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German National Emissions Trading System

ETS Status
in force
Jurisdictions
Germany
Start of operation (year)
2021
Sectoral coverage
Agriculture and/or forestry fuel use
Waste
Transport
Buildings
Industry
Allocation
Fixed price until 2025. Price corridor foreseen for 2026
Offsets and credits
Not allowed
Cap
260 MtCO2 (2025) - In the introductory phase, with fixed price or price corridor, the cap is flexible
GHGs covered
CO2
Average auction price
Fixed price: EUR 45 (USD 48.71)
Total revenue since beginning
EUR 37.3 billion (USD 40.9 billion) since the beginning of the program
Total revenue
EUR 12.97 billion (USD 14 billion)

General Information

Germany launched its national ETS (nETS, Nationales Emissionshandelssystem) for heating and transport fuels in 2021. With the introduction of the nETS, a wide range of sectors in Germany are now subject to a carbon price. 

The nETS covers all fuel emissions not covered by the EU ETS. It is being phased in gradually, with an increasing fixed price per tCO2 from 2021 to 2025. In 2026, auctions with minimum and maximum prices will be introduced. All main fuel types (gasoline, diesel, heating oil, natural and liquid gases) have been covered from the outset, while solid fuels such as coal have been included in 2023 and the incineration of waste in 2024. During the fixed price and price corridor phases, the cap is flexible. Covered entities must surrender allowances for all their covered emissions, and allocation is based on auctions.

The nETS was established through the 2019 “Fuel Emissions Trading Act”, which was amended in 2020, 2022 and again in 2023. It forms part of the “Climate Action Program 2030”, a package of measures adopted by the German Federal Cabinet to reach the country’s 2030 climate targets and aim for climate neutrality by 2045.

In January 2024, Germany’s national ETS expanded to include waste incineration.

In February 2025, the German parliament adopted a law to transition from the nETS to the EU-wide ETS 2, a new emissions trading system for fuels, set to start in 2027. According to the law, Germany’s system will end on 31 December 2026 for most sectors, and the EU ETS 2 will begin on 1 January 2027. The law foresees making use of the “opt-in” option, which allows Member States to add sectors not covered in the European system. In addition to fuels used in transport, buildings, and small industries, Germany plans to opt-in fuels used in agriculture and rail transport (into EU ETS 2). However, the law does not extend the opt-in option to waste incineration, as the government is awaiting further EU-wide analysis on the effectiveness of carbon pricing in the waste sector. As a result, the waste sector will remain under the nETS after 2026 unless new provisions are introduced by then.4.   
 

Agriculture and/or forestry fuel use
Waste
Transport
Buildings
Industry

Emissions & Targets

750 MtCO2e (2022)

By 2030: 65% reduction from 1990 GHG levels (“Climate Change Act”)

By 2045: Climate neutrality (Climate Change Act)

EUR 55 (USD 59.53)

Size & Phases

291.10MtCO2e
CO2

PHASE 1: Ten years (2021-2030)

A cap limits the total emissions allowed in the system.

PHASE 1: The cap is set in line with Germany’s reduction targets for the non-EU ETS sectors as defined by the “European Effort Sharing Regulation” (ESR). Given the revision of the ESR as part of the EU’s “Fit for 55” legislative package, the German government has set a revised cap for the national ETS that decreases yearly in accordance with reduction targets.

During the fixed-price period from 2021 to 2025, and as long as a price corridor is deemed necessary, the cap is flexible. If emissions (and therefore the demand for allowances) within the German ETS exceed the cap, additional allowances will be available for covered entities. 

These flexibility provisions will become void as soon as price determination is left solely to the market. The cap will also be binding at this point.

TYPES OF FUELS COVERED: All fuels used in the transport sector, for the production of heat and other sectors such as fuels in agriculture, rail transport and waste incineration, e.g., fuel oil, LPG, natural gas, coal, gasoline, and diesel.

Biomass used as fuel in the transport sector and for heating purposes generally also falls under the scope of the system. However, emissions from biogenic fuels that meet the sustainability criteria as set out in national regulations transposing the “European Renewable Energy Directives 2029/28/EC” and “2018/2001” do not face compliance obligations.

The system started with a limited scope in 2021 and 2022, including fuel oil, LPG, natural gas, gasoline, and diesel. Coal was added in 2023. Fuels used in waste incineration were covered from 2024 onwards.

Provisions have been put in place to avoid double compliance burdens for installations covered by the EU ETS. Emissions that arise from a fuel delivered to and used in an EU ETS installation must be reported by the EU ETS installation in all cases. These emissions may then be deducted from the reported emissions of the fuel distributor under the German ETS if:

  1. evidence can be provided that the emissions have been reported by the receiving EU ETS installation; and 
  2. no carbon price has been passed through. 

