Emissions Trading in the Spotlight: What Companies Need to Know Now

• Emissions trading systems determine how emissions are reduced and priced – and have a direct impact on companies’ cost structures and competitiveness.
• The Carbon Border Adjustment Mechanism (CBAM) and the planned revision of the European Emissions Trading Scheme are setting the course for fair competitive conditions and ambitious climate targets in Europe.
• Commerzbank supports its Corporate Clients with risk management solutions, market information and formats such as the Energy & Carbon Summit to help them manage the opportunities and risks of carbon pricing strategically.

Mr Hoechemer, why is there a separate German system in addition to the European Emissions Trading Scheme? Who participates in it?
The European Emissions Trading Scheme, or EU ETS for short, has been in place since 2005. It covers emissions from the energy, industrial, shipping and aviation sectors. Large power plants and industrial installations must acquire allowances for their carbon dioxide emissions. Each allowance entitles the holder to emit a certain volume of CO2.

The German emissions trading system (nEHS) has supplemented sectors since 2021 that previously did not fall under the EU ETS. These include fuels for heating and transport, such as heating oil, natural gas or petrol. Unlike the EU ETS, the national trading scheme does not oblige individual consumers to participate, but rather the so called “suppliers” of fossil fuels. These include, for example, gas and coal suppliers as well as the mineral oil industry.

The rationale is straightforward: in the heating and transport sectors there are very many, mostly private emitters – for instance anyone with a non electric car, or any home owner with an oil fired heating system. Including them directly in emissions trading would be almost impossible to manage from an organisational perspective. In the German system, emissions are therefore priced indirectly via the companies that place the fuels on the market.

How has German emissions trading developed in recent years?
In the initial years, allowance prices in the nEHS were fixed by law and rose from 25 euros in 2021 to 55 euros in 2025. Since 2026, the price has been set in an auction process within a price corridor of 55 to 65 euros. Supply and demand determine the exact value, but it remains within this range.

In parallel with these national developments, far-reaching changes are also pending in the European emissions trading system.

On the one hand, in 2028 a new European emissions trading scheme for heating and transport, the so called EU ETS 2, is planned. It is expected largely to replace the German scheme and to harmonise the rules across Europe.

Secondly, the EU ETS 1, which has already been in place for over 20 years and covers the energy, industrial, shipping and aviation sectors, is to be revised. To this end, the European Commission published its proposals on 17 July 2026, which aim to strengthen Europe’s competitiveness, decarbonisation and independence. The next step will be for the Council of the EU Member States and the European Parliament to deliberate on these proposals.

How are companies feeling the impact of current developments in emissions trading in their strategic planning?
The European Emissions Trading Scheme has been in the political spotlight for some time, particularly with regard to industry. For many companies, the costs of CO2 emissions are becoming increasingly important, for example alongside energy costs and geopolitical challenges. The free allocation of allowances for industry is being gradually reduced, so companies have to purchase more allowances. At the same time, the Carbon Border Adjustment Mechanism (CBAM) is being launched, which prices imported goods with a high CO2 footprint and is intended to create a level playing field for European manufacturers.

The revision of the EU ETS planned from mid 2026 is the subject of intense political debate – with very different positions among the Member States. The key challenge is to further develop the scheme in such a way that the European Union meets its climate targets while at the same time preserving the competitiveness of its companies.

How does Commerzbank support its corporate clients in dealing with the effects of carbon pricing?
At Commerzbank, we have many years of experience in emissions trading and support our corporate clients in various markets. These include the European and UK emissions trading schemes, the Carbon Border Adjustment Mechanism, the German emissions trading system and the voluntary carbon offset market, where companies can offset emissions through projects.

We develop bespoke risk management solutions to enable companies to plan and manage their costs more effectively. We also provide our clients with regular information on current developments and market trends. An important pillar is the annual Energy & Carbon Summit in Berlin. There, international experts discuss key issues relating to energy and carbon markets and provide insights into how companies can prepare for them.

What strategic adjustments or new business areas arise from the changes in emissions markets?
Emissions trading is a central instrument of European climate policy. Over recent decades, it has made a key contribution to reducing emissions cost efficiently by putting a price on CO2 for companies while at the same time giving them flexibility as to how they reduce emissions.

Over the past twenty years, a comprehensive carbon trading structure has emerged in Europe, encompassing various sub markets and instruments – such as different types of allowances, adjustment mechanisms and offset projects. These do not only have an impact in Europe but, not least through the Carbon Border Adjustment Mechanism, increasingly beyond.

Globally, the number of emissions trading schemes being introduced is growing. This shows that reducing emissions remains a central issue for companies and governments. Those who move early to adopt resilient and future proof business models can not only limit risks but also seize new opportunities – for example through more efficient production processes, new products or services with a low carbon footprint.