Aug 11, 2025
Germany joins other EU countries in demanding modifications to the bloc's new emissions trading system.
More than a dozen EU member states, including Germany, have urged the European Commission to revise its plans for implementing a carbon price on transport and heating fuels starting in 2027 to avoid price surges, according to the Tagesspiegel Background newsletter. An alliance of environmental and social welfare organizations stated that the EU's second emissions trading system, ETS 2, needs to be more equitably designed.
The letter to the Commission was signed by countries such as Austria, Italy, Poland, Lithuania, Romania, and Slovakia. Germany’s environment ministry mentioned that they support the aim of the paper to garner maximum backing for ETS 2 in the EU and prevent price volatility.
The member states also request that the auctioning of allowances commence as early as mid-2026. This early action would provide market participants with a clearer understanding of expected prices, enhancing the transparency and predictability of the CO2 price signal.
Additionally, the letter emphasizes the need for a flexible design of the market stability reserve (MSR). The ETS 2 includes provisions for releasing extra allowances into the market if prices exceed 45 euros per tonne of CO2. However, the signatories caution that measures against sudden price hikes might be “insufficient,” possibly leading to “significant negative social impacts.”
The alliance of environmental and social welfare organizations has called for an increase in the EU’s Social Climate Fund. Stefanie Langkamp, policy director at Climate-Alliance Germany network, stated that for emissions trading to be effective and publicly accepted, it must be paired with social measures from the outset. The group also proposed a flat-rate public transport ticket for low-income individuals and targeted subsidies for renovating social housing.
The EU Commission is expected to present its proposal for a new 2040 climate target next week. As part of its broader climate strategy, the European Union plans to introduce a second emissions trading system for the transport and building sectors, building on the existing system for energy and industry. Germany already operates a national carbon price for transport and buildings, which will be aligned with the EU framework.
The letter to the Commission was signed by countries such as Austria, Italy, Poland, Lithuania, Romania, and Slovakia. Germany’s environment ministry mentioned that they support the aim of the paper to garner maximum backing for ETS 2 in the EU and prevent price volatility.
The member states also request that the auctioning of allowances commence as early as mid-2026. This early action would provide market participants with a clearer understanding of expected prices, enhancing the transparency and predictability of the CO2 price signal.
Additionally, the letter emphasizes the need for a flexible design of the market stability reserve (MSR). The ETS 2 includes provisions for releasing extra allowances into the market if prices exceed 45 euros per tonne of CO2. However, the signatories caution that measures against sudden price hikes might be “insufficient,” possibly leading to “significant negative social impacts.”
The alliance of environmental and social welfare organizations has called for an increase in the EU’s Social Climate Fund. Stefanie Langkamp, policy director at Climate-Alliance Germany network, stated that for emissions trading to be effective and publicly accepted, it must be paired with social measures from the outset. The group also proposed a flat-rate public transport ticket for low-income individuals and targeted subsidies for renovating social housing.
The EU Commission is expected to present its proposal for a new 2040 climate target next week. As part of its broader climate strategy, the European Union plans to introduce a second emissions trading system for the transport and building sectors, building on the existing system for energy and industry. Germany already operates a national carbon price for transport and buildings, which will be aligned with the EU framework.