     

If no such evidence can be provided or if carbon costs were passed through from the supplier under the system to the EU ETS installation, the supplier is obligated to report and surrender allowances to cover the emissions. In such a case, the EU ETS installation, upon application, receives full compensation for the price that has been passed through.

Upstream

2,070 (2024)

Allowance Allocation & Revenue

PHASE 1:

Fixed price phase (2021 to 2025): Allowances are sold for a fixed price. The price schedule is as follows:

  • 2021: EUR 25 (USD 27.06)
  • 2022: EUR 30 (USD 32.47)
  • 2023: EUR 30 (USD 32.47)
  • 2024: EUR 45 (USD 48.71)
  • 2025: EUR 55 (USD 59.53)

Generally, the yearly fixed price only applies to allowances acquired in the respective calendar year. However, up to 10% of allowances needed for compliance obligations for year X can be acquired until the end of September of year X+1 at the fixed price of year X. 

Auctioning phase (from 2026): A price corridor with a minimum price of EUR 55 (USD 59.53) and a maximum price of EUR 65 (USD 70.35) per tCO2 will apply in 2026.

CARBON LEAKAGE RULES: The German ETS is accompanied by a compensation mechanism to avoid carbon leakage for emission-intensive trade-exposed sectors. Regulations were released in July 2021 and applied retroactively to companies in emission-intensive sectors that face international competition. Industries eligible for compensation are those on the carbon leakage list of the EU ETS Phase 4. Therefore, firms from the same industrial sector regulated under the nETS and EU ETS should be treated equally.

Additional sectors/sub-sectors may qualify upon request if they meet thresholds for emissions and trade intensity. In contrast to the EU ETS, the German ETS does not use free allocation, but compensation based on sectoral fuel benchmarks and fixed compensation levels. 

EUR 12.97 billion (USD 14 billion) in 2024

All revenues from the national ETS go into the Government’s “Climate and Transformation Fund” (Klima- und Transformationsfond – KTF). This fund is used to support measures under the climate protection program. These include GHG reduction programs – e.g., incentivizing climate-friendly transport and energy-efficient buildings – and direct assistance to industry or households.  

Flexibility & Linking

Banking is not allowed during the fixed price and the corridor phase. 

Borrowing is not allowed.

The use of offset credits is not allowed. 

The nETS is not linked with any other system.

ETS (supranational): EU ETS

Compliance

One calendar year. Entities have until the end of September to surrender allowances to cover the reported emissions of the previous year.

REPORTING FREQUENCY: Annual self-reporting in the form of an emissions report based on electronic templates to be submitted by the end of July. 

From 2023 onwards, the emissions report must be based on a previously approved monitoring plan. Due to a high level of standardization of the permitted reporting methods during the first two years, the monitoring plan requirement was waived for 2021 and 2022. 

Emissions data are recorded in a national registry and are publicly available.

VERIFICATION: Verification of the annual emissions by accredited independent third-party verifiers has been mandatory since 2023. As with the monitoring plan requirement, the verification requirement was waived for the years 2021 and 2022.

During the fixed-price phase, entities must pay an excess emissions penalty for each tCO2 emitted for which no allowance has been surrendered, set at two times the fixed price. Payment of the penalty does not release the entity from the obligation to surrender allowances to cover the emissions; entities remain obliged to purchase and surrender the outstanding allowances.

For 2026, entities must pay an excess emissions penalty of EUR 100/tCO2 (USD 108.24) for each tCO2 emitted for which no allowance is surrendered.

For other instances of non-compliance, e.g., misreporting or late reporting, entities can be fined.

Market Regulation

MARKET PARTICIPATION: Trading accounts can be held by any domestic or international natural or legal person. Compliance entities can buy allowances directly from the trading platform or via financial intermediaries. 

MARKET TYPES: 

Primary: EEX is the German ETS’s auction platform. During the fixed-price phase, allowances are issued at the predetermined price. Auctioning will start in 2026.

Secondary: Allowances can be purchased on the secondary market throughout the year.

LEGAL STATUS OF ALLOWANCES: Allowances do not have the status of financial instruments or derivates according to the “German Banking Act” or the “Securities Trading Act”. 

FLEXIBLE CAP PROVISIONS

Instrument type: Quantity-based instrument

Functioning: To maintain the fixed price in the introduction phase, additional allowances exceeding the cap can be acquired by entities if the demand exceeds the cap. This was the case in 2021, where auctioned allowances exceeded the cap by 4.6 MtCO2. In 2022, the auctioned volume was 4 MtCO2 lower than the cap.  

