The amendment to the German Greenhouse Gas Emissions Trading Act (TEHG) is in effect. EU ETS 2 is being implemented, EU ETS 1 is being adapted in the area of stationary installations and aviation, and maritime transport is being integrated. The coalition is committed to the ETS.
The TEHG European Law Adaptation Act 2024 (TEHG-Europarechtsanpassungsgesetz 2024) came into effect on 6 March 2025. This transposes amendments to the EU Emissions Trading System Directive (ETS Directive) into German law. The German Greenhouse Gas Emissions Trading Act (TEHG) has been amended and the German Fuel Emissions Trading Act (BEHG) has been adapted. This establishes new obligations for those targeted by the legislation.
To date: EU ETS 1 and national emissions trading in parallel
Emissions trading systems (ETS) are key instruments for achieving climate neutrality. They require the emitters of greenhouse gases in certain sectors to purchase allowances for their emissions and submit them annually to the competent authority (German Emissions Trading Authority (DEHSt)). In "cap and trade" systems, these allowances are limited in their total number and can be traded. If the number of allowances available is reduced each year, the remaining allowances increase in value, creating an increasing economic incentive for the participants in the system to reduce greenhouse gas emissions.
Stationary installations – mainly from the energy sector (e.g. coal or gas-fired power plants) and energy-intensive industry (e.g. steel production) – as well as intra-European aviation participate in European emissions trading, which was implemented in the German Greenhouse Gas Emissions Trading Act (TEHG) even before the amendment (EU ETS 1). Under EU ETS 1, the operators of the polluting installations are required to surrender emission allowances (downstream approach).
In Germany, there is a national emissions trading system for other sectors in parallel to the European emissions trading system, regulated in the German Fuel Emissions Trading Act (BEHG). This imposes requirements on distributors of gas and coal as well as petroleum companies and waste incineration plants (upstream approach).
New: Introduction of EU ETS 2
The key component of the amendment that has come into effect is the introduction of a new European emissions trading system, which will take its place alongside the existing EU ETS 1. EU ETS 2 is also being implemented in the German Greenhouse Gas Emissions Trading Act (TEHG). As with EU ETS 1, this is a "cap and trade" system. In Germany, EU ETS 2 applies to the energy, manufacturing, construction, transport (road, rail and non-commercial maritime and air transport), building heating, agriculture and forestry sectors. Obligations are imposed on the distributors of fossil fuels (upstream approach) and not the subsequent emitters (downstream approach) like in EU ETS 1.
EU ETS 2 requires emission allowances to be surrendered annually, beginning in 2028 for the 2027 reporting year. These are auctioned and traded separately from EU ETS 1. In terms of terminology, this distinction is reflected in the German Greenhouse Gas Emissions Trading Act (TEHG) in that the implementation of EU ETS 1 refers to (emission) allowances and EU ETS 2 to emission certificates.
Double charging due to overlaps between EU ETS 1 and EU ETS 2 is avoided by excluding emissions that have already been priced in EU ETS 1 from EU ETS 2. In this respect, EU ETS 2 is subsidiary to EU ETS 1.
There will be no free certificates in EU ETS 2 like there are free allowances in EU ETS 1. The quantity of certificates issued annually in EU ETS 2 (the cap) is based on historical emissions in 2024 and will be reduced by 5.10 % per year on a linear basis up to and including 2027. From 2028, this reduction will increase to 5.38 % per year. The price of emission certificates will be determined at auctions.
Transfer of national emissions trading to EU ETS 2
The new EU ETS 2 is implemented in the German Greenhouse Gas Emissions Trading Act (TEHG). However, it heavily overlaps with the existing national emissions trading system under the German Fuel Emissions Trading Act (BEHG) with its upstream approach and the entities it targets. This will therefore be largely transferred to the new EU ETS 2 in the German Greenhouse Gas Emissions Trading Act (TEHG): Emissions trading under the German Fuel Emissions Trading Act (BEHG) is expected to end for participants in EU ETS 2 when the pricing phase of EU ETS 2 begins in 2027. Carbon pricing under the German Fuel Emissions Trading Act (BEHG) will remain in place until the transition.
The amendment provides for the (almost) complete transition of the national ETS to EU ETS 2. The German Greenhouse Gas Emissions Trading Act (TEHG) therefore makes use of an opt-in option (overriding implementation) for sectors that were previously covered by the German Fuel Emissions Trading Act (BEHG) but for which the ETS Directive does not provide for mandatory participation in EU ETS 2. These sectors will also be transferred to EU ETS 2. This applies in particular to the use of fuels in agriculture and forestry (see below for possible exclusion), rail transport and inland waterway navigation. The only exception is waste incineration plants, which are not included. The opt-in still has to be approved by the European Commission. In the event that the opt-in option is not approved by the European Commission, pricing under the German Fuel Emissions Trading Act (BEHG) is likely to continue for these areas even after EU ETS 2 is launched in 2027.
