CO₂ Pricing

CO₂ pricing is a measure to reduce carbon dioxide emissions through economic incentives.

CO₂ pricing is a central element of climate policy aimed at reducing carbon dioxide emissions through economic incentives. By imposing a price on CO₂ emissions, both companies and consumers are encouraged to switch to more climate-friendly alternatives and minimize their emissions. In Germany, CO₂ pricing has been implemented since 2021 as part of a national emissions trading system primarily targeting the transport, buildings, and heat sectors.

The implementation occurs through the Fuel Emissions Trading Act (BEHG), which requires companies distributing fossil fuels to purchase certificates for the resulting emissions. The initial entry price was 25 euros per ton of CO₂, with a planned increase to 55 euros by 2025. From 2026, the certificates are to be auctioned, aiming for a price corridor between 55 and 65 euros.

The purpose of CO₂ pricing lies in internalizing external costs, which has both direct and indirect effects on consumer behavior and technological innovation. The measure also poses a challenge, especially for low and middle-income households, leading to discussions on social compensation measures to ensure societal acceptance. Overall, CO₂ pricing makes a significant contribution to achieving climate goals by creating economic conditions for climate protection and encouraging investments in more sustainable technologies.