Researchers call for earlier start of auctions for CO2 price in transport and heating

Leading German climate and energy researchers have called for an earlier start of emissions trading for the country’s CO2 price on transport and heating fuels. Introducing auctions from 2023, instead of 2026 as planned, is one of four “no-regret measures” proposed in a paper by the state-supported Ariadne research project. These should be implemented despite it being unclear whether the EU will move to introduce a similar bloc-wide emissions trading system, which Germany would then have to merge with its national system. The planned price corridor for the auctions should be higher and wider to align the policy with new climate targets, write the researchers. They also call on legislators to introduce a climate bonus – the direct per capita reimbursement of CO2 price revenues – even before 2023 to help ease the burden on low-income households. In addition, they call for the volume of emissions allocations in the national system to be aligned with sector climate targets.

Germany introduced its national carbon price on transport and heating fuels with a fixed price of 25 euros per tonne of CO2 at the start of 2021. This year, the fixed price is 30 euros/t CO2, and the transition to an emissions trading system is planned for 2026 – at the start with a price corridor of 55-65 euros. The new government coalition has said it aims to assess the compatibility of Germany’s national carbon price with the planned EU emissions trading system in transport and buildings. It is unclear whether EU legislators will introduce such a system as negotiations in the European Parliament and among member states are ongoing.