ETS2 from 2028: what the European CO₂ price could cost businesses and households

The short answer

From 2028 there will no longer be a state-set CO₂ price for heating oil, natural gas, petrol and diesel. The price will instead be set by the market in the European emissions trading system ETS2. Every €10 per tonne more adds around 0.18 cents to a kilowatt hour of gas and around 2.7 cents to a litre of heating oil or diesel, net in each case.

What the CO₂ price still costs in 2027 and how landlords share it with tenants is covered in the guide to the 2027 CO₂ price. This piece is about what comes afterwards, and what it means for businesses, households and the public purse.

What changes in the CO₂ price in 2028?

Today Germany prices fuels through the national Brennstoffemissionshandelsgesetz (BEHG, Fuel Emissions Trading Act). In 2026 a corridor of €55 to €65 per tonne applies. On 16 October 2026 the Bundestag adopted the same corridor for 2027, because the European start had been postponed.

The postponement is part of the amendment of the EU Climate Law with its 2040 target. The European Parliament approved it on 10 February 2026: ETS2 begins a year later, in 2028 instead of 2027. According to the Commission, the first auctions are due to take place as early as 2027.

ETS2 covers buildings, road transport and additional sectors. The obligation does not fall on households or businesses but on fuel suppliers. They must surrender allowances for the emissions from their fuels and pass the cost on through the price. Emissions in these sectors are to fall by 42 per cent by 2030 compared with 2005 (European Commission).

How strongly is the price held back?

ETS2 has no fixed price cap like the German corridor. Instead there is a brake: if the allowance price exceeds €45 per tonne in 2020 prices (adjusted for inflation) during the first years, or rises too quickly, additional allowances are released from the market stability reserve.

In June 2026 the Council and Parliament agreed to tighten this. According to the Commission, allowances are to come out of the reserve earlier and more gradually, and above a certain price threshold the additional volume doubles. On top of this, the Commission and the European Investment Bank are making up to €3 billion in frontloaded funding available to member states in 2026 and 2027.

The brake dampens price spikes. It does not determine where the price will actually be in 2028. There is no reliable forecast for that. That is why I calculate with scenarios below, not with a prediction.

What does a higher CO₂ price cost in practice?

The basis is the emission factors in EBeV 2030, Annex 2: natural gas around 0.181 kg CO₂ per billed kilowatt hour (gross calorific value), heating oil EL and diesel around 2.68 kg per litre. €65 corresponds to the 2027 cap; €100 and €150 are calculation scenarios.

CO₂ price per tonne	Natural gas per kWh	Heating oil/diesel per litre
€65 (2027 cap)	1.18 ct	17.4 ct
€100 (scenario)	1.81 ct	26.8 ct
€150 (scenario)	2.72 ct	40.1 ct

All values net, excluding VAT.

Worked example 1, apartment building: 12 flats, gas consumption of 180,000 kWh a year, which is around 32.7 tonnes of CO₂.

CO₂ price	net	gross (19% VAT)
€65	€2,122	€2,526
€100	€3,265	€3,886
€150	€4,898	€5,828

Worked example 2, trade business: ten vans each using 2,500 litres of diesel a year, 25,000 litres in total or around 66.9 tonnes of CO₂. The business can reclaim input VAT, so the calculation is net: €4,349 at €65, €6,690 at €100, €10,035 at €150 per tonne.

Consumption and number of vehicles are assumptions. Anyone plugging in their own figures needs only two values: annual consumption and the rule of thumb from the table.

Why is the CO₂ price an economic factor?

Because it has become a major source of state revenue. In 2025 national emissions trading raised around €16 billion, 23 per cent more than the year before. Around 294 million allowances were sold, most of them at the fixed price of €55. Together with European emissions trading for industry and energy, the total was €21.4 billion. The money goes entirely into the Klima- und Transformationsfonds, which among other things pays for heating subsidies (Umweltbundesamt, 7 January 2026).

ETS2 adds a European layer: the Social Climate Fund. It is to mobilise at least €86.7 billion between 2026 and 2032 and is funded from ETS2 revenue, 50 million allowances from the existing EU emissions trading system and 25 per cent co-financing from member states (European Commission). Germany is entitled to around €5.3 billion of this for particularly affected households and businesses (Bundestag, printed paper 21/1072).

For businesses the price is above all a cost factor that runs through the chain: via diesel in logistics and the trades, via heat in hotels, care homes and workshops. Anyone who prices long-term, for example in framework contracts or maintenance flat rates, carries the risk themselves unless an adjustment clause applies.

Who bears the cost: tenant, landlord or business?

ETS2 does not change the distribution mechanism, only the amount. For residential buildings the Kohlendioxidkostenaufteilungsgesetz (Carbon Dioxide Cost Allocation Act) continues to split CO₂ costs by tiers: the worse the building, the more the landlord bears. For commercial tenants the landlord may pass on at most half. Owner-occupiers and businesses with their own heating or fleet bear the costs in full.

For investment appraisal this means: a heating system installed today will run under ETS2 for almost its entire service life. The difference between €65 and €150 per tonne amounts to around €2,800 net a year in the example building. Over 15 years that is an order of magnitude that belongs in every comparison of options, when comparing heat costs as much as when weighing own investment against contracting.

What businesses and owners should do now

1. Take annual consumption of gas, heating oil and diesel from the invoices and run it through €65, €100 and €150 per tonne.
2. For investments in heating or vehicles, use at least two CO₂ scenarios, not just today’s price.
3. Check long-running customer contracts for price adjustment clauses covering energy and CO₂ costs.
4. As a landlord, know the building’s CO₂ tier, because it determines how much of the higher price stays with the owner.
5. Watch the subsidy programmes funded from the Klima- und Transformationsfonds and the Social Climate Fund. They are the other side of the same calculation.