Germany has yet to decide national CO2 price in 2027 following EU scheme delay

The German government continues to assess how the delay of the EU emissions trading system for transport and buildings (ETS 2) affects the national carbon price for these sectors, the environment ministry told Tagesspiegel Background. 

The EU ETS 2 will replace Germany's national system. But as part of a deal on an emissions reduction target for the European Union for 2040, countries agreed to delay the ETS 2 start to 2028. As a result, the German national system will run for one extra year, but there has been no decision on the concrete design during that period.

Lawmakers from the government coalition partners – the Social Democratic Party (SPD) and the Christian Democratic Union (CDU) – had proposed to freeze the price at this year’s level. Since the start of the year, the national carbon price is determined by auctions with a price corridor from 55 to 65 euros per tonne. 

However, it remains unclear whether the government will follow the agreement in its proposals to reform the relevant regulation, wrote Tagesspiegel. The ministry did not say when it would present its plans. A higher carbon price would bring extra revenues for the state and increase pressure on consumers to save energy, or switch away from fossil fuels. But higher prices could also involve the risk of a backlash. 

Germany decided to put a price on greenhouse gas emissions in the transport and building sectors from 2021 as a key instrument to help reach its climate targets. It started with a fixed price, which increased every year until the shift to auctioning this year.