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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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Brazilian Greenhouse Gas Emissions Trading System

ETS Status
under development
Jurisdictions
Brazil
Sectoral coverage
Maritime
Mining and extractives
Waste
Domestic Aviation
Transport
Industry
Power
Allocation
Free Allocation: TBD; Auctioning
Offsets and credits
Domestic offset credits will be allowed, with quantitative limits
GHGs covered
CO2, CH4, N2O, HFCs, SF6, PFCs

General Information

Law No. 15,042/2024 establishes the Brazilian Greenhouse Gas Emissions Trading System (Sistema Brasileiro de Comércio de Emissões de Gases de Efeito Estufa, SBCE). The SBCE aims to support the implementation of  “Law No. 12,187 – Brazilian National Climate Change Policy” and the achievement of the country’s climate targets. The law lays out the governance framework and the legal foundation for obligations by covered entities, with key design elements (such as scope, cap, and allocation) to be determined in the coming years. 

The ETS will impose compliance obligations on entities emitting more than 25,000 tCO2e per year, with reporting obligations applying to those emitting more than 10,000 tCO2e per year. Covered entities will have to surrender allowances for all their covered emissions (see ‘Compliance Period’ below). A priori, the ETS applies to all sectors of the economy – with the explicit exemption of agricultural activities, and with forestry activities expected to generate carbon credits. The extent to which some sectors will see entities covered by the SBCE will depend on whether participation thresholds will apply to individual sources or e.g., at company level, which is yet to be determined.  

The system will be overseen by the Interministerial Climate Change Committee, and operated by the SBCE management body, which will be supported by a technical consultative body. National Allocation Plans – to be published regularly – will set out the cap and its expected trajectory, allocation methods, the percentage of offset credits allowed for compliance, market stability provisions, as well as provisions to protect against reversals and leakage, among others. The cap is to be set in accordance with Brazilian climate targets. Revenues from the trade of allowances and offset credits will be subject to net gains and capital gains tax. Non-compliance will be punishable by fines and embargoes, among other penalties. 

Covered entities will be allowed to surrender domestic offset credits to meet part of their compliance obligation. Eligible activities are those that make use of methodologies accredited by the SBCE management body (to be determined); verified by an independent entity; and registered in the SBCE Central Registry. Once registered in the SBCE registry as Verified Emissions Reduction or Removal Certificates (Certificado de Redução ou Remoção Verificada de Emissões - CRVE), the offset credits will become eligible for use under the SBCE. The agriculture, land-use change and forestry sectors – responsible for more than 60% of emissions in Brazil – are expected to play a key role in the generation of CRVE. Provisions for REDD+ credits are included in the law. 

The law also explicitly defines the rights of indigenous peoples and traditional communities with regard to carbon crediting. This includes the right to commercialize offset credits generated on lands they traditionally occupy, as well as the compensation for any damages resulting from offset credit projects. Actors involved in offset credit projects would also have to adhere to a benefit-sharing regulation. 

The law also stipulates that CRVEs may be eligible for international transfers under Article 6 of the Paris Agreement, subject to authorization by a designated national entity. The SBCE registry will track both national and international transactions.

The implementation of the law will occur in five stages: 

  • Phase I: government enacts regulations needed to implement the system (one to two years).
  • Phase II: regulated entities operationalize emissions monitoring and reporting (one year). 
  • Phase III: regulated entities face monitoring and reporting obligations (two years). 
  • Phase IV: implementation of the first national allocation plan, with free allowance allocation. 
  • Phase V: full operationalization of the SBCE, following the end of the first national allocation plan. 
Maritime
Mining and extractives
Waste
Domestic Aviation
Transport
Industry
Power

Emissions & Targets

1,234 MtCO2e (2022)

By 2030: 1.2 GtCO2e (53.1% below 2005) (2030 NDC)

By 2035: between 850 MtCO2e and 1.05 GtCO2e (2035 NDC, upcoming)

By 2050: Long-term objective to achieve climate neutrality by 2050 (2030 NDC)

Size & Phases

CO2, CH4, N2O, HFCs, SF6, PFCs

INCLUSION THRESHOLDS: The SBCE will impose obligations on the operators responsible for installations and sources that emit:

  • 10,000 tCO2e/year for monitoring and reporting obligations; and
  • 25,000 tCO2e/year for compliance obligations. 

Inclusion thresholds may be amended upwards by the SBCE management body. Obligations will apply only to activities for which consolidated MRV regulations are available. 

Point source

Allowance Allocation & Revenue

To be determined through the National Allocation Plan. Allowance allocation may be free of charge or auctioned. Auctions are not permitted during the first commitment period.

ETS revenues – such as from allowance auctions and non-compliance fees – are to be disbursed as follows: 

  • at least 15% for the operationalization and maintenance of the SBCE; 
  • at least 75% for the National Climate Change Fund, to support the financing of mitigation activities; and

at least 5% for indigenous peoples and traditional communities to compensate them for forest preservation and ecosystem services.

Flexibility & Linking

QUALITATIVE LIMITS: Eligible activities are those that make use of methodologies accredited by the SBCE management body (to be determined); are measured and reported by those responsible for developing or implementing the project or program and verified by an independent entity, in accordance with the methodology accredited by the SBCE; and registered in the SBCE Central Registry. Once registered in the SBCE registry as Verified Emissions Reduction or Removal Certificates (Certificado de Redução ou Remoção Verificada de Emissões - CRVE), the CVRE credits will become eligible for use under the SBCE. 

QUANTITATIVE LIMITS: Quantitative limits for the use of CRVEs against compliance obligations will be determined as part of each National Allocation Plan.

Compliance

To be determined by implementing regulation. As per the law, compliance must occur at the end of each compliance period or at shorter frequency as defined by the SBCE management body. 

MONITORING: Covered entities will have to submit a monitoring plan to the SBCE management body for approval. Rules for the establishment of monitoring plans will be developed in the 12 to 24 months following the approval of the bill introducing the ETS. 

REPORTING: Operators will have to submit an annual report on GHG emissions and removals, adhering to the approved monitoring plan and specific guidelines set by the SBCE management body.

VERIFICATION: The report must undergo a conformity assessment by an accredited inspection body to ensure accuracy and compliance. 

Non-compliance will be punishable by fines and activity embargoes, among other penalties. Fines will be limited to 3% of the gross revenue for legal entities (up to 4% in case of repeat offense). For other individuals, as well as for legal entities without revenue, the fine will range from BRL 50,000 (USD 9,278) to BRL 20 million (USD 3.71 million).  

Market Regulation

LEGAL STATUS OF ALLOWANCES: Allowances and CRVEs, when traded on financial and capital markets, are securities (valores mobiliários) subject to relevant laws and to the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM).

Other Information

Interministerial Climate Change Committee: Responsible for general guidance and regulatory framework.

SBCE management body: Implementing authority, responsible for setting the cap, receiving emissions report, run the registry among other responsibilities.

Permanent Consulting Technical Committee: Advisory body responsible for presenting inputs and recommendations for improving the SBCE. The Permanent Consulting Technical Committee will have a Regulatory Affairs Chamber, composed of entities representing the regulated sectors.

Law 15042/2024 establishing the SBCE 

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