The German government is to reinvest the revenues generated from CO2 pricing in climate change mitigation measures, or pass it on to citizens in the form of financial assistance and promotion measures.
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The new pricing of CO2 emissions in the transport and heating sectors as of 2021 is pivotal to the Climate Action Programme. As is already the case for the energy sector and energy-intensive industry within the framework of the European emissions trading scheme, a price is to be put on CO2 emissions generated by the building sector and by traffic and transport. Expert reports indicate that this is the most economically cost-effective way to reduce emissions and achieve our climate targets.
Fixed price for CO2
The national emissions trading system will be launched in 2021 with a fixed price system. A price per tonne CO2 will be set at political level. Certificates will be sold to companies selling heating fuel and fuel for vehicles. The costs of the certificates will then be carried by the fuel trade. When a company sells heating oil, liquefied petroleum gas, natural gas, coal, petrol or diesel, it will need one certificate for every tonne CO2 emitted by the products it sells.
The fixed price will initially be 10 euros per tonne CO2, and will rise to 35 euros per tonne by 2025. As of 2026, the market will set the price, within a fixed band. The total quantity of certificates issued throughout Germany will be in line with the imperatives of German and European climate targets.