In 2026, auctions of allowances will contain a price corridor of a minimum price per tCO2 of EUR 55 (USD 59.53) and a maximum price of EUR 65 (USD 70.35). 

Other Information

German Federal Ministry for Economic Affairs and Climate Action (BMWK): Responsible for establishing the regulatory framework of the national ETS.

German Emissions Trading Authority (DEHSt) at the German Environment Agency (UBA): Implementing authority, e.g., responsible for the registry and receiving emission reports.

The German government published its first evaluation report in December 2022.*

A second evaluation report has been published in January 2025.** From 2025 onwards, the German ETS will be evaluated every four years.


 

* The 2022 report is available (German only) at https://dserver.bundestag.de/btd/20/048/2004861.pdf. 

** The 2024 report is available (German only) at https://dserver.bundestag.de/btd/20/144/2014488.pdf. 

Fuel Emissions Trading Act

Emissions Reporting Regulation 2022

Fuel Emissions Trading Regulation

Carbon Leakage Regulation

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Switzerland Emissions Trading System

ETS Status
in force
Jurisdictions
Switzerland
Start of operation (year)
2008
Sectoral coverage
Domestic Aviation
Industry
Power
Allocation
Free Allocation (Fixed Benchmarking); Auctioning
Offsets and credits
Not allowed
Cap
4.3 MtCO2e (2025, power and industry); 1.1 MtCO2e (2025, aviation)
GHGs covered
CO2, N2O, CH4, HFCs, NF3, SF6, PFCs*

* In principle, all these gases are covered in accordance with the CO2 Ordinance. In practice, only CO2, N2O, and PFCs require monitoring, as the share of the other gases is negligible.
Average auction price
EUR 60.19 (USD 65.15)
Total revenue since beginning
EUR 182.5 million (USD 207.3 million)
Total revenue
EUR 47.3 million (USD 51.2 million)

General Information

The Switzerland (Swiss) ETS started in 2008 with a five-year voluntary phase. Thereafter, participation was mandatory for large, energy-intensive entities and voluntary for medium-sized entities. The Swiss ETS covered about 12% of the country’s total GHG emissions in 2022 (including aviation). Participants in the ETS are exempt from the national CO2 levy.

The Swiss ETS covers electricity generation, industrial entities (largely comprising companies from the cement, chemicals, pharmaceuticals, paper, refining, and steel sectors), domestic aviation, and flights to the European Economic Area and the United Kingdom. Allowances are allocated through benchmarking and auctioning. Free allocation for aviation is being phased-out by 2026. Auctioning volumes may be reduced if the total number of allowances in circulation exceeds a certain threshold.

The Swiss ETS has been linked with the EU ETS since January 2020. The same benchmarks as in the EU ETS apply to entities covered by the Swiss ETS.

The system is mandated by the Federal Act on the Reduction of CO2 Emissions (“CO2 Act”) and regulated through an implementing regulation (“CO2 Ordinance”).  

In March 2024, the Parliament approved a revised CO2 Act for the period from 2025 to 2030, setting 2030 emissions targets and introducing national and sectoral measures to meet them. The law entered into force at the start of January 2025, thereby aligning the Swiss ETS with the revised EU ETS. The CO2 Ordinance implementing the act underwent public consultation from July to October 2024 and will be set into force in spring 2025 with retroactive effect.

For stationary installations and aviation, the same linear reduction factors as in the EU ETS apply to reduce the respective caps for the period 2024 to 2030. Additionally, carbon capture and storage, and under certain conditions, foreign biogas use, can now be accounted for in the ETS. In aviation, free emission allowances for operators are phased out by 2026 in accordance with the rules in the EU ETS. 

Domestic Aviation
Industry
Power

Emissions & Targets

41.6 MtCO2e (2022)

By 2030: At least 50% reduction from 1990 GHG levels (NDC and CO2 Act)

By 2050: Net-zero GHG emissions (NDC and “Climate and Innovation Act”)


 

 

EUR 60.19 (USD 65.15) (average auction price in 2024)

 

Size & Phases

5.40MtCO2e
CO2, N2O, CH4, HFCs, NF3, SF6, PFCs*

* In principle, all these gases are covered in accordance with the CO2 Ordinance. In practice, only CO2, N2O, and PFCs require monitoring, as the share of the other gases is negligible.

VOLUNTARY PHASE: Five years (2008 to 2012)

SECOND TRADING PERIOD: Eight years (2013 to 2020)

THIRD TRADING PERIOD: Ten years (2021 to 2030)

A cap limits the total emissions allowed in the system.

