 9th of October, the ruling coalition in the Saeima overcame weeks of opposition resistance and adopted amendments to the Law on Pollution, transposing EU directives regulating the emissions trading system (ETS) and the emissions trading system for buildings, transport, and additional sectors (ETS2).
The ministry stated that adopting the amendments was necessary to avoid a fine of approximately 300 million euros for failing to comply with EU requirements.
Meanwhile, the opposition has claimed, through various communication channels including social media, that the changes will lead to a significant rise in fuel prices — with different estimates suggesting an increase between 26 and 40 cents per litre.
According to KEM representative Zane Leimane,
the adopted amendments are intended to reduce the EU’s dependence on imported oil
by increasing the share of local energy resources. Costs related to imported oil could be offset by expanding domestic energy production — such as electricity, biogas, and green hydrogen — and by reducing fossil fuel consumption. She stressed that fossil fuel prices will rise throughout the EU, not just in Latvia.
The ETS2 requirements are expected to take effect across the EU in 2027, and from 2028, fuel and heating fuel operators will be required to surrender emission allowances equivalent to the carbon dioxide emissions reported for the previous year (one tonne of CO₂ equals one emission allowance). Leimane explained that it is not yet possible to calculate the exact impact, since the price of carbon dioxide allowances in 2027 remains unknown. Therefore, it would be inaccurate to predict precise fuel price levels now. Any calculations made would be speculative and could differ significantly from actual conditions in 2027.
Fuel prices consist of several components — the price of oil products (depending on each supplier’s contracts), national taxes and duties, mandatory biofuel blending requirements, and other fees included in the retail price. The impact of carbon dioxide allowances on final prices will depend on the market price of allowances at the time of purchase, she said.
As an example,
Leimane referred to the natural gas and heating sectors, where carbon dioxide quotas are already applied.
One megawatt-hour (MWh) of natural gas produces 0.202 tonnes of carbon dioxide emissions. At a quota price of 50 euros per tonne, this equals 10.1 euro per MWh — theoretically meaning natural gas prices could increase by 10 euros per MWh. For a heat producer using natural gas, this would translate into a tariff increase of roughly 11–12 euros per MWh.
According to data from the Public Utilities Commission (SPRK), only two companies — AS “Rēzeknes siltumtīkli” (current tariff) and SIA “Gren Jelgava” (planned tariff) — have so far indicated costs related to purchasing emission quotas. For Gren Jelgava, these costs make up only 0.7% of total expenses. Therefore, the current impact of emission quota prices is negligible, KEM emphasized.
Regarding renewable energy in transport, Latvia’s National Energy and Climate Plan (2021–2030) sets a target of 29% renewable energy share in the transport sector by 2030. To achieve this, KEM has developed a new Transport Energy Law, which the Saeima Economic Affairs Committee will review on the 14th of October. The law will establish obligations for market participants to gradually increase the share of renewable energy used in transport.
As reported,
the Saeima adopted the amendments to the Law on Pollution in the final reading after several delays.
The amendments are designed to update Latvia’s climate policy framework for ETS implementation, reflecting institutional reorganizations and consolidating previously scattered regulations. The law introduces a new section covering both ETS and ETS2, outlining conditions, requirements, permits, and obligations for operators.
It specifies that operators — including fuel, shipping, and aviation companies — must take measures to reduce greenhouse gas (GHG) emissions and monitor their emission levels. The State Environmental Service (VVD) will determine which facilities require a GHG permit and may suspend operations if an operator functions without a valid permit.
The new ETS2 system will cover fuel and heating fuel consumption in buildings, transport, and certain industrial sectors not currently under ETS. Although both systems follow similar management principles, their quota allocation and trading mechanisms are separate.
From 2028 onward, fuel suppliers in Latvia will be required to obtain GHG permits from VVD and monitor their emissions based on individual monitoring plans. A detailed monitoring and reporting procedure, as well as compensation mechanisms to avoid double counting between ETS and ETS2, will be defined by the Cabinet of Ministers.
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