EU ETS 2 reporting obligations from 2025, pricing from 2027
The pricing phase for EU ETS 2 will begin in 2027. Those responsible for emissions must then surrender annually by 31 May of the following year emission certificates equivalent to the emissions caused by their activities in a calendar year. The first certificates must therefore be submitted in May 2028. However, there is a possibility that the start of the pricing phase will be postponed by one year. The decision on this will be published by the European Commission by 15 July 2026.
However, the first reporting obligations must be fulfilled this year. A monitoring plan had to be submitted for approval for 2025, specifically by 30 June 2025. The same applies to the required emission permit, which also had to be submitted by 30 June 2025.
In addition, a report on the 2024 emissions had to be submitted by 30 April 2025. However, due to the delayed implementation of the ETS Directive in Germany, a different deadline and a special solution for submitting the EU ETS 2 emissions report in 2024 applies. The historical emissions relevant for EU ETS 2 in 2024 are determined using the share factors published by the German Emissions Trading Centre (DEHSt) on the basis of the information in the emissions report for the German Fuel Emissions Trading Act (BEHG). This means that the EU ETS 2 emissions report no longer needs to be prepared and submitted separately for the 2024 reporting year. The EU ETS 2 emissions report also does not have to be verified. The deadline for submitting the report under the German Fuel Emissions Trading Act (BEHG) is 31 July 2025. When submitting the emissions report for the German Fuel Emissions Trading Act (BEHG), the ETS 2 participant must manually confirm that they are also submitting the EU ETS 2 emissions report in accordance with section 43 (2) German Greenhouse Gas Emissions Trading Act (TEHG) for the 2024 reporting year. In future, the report must be prepared in accordance with the EU Monitoring Implementing Regulation (Implementing Regulation (EU) 2018/2066). The approved monitoring plan will form the basis for emissions reporting for the following emissions reports from the 2025 reporting year onwards. The federal government may also regulate details by statutory instrument. From the 2025 reporting year, the emissions reports also have to be independently verified.
The reporting obligations under the German Fuel Emissions Trading Act (BEHG) only end for those entities that are covered by EU ETS 2 once the pricing phase of EU ETS 2 begins in 2027. In the meantime, dual reporting obligations exist under both the old system of the German Fuel Emissions Trading Act (BEHG) and the new system of EU ETS 2 in the German Greenhouse Gas Emissions Trading Act (TEHG). The German Emissions Trading Centre (DEHSt) has already announced that it will make this dual reporting as easy as possible for those affected by providing a 3-in-1 application in its form management system (FMS) for preparing a monitoring plan in accordance with the German Fuel Emissions Trading Act (BEHG), EU ETS 1 and EU ETS 2, into which the application for an emission permit is also integrated. The German Emissions Trading Centre (DEHSt) will also provide a corresponding 3-in-1 application for emissions reporting for the 2024 reporting year. This is to prevent data from having to be entered twice.
Waste incineration plants remain subject to the German Fuel Emissions Trading Act (BEHG)
While the federal government's bill provided for waste incineration plants to be included in the pricing under EU ETS 2 by way of an opt-in, this was ultimately not adopted. Waste incineration plants will therefore remain subject to pricing under the national emissions trading system of the German Fuel Emissions Trading Act (BEHG) for the time being, even after the launch of EU ETS 2.
Changes to EU ETS 1
The German Greenhouse Gas Emissions Trading Act (TEHG) has also been amended with regard to the regulations on EU ETS 1 in the area of stationary installations and aviation. Installations whose emissions come from at least 95 % biomass, for example, are completely excluded from the scope of EU ETS 1.
Aircraft operators are now also required to determine and report "non-CO2 effects". This is the name given to the effects of aviation on the climate that are not caused by CO2 emissions, but rather by water vapour (contrails), nitrogen oxides, soot particles and oxidised sulphur compounds in exhaust gases, for example. Maritime transport has also been included in EU ETS 1.
Next steps and outlook
The TEHG European Law Adaptation Act 2024 (TEHG-Europarechtsanpassungsgesetz 2024) has initiated the broad transfer of the parallel emissions trading systems. During the transition phase from 2025 to 2026, many companies will be subject to dual reporting obligations.
We can also look forward to news in emissions trading in the future: The 2025 coalition agreement between the CDU/CSU and SPD does not envisage use being made of the opt-in for EU ETS 2 for agriculture. Fuels used in agriculture will remain within the scope of application of the German Fuel Emissions Trading Act (BEHG). The German opt-in for the other sectors in EU ETS 2 also has to be reviewed by the European Commission. It will also evaluate by the end of 2026 whether municipal waste incineration plants are to be included in EU ETS 1 after all. Finally, the European Commission will announce by 15 July 2026 whether the pricing phase of EU ETS 2 will start as planned.