VOLUNTARY PHASE: Each participant received its own entity-specific reduction target.

SECOND TRADING PERIOD: 

Stationary installations: Overall top-down cap of 5.6 MtCO2e (2013) that was reduced annually by a constant linear reduction factor of 1.74% (of baseline emissions set by entities’ historical data of the years 2008-2012) to 4.9 MtCO2e in 2020.

Aviation: 1.3 MtCO2 (2020)

THIRD TRADING PERIOD: An annual linear reduction factor of 2.2% (2010 base year) applied to the cap for stationary installations and to the aviation cap from 2021 to 2023. As from 2024 the effective linear reduction factor is 4.3% and 4.4% as from 2028.

MANDATORY PARTICIPATION: Industries listed under Annex 6 of the CO2 Ordinance must participate in the Swiss ETS. These include 25 categories, such as cement, chemicals and pharmaceuticals, refineries, paper, district heating, steel, and other sectors. Since 2020, the ETS has covered emissions from aviation (domestic and outbound flights to the EEA or the UK) and fossil-thermal power plants.

INCLUSION THRESHOLDS: Threshold values apply to most activities in terms of production capacity or total rated thermal input.

POSSIBLE VOLUNTARY OPT-IN: Industries with a total rated thermal input of ≥10 MW. A company that fulfils the participation conditions must submit the application within the following six months.

POSSIBLE OPT-OUT: Industries with a total rated thermal input greater than 20 MW but emissions below 25,000 tCO2e in each of the past three years. If an entity’s future emissions rise above the threshold in a given year, it must participate in the ETS starting from the following year and cannot opt out for the remainder of the compliance period. New entrants can apply for an opt-out with immediate effect if they can credibly report their emissions to be below 25,000 tCO2e/year.

AVIATION: Commercial aircraft operators emitting more than 10,000 tCO2/year or operating ≥ 243 flights in a four-month period in the preceding year. Non-commercial operators are included when emitting more than 1,000 tCO2/year. The thresholds do not apply if the operator has obligations under the EU ETS.

Point source

Stationary installations: 95 (2024)

Aircraft operators: 205 (2023)

Allowance Allocation & Revenue

VOLUNTARY PHASE: Participants received free allowances covering emissions up to their entity-specific emissions target.

SECOND TRADING PERIOD:
Free allocation: Free allocation was based on industry benchmarks. Free allocations for sectors not exposed to the risk of carbon leakage were phased out gradually. In 2013, these entities received 80% of their allowances for free, which was reduced to 30% by 2020.

A correction factor was implemented to reduce the allocated emissions allowances, determined by industry benchmarks and ensuring they aligned with the specified overall emissions cap.


Free allocation for aircraft operators was based on tonne-kilometer data for 2018 reported by individual aircraft operators, multiplied by the benchmark of 0.642 emissions allowances per 1,000 tonne-kilometers (same benchmark as in the EU ETS).

Auctioning: Allowances that were not allocated for free were auctioned. Auctions took place two or three times a year, depending on available auction volumes. Since January 2020, auctions are open to entities covered by the Swiss ETS and the EU ETS, as well as to non-compliance entities allowed to place bids in the EU ETS. In line with EU ETS legislation, the Federal Office of the Environment (FOEN) has the authority to cancel the auction if the clearing price is significantly below the prevailing secondary market price of the EU ETS. In such a situation, allowances are transferred to subsequent auctions.

5% of the allowances are set aside in a reserve for new entrants and fast-growing operators.

Aviation: In line with EU ETS regulations, starting in 2020, 15% of aviation sector allowances are auctioned. 3% were placed in the reserve dedicated to new and fast-growing operators. The remaining 82% was allocated according to sector-specific benchmarks

THIRD TRADING PERIOD:
Free allocation: As of 2022, the Swiss ETS applies the same allocation benchmarks as the EU ETS. Free allocation levels may be updated annually if production levels deviate at least 15 percentage points from the 2014 to 2018 base years. Free allocation in the aviation sector will be phased out by 2026, in line with the EU ETS regulation.

Auctioning: Since 2022, auction volumes have been subject to a market stability mechanism (see ‘Market Stability Provisions’ section).

EUR 182.5 million (USD 207.3 million) since the beginning of the program

EUR 47.3 million (USD 51.2 million) in 2024

From 2025, revenues from Swiss ETS auctions are earmarked to support inter alia the decarbonization of installations in the ETS and the mitigation of emissions from aviation.

Flexibility & Linking

Banking within and across phases is allowed without limits. Banked allowances from Phase 3 of the EU ETS can be used for compliance in the 2021 to 2030 trading phase.

