Carbon pricing

The pricing of carbon dioxide (CO₂) emissions from fossil fuel consumption is essential for climate change mitigation. Carbon pricing makes climate action more economically viable: it encourages investment in low-carbon technologies, supports a rapid switch to renewables and offers incentives for energy-saving. At the European level, carbon emissions from power plants, industry and aviation are priced via the EU Emissions Trading System; shipping will be progressively included within the scope of the EU ETS from 2024. With the Fuel Emissions Trading Act, the German government has introduced carbon pricing in the heating and transport sectors. A second Emissions Trading System for these sectors will be introduced at the EU level from 2027.

The Oeko-Institut conducts research on the development and effects of carbon pricing, including its impacts on energy markets, energy demand and greenhouse gas emissions reductions. It monitors legislative processes at German and EU level and draws attention to unresolved issues relating to the ways policies are designed and revenues allocated. Distribution effects, such as impacts on private households, are a further focus of the Oeko-Institut’s research. The aim is to establish a socially balanced carbon pricing system.