The aim of this study is to examine the governance and utilisation of EU ETS revenues in the five Member States with the highest emissions within the system: Germany, Poland, Spain, Italy, and France. Building on this analysis, the report provides policy recommendations for an effective, socially equitable, and climate-aligned implementation of ETS2 and the Social Climate Fund (SCF), as well as suggestions for enhancing the use of revenues generated by the EU ETS. The study draws upon analysis of data reported by the Member States to the EU institutions, interviews with national and EU-level experts and stakeholders, and comparative policy evaluation. This report is a part of the LIFE Effect project1, funded by the EU LIFE Programme and the German Federal Environmental Foundation.

The first chapter outlines current EU-level legislation on the EU ETS, emphasising the key obligations of Member States. It also presents an overview of how EU ETS revenues are utilised across the EU. The second chapter assesses revenue governance and usage in the five selected Member States, highlighting good practices and areas for improvement, and offering country-specific recommendations. Subsequent chapters compare the approaches adopted by these countries and summarise the good and bad practices identified. The report concludes with general recommendations addressed to both Member States and EU institutions. These recommendations also reflect the key findings of the Greek case study featured in the report published by The Green Tank and Facets, “Recommendations for policies and measures to mitigate ETS2 implementation impact in Greece”.

We would like to thank all national and EU-level experts and stakeholders who participated in the in-depth interviews conducted during the preparation of this report, including: Géraud Cayol – I4CE, France; Diana Cárdenas Monar – I4CE, France; Phuc-Vinc Nguyen – Jacques Delors Institute, France; Isabel Haase – Oeko Institute, Germany; dr Victoria Noka – Oeko Institute, Germany; Eike Velten – Ecologic, Germany; Francesca Bellisai – ECCO, Italy; Giulia Colafrancesco – ECCO, Italy; Costanza Scano – ECCO, Italy; Adam Guibourge-Czetwertyński – T&E, Poland; Magdalena Jóźwicka – EEA, and others.