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EU Considers Easing 2027 Carbon Market for Fuel and Heat

Germany’s 2026 shift to auctioned CO2 permits will raise fuel costs ahead of the EU-wide expansion.

Overview

  • The European Commission is weighing options to soften ETS2, including a lower entry price, extra allowances, a possible delay to 2028 or 2030, or a price cap, according to MEP Peter Liese.
  • The plan would extend carbon trading to road transport and building heat from 2027, replacing fixed national charges with market-priced certificates purchased by fuel suppliers.
  • Germany will move its national CO2 pricing to auctions in 2026 within a 55–65 euros per tonne corridor, and experts expect petrol and diesel to rise by roughly 17–19 cents per liter.
  • Price projections vary widely, with an EU start estimate around 45 euros per tonne for 2027 contrasted with forecasts of 70–80 euros and potentially above 100 euros by 2030.
  • Safeguards include short-term stabilization mechanisms through 2030 and a fund to limit energy poverty, while experts warn cost pressures for fossil heating are likely to intensify thereafter.