Germany saw record revenues from the sale of carbon dioxide emission allowances in 2025, totaling over 21.4 billion euros from both the European and national emissions trading schemes, according to the German Emissions Trading Authority (DEHSt), which is part of the Federal Environment Agency (UBA). This represents an increase from the 18.5 billion euros earned in 2024.
Emissions Trading: A Key Climate Policy Tool
The funds generated are entirely allocated to the Climate and Transformation Fund, which finances measures related to the energy transition and climate protection. Emissions rights have been sold since 2008, and cumulative revenues surpassed the 100-billion-euro mark in December. UBA President Dirk Messner stated, “Emissions trading has developed into the central cross-sectoral climate protection instrument.”
The system operates through both a European and a national scheme. Power plants, large industrial facilities, intra-European air travel, and maritime transport require European allowances. For each ton of CO2 emitted, a certificate must be surrendered to the Emissions Trading Authority, and these rights can be acquired through auctions at the Leipzig Energy Exchange, among other methods.
The European Emissions Trading System (ETS) progressively reduces the number of allowances issued annually to gradually limit emissions. European certificates averaged 73.86 euros in 2025, up from 65 euros the previous year, with Germany’s auction revenues reaching 5.4 billion euros.
National System Targets Heat and Transport
The national trading system, where certificates were previously not scarce and prices were set, generated 16 billion euros in revenue – approximately three billion euros more than in 2024. This system aims to reduce CO2 emissions in the heat and transport sectors, which are not covered by the European scheme. Fuels including gasoline, diesel, heating oil, liquid and natural gas, and coal are included. Since 2024, the levy has also applied to the incineration of waste.
The pricing of greenhouse gases is intended to incentivize businesses and consumers to use fewer fossil fuels. CO2 taxes are levied by gas suppliers or oil companies and passed on to customers. A total of 294 million national allowances were sold in 2025. Christoph Kühleis, the interim head of the UBA’s Climate Protection, Energy, and German Emissions Trading Authority division, noted that the high sales volumes reflect a “clearly too high emissions level in the building and transport sectors.”
Price Increases and Future Outlook
The increase in revenue was primarily due to the higher price of national allowances, rising from 45 euros per ton of CO2 in 2024 to 55 euros in 2025. National allowances will be auctioned for the first time in the new year, with prices ranging from a minimum of 55 euros to a maximum of 65 euros.
The national emissions trading scheme is slated to be largely replaced by a European emissions trading system for fuels from 2028. This implementation was originally planned for 2027 but was postponed to avoid significant price spikes at the pump and for heating. Kühleis cautioned that this delay could slow down modernization efforts and hinder the achievement of German and European climate protection goals.
Frequently Asked Questions
What is the purpose of emissions trading?
Emissions trading is a climate protection instrument designed to reduce greenhouse gas emissions by putting a price on pollution. It incentivizes businesses to reduce their emissions and invest in cleaner technologies.
Where does the money from emissions trading go?
The money generated from the sale of emission allowances flows entirely into the Climate and Transformation Fund, which is used to finance energy transition and climate protection measures.
What is the difference between the European and national emissions trading systems?
The European system covers power plants, large industrial facilities, air travel, and maritime transport, while the national system focuses on reducing emissions in the heat and transport sectors.
How might these developments impact future climate policy and the cost of energy for consumers?
