Lubricants are everywhere in modern life, keeping Europe’s transport, manufacturing, agricultural machinery and digital devices running smoothly. Within this broad market, two-stroke oils represent a small, highly specialised niche produced mainly by SME formulators. They power everyday tools and machines: a farmer’s chainsaw, a gardener’s lawnmower, a technician’s generator or a moped crossing the city. Yet under the current interpretation of ETS2, these small producers could be treated like large fuel suppliers – even though their products are not fuels.
For an SME blending lubricants for local customers, the implications are severe. A minor product line could suddenly require participation in a carbon trading system designed for major energy companies. This is the reality facing hundreds of European SMEs if two-stroke oils remain in the ETS2 scope.
As an example, an SME making 50,000 liters of two-stroke oil might earn just €10,000 in margin. Once ETS2 compliance is factored in - including administrative obligations, monitoring systems, reporting, and carbon costs - that modest profit can quickly turn into a loss. In a competitive market, these costs cannot simply be passed on - they risk wiping out the activity altogether.
Lubricants are everywhere in modern life, keeping Europe’s transport, manufacturing, agricultural machinery and digital devices running smoothly
The objective of ETS2 is legitimate: to price emissions from fuels used in buildings, road transport and related sectors. But two-stroke oils are fundamentally different. Their primary function is mechanical, not energetic. They reduce friction, protect engines, and improve efficiency, thereby reducing energy consumption. The fact that a portion may combust when mixed with petrol reflects engine design, not product purpose. Including them in ETS2 stretches the system beyond its intended purpose and risks weakening its effectiveness.
This approach also contradicts the Commission’s efforts to reduce administrative burden. The chemical complexity of two-stroke oils makes calculating carbon intensity genuinely difficult, even for large companies with specialist teams. For SMEs - which dominate this sector - the compliance requirements are disproportionate. A small company with 20, 30, or 50 employees cannot absorb obligations designed for multinationals. Many will have no choice but to stop production, reducing competition amongst European players and increasing dependency on external suppliers.
The irony is clear: high-quality European two-stroke oils already help reduce emissions by enabling cleaner, more efficient engine performance. If compliance costs force producers out of Europe, consumers - from farmers to gardeners to independent tradespeople - will face fewer choices, higher prices, and lower-quality imports. Climate policy should not unintentionally penalise the products that support it.
A small company with 20, 30, or 50 employees cannot absorb obligations designed for multinationals
The solution is straightforward: exclude two-stroke oils from ETS2. Their function is mechanical, not energetic, they are marketed as lubricants, not fuels, and they do not belong in a framework designed for fuels. Correcting the scope will support SMEs, strengthen competitiveness, and maintain the integrity of the EU’s climate policy.
UEIL calls on the Commission, Parliament, and Member States to act swiftly. Getting the scope right is not a technical detail - it is the difference between policy that works and policy that harms.
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