Emission trading in Germany: Revenue, key developments and prospects

Germany’s emissions trading systems are undergoing fundamental changes. The EU emission trading system (EU ETS 1) faced declining revenues, while the national system (nEHS) sets new revenue records. What drives these developments, and how will upcoming regulatory shifts – from CBAM to the EU ETS 2 – shape Germany’s carbon pricing landscape?

EU ETS 1: Declining revenue with potential upside

The EU ETS 1, which regulates emissions from energy-intensive industrial plants, intra-European aviation, and maritime transport, saw a significant decline in German auction revenue in 2024. The total revenue from auctioning the EU ETS 1 emission allowances (EUA) amounted to approximately EUR 5.5 billion marking a 28% decrease from the EUR 7.7 billion recorded in 2023 (Figure 1). This decline was driven by two main factors: a reduction in the number of EUAs auctioned and a fall in the average EUA price in 2024 compared to 2023 (UBA, 2025).

Figure 1: Auction revenues from the EU ETS 1 in Germany 2023-2025 (source: DEHSt, 2025a)

To reinforce climate goals, the EU continues to reduce the quantity of available EUAs. In 2024, the auctioned amount for Germany dropped to 85 million, down from 92 million in 2023. Additionally, the average price per EUA decreased from 83.66 EUR/tCO2 in 2023 to 65.00 EUR/tCO2 in 2024, reflecting lower demand from the energy and industrial sectors due to higher shares of renewables in the electricity grid and weaker economic conditions. Despite this, the 2024 average price remained 24% higher than the 2021 level, showcasing the long-term strengthening of emissions pricing.

Since the end of 2024, the allowance price in the EU ETS 1 has rallied amid the expectations of lower supply of allowances and thus higher prices during 2025. While the price stood at 65 EUR/tCO2 mid December 2024, it has risen by almost 25% and sometimes traded at above 80 EUR/tCO2 in February 2025. The EUA price expectations for the year 2025 ranges between 80-90 EUR/tCO2 indicating both a tightening of supply and thus likely higher auction revenues again this year.

Record revenues in Germany’s national emission trading system

Unlike the EU ETS 1, the German national emissions trading system (nEHS), which covers emissions from heating and transport, witnessed an increase in revenue. In 2024, revenue from the nEHS reached EUR 13 billion, up 21% from the EUR 10.7 billion recorded in 2023 as Figure 2 shows. This increase was primarily due to a rise in the fixed price of nEHS certificates from €30 per tonne in 2023 to €45 per tonne in 2024 (UBA, 2025).

Figure 2: Sales revenues from the nEHS in Germany 2023-2025 (source: DEHSt, 2025b)

A total of 278 million nEHS certificates were sold on the European Energy Exchange (EEX) in Leipzig in 2024 at the new fixed price, generating approximately EUR 12.5 billion. An additional 17 million certificates for 2023 were sold at the previous year’s price of 30 EUR/tCO2, adding another €500 million to the total revenue. Despite a lower number of certificates sold compared to 2023 (which saw 358 million certificates sold), the revenue increase was sustained by the price hike.

Total revenues from emission pricing at record high

Germany’s combined revenue from the EU ETS 1 and nEHS reached EUR 18.5 billion in 2024, surpassing the EUR 18.4 billion in 2023 and significantly exceeding the EUR 13 billion in 2022. These funds are allocated to the Climate and Transformation Fund (KTF), which finances initiatives supporting Germany’s energy transition and decarbonisation goals.

Dirk Messner, President of the German Environment Agency (UBA), emphasized that emissions trading must continue to be a driving force for climate protection, economic competitiveness, and social sustainability. He advocates for a climate bonus to support households affected by rising carbon prices, alongside targeted subsidies to assist vulnerable groups in transitioning to climate-friendly alternatives (UBA, 2025).

Regulatory developments: Aligning national legislation

The German Bundestag passed the TEHG-Europarechtsanpassungsgesetz 2024 in the end of January 2025, aligning national regulations with the reformed emission trading rules of the EU. Key aspects of this reform include (BMWK, 2025):

Inclusion of maritime transport: From 2024, 40% of emissions from shipping are covered under EU ETS 1, increasing to 70% in 2025 and 100% in 2026.
Stricter emission caps in aviation: Starting 2024, airlines face lower emission limits, and for the first time, they must report non-CO2 climate effects such as contrail formation.
Transition to the EU ETS 2 in 2027: The new European emissions trading system for transport and heating will replace the German nEHS and other national carbon pricing schemes of EU Member States.
Implementation of the Carbon Border Adjustment Mechanism (CBAM): CBAM introduces carbon pricing for imports of energy-intensive products such as steel, cement, and aluminum, ensuring fair competition within the EU market. A transition phase is underway, with full financial obligations beginning in 2026.

At the start of 2025, the fixed CO2 price in the nEHS rose from 45 to 55 EUR/tCO2 (compare Table 1), a step that has been planned since the introduction of the system in 2021. This gradual increase allows citizens and businesses time to transition to greener alternatives and will also likely lead to higher sales revenues during 2025 again. With the nEHS being absorbed into the EU ETS 2 from 2027, price for emissions in those sectors will be based on free auction prices.

Year	Price EUR/tCO2	Mechanism
2021	25	Fixed price
2022	30
2023	30
2024	45
2025	55
2026	55-65	Auction with price corridor
From 2027	45-100 (estimates)	Auction with free market price (EU ETS 2)

Table 1: Development of emission pricing in the sectors covered by the nEHS

The 2025 price hike in the nEHS is expected to have only moderate impact on fuel costs. The price per liter of gasoline and diesel may rise by around 3 cents. However, fuel prices fluctuate due to external factors such as global oil prices, which often cause greater price variability than carbon pricing alone. For an individual driving 15,000 km annually, the expected cost increase will be around EUR 50 per year (Bundesregierung, 2025).

Conclusion and future trajectory

As the EU emission trading framework expands, carbon pricing evolves as central mechanisms for climate policy. While the EU ETS 1 faced revenue declines due to economic fluctuations and market adjustments, the nEHS saw record revenues driven by increased carbon pricing. Germany’s total revenue from emissions trading reached an all-time high, reinforcing the importance of dedicating these funds to climate mitigation and social equity initiatives.

The price increase in the nEHS, the expected higher prices in the EU ETS 1, the introduction of CBAM and the launch of the EU ETS 2 in 2027 mark significant milestones in the transition towards a carbon-neutral economy. As Europe moves towards its 2050 net-zero target, emissions trading will remain a cornerstone of environmental and economic policy.

Sources

BMWK, 2025, Bundestag beschließt umfassende Reform des Emissionshandels, URL: https://www.bmwk.de/Redaktion/DE/Pressemitteilungen/2025/20250131-bundestag-emissionshandel.html

Bundesregierung, 2025, CO2-Preis beträgt jetzt 55 Euro, URL: https://www.bundesregierung.de/breg-de/aktuelles/co2-preis-kohle-abfallbrennstoffe-2061622

DEHSt, 2025a, Auctioning report: Fourth Quarter 2024, URL: https://www.dehst.de/SharedDocs/downloads/EN/auctioning/2024/2024_report_Q4.pdf?__blob=publicationFile&v=3

DEHSt, 2025b, Sales report: Fourth Quarter and entire year 2024, URL: https://www.dehst.de/SharedDocs/downloads/EN/nehs/sales-reports-nehs/2024/2024-Q4_sales-report.pdf?__blob=publicationFile&v=3

UBA, 2025, Revenue from emission trading one again at record level, URL: https://www.umweltbundesamt.de/en/press/pressinformation/revenue-from-emissions-trading-once-again-at-record