Borrowing across phases is not allowed. Within a phase, allocated allowances from the current trading year may be used for surrender obligations of the prior year.

The use of offset credits is not allowed.

QUALITATIVE LIMITS: Since 2021, offset credits cannot be used to meet compliance obligations. International offset credits were allowed up to 2020, subject to certain criteria. Most categories of credits from CDM projects in least developed countries were allowed. Credits from CDM and Joint Implementation projects from other countries were eligible only if registered and implemented before the end of 2012.

QUANTITATIVE LIMITS: During 2013 to 2020, the maximum amount of offset credits allowed into the system was set at 11% of average emissions allowances allocated in the voluntary phase, minus offset credits used in that same time period, multiplied by five.

Industries that entered the Swiss ETS in the second trading period could surrender offsets to cover up to 4.5% of their emissions. For aircraft operators, the quantitative limit was set at 1.5%.

Switzerland concluded negotiations with the EU on linking their respective systems in 2015 and signed the agreement in 2017. Following legislative approval and ratification in 2019, the link entered into force in January 2020. Prior to that, revisions were made to align with the EU ETS legislative framework.

Covered entities in the Swiss ETS can use allowances from the EU ETS for compliance, and vice versa. The two systems run separate auctions. Market participants from the EEA need an account in the Swiss Emissions Trading Registry in order to participate. From 2024, allowance transfers between the EU and Swiss registries are executed on a daily basis, with specific exceptions for certain dates. The 2025 exception dates are published in the Emissions Trading Registry.

Carbon tax: CO₂ levy

Compliance

One calendar year. Covered entities have until the end of September of the following year to surrender allowances.

MONITORING: Monitoring plans are required for every installation and for every aircraft operator (no later than three months after the registration deadline). Monitoring plans must be approved by a competent authority. Emissions according to the Swiss CO2 Ordinance (mainly CO2 and N2O) are subject to monitoring.

REPORTING: Annual monitoring report, based on self-reported information (by the end of March).

VERIFICATION: FOEN may order third-party verification of the monitoring reports from installations and can take random samples to ensure consistency. Aircraft operators must have their monitoring reports verified by an accredited third-party verifier.

The penalty for failing to surrender sufficient allowances is set at CHF 125/tCO2 (USD 142.01/ tCO2). In addition to the fine, entities must surrender the missing allowances in the following year.

Market Regulation

MARKET PARTICIPATION: Compliance entities, non-compliance entities (domestic and international) and individuals. Traders are subject to a holding limit of one million Swiss/EU allowances. 

MARKET TYPES: 

Primary: Single round sealed-bid uniform price auction, organized by the Swiss Emissions Trading Registry several times per year. 

Secondary: Swiss allowances are not traded on regulated trading platforms but may be traded over the counter. EU ETS allowances, which can be used for compliance in the Swiss ETS, are traded on multiple exchanges, including ICE Futures and EEX.

LEGAL STATUS OF ALLOWANCES:

Allowances do not qualify as financial instruments under Swiss financial market regulations. Emissions allowances may form the underlying asset of derivative contracts which are covered by the “Financial Market Infrastructure Act”.

Market stabilisation mechanism

Instrument type: Quantity-based instrument

Functioning: The authorities introduced a mechanism in 2022 that reduces auction volumes if the quantity of emissions allowances in circulation exceeds a certain threshold. 

If the number of allowances in circulation exceeds 50% of the cap of the previous year, the market stabilisation mechanism reduces the auction volume of the current year by 50%. In 2022, the mechanism reduced the auction volume from 460,000 to 230,000 and in 2023 from 580,000 to 290,000 allowances. In 2024, it reduced the auction volume from 820,000 to 410,000 allowances.

The unauctioned allowances lose their validity after the end of the compliance period. The mechanism is regularly reviewed against market dynamics and developments in the EU. The Swiss ETS is not subject to the EU ETS Market Stability Reserve.

Other Information

Federal Office for the Environment (FOEN): Implementing authority, e.g., responsible for the registry, for auctioning allowances, receiving emission reports and enforcing compliance.

The full revision of the CO2 Act was rejected in a popular vote in June 2021. A transitional extension of the Act for 2022 to 2024 was adopted in December 2021. A new revision of the Act that covers the period from 2025 to 2030 was adopted by the Swiss Parliament in March 2024 and entered into force on 1 January 2025. The new law provides for a linking-compatible revision of the ETS. 

Federal Act on the Reduction of CO2 Emissions (2022) (CO2 Act)

Revised Federal Act on the Reduction of CO2 Emissions (2025) (CO2 Act)

Ordinance on the Reduction of CO2 Emissions (CO2 Ordinance) 

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