National Carbon Price Stabilization

Germany's government approved a draft bill amending the BEHG, which sets Germany's fixed carbon price, keeping it within a fixed €55 to €65 per metric ton band through 2027 rather than tying it to more volatile European emissions trading markets. The move responds to the EU's postponement of its new Emissions Trading System for Buildings and Transport to 2028, which would otherwise have automatically linked Germany's national price to fluctuating European carbon market rates. Industry group BDEW welcomed accompanying changes, including a reduction in the maximum auction bid volume from 50% to 20% and a restriction preventing allowances from being banked across years. BDEW says these changes lower financing costs and reduce hedging burdens for businesses. However, BDEW noted that further adjustments to top-up price levels and auction design remain necessary as the bill moves through parliamentary review.

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