Germany has joined forces with more than a dozen EU member states to demand revisions to the bloc’s upcoming Emissions Trading System (ETS 2), aimed at curbing carbon emissions from transport and heating fuels. The coalition, which includes Austria, Italy, Poland, Lithuania, Romania, and Slovakia, has raised concerns about potential price spikes when the system launches in 2027. In a letter to the European Commission, the group emphasized the need for early allowance auctions by mid-2026 to provide market participants with clearer price signals, ensuring the system’s transparency and predictability.

The ETS 2 framework includes provisions to release additional allowances if carbon prices exceed €45 per tonne, but signatories argue these measures may fall short in preventing rapid price surges. "We support the paper's intention to achieve the greatest possible support for ETS 2 in the EU and to avoid price jumps," stated Germany’s environment ministry. The letter also calls for a more flexible Market Stability Reserve (MSR) to stabilize prices and mitigate adverse social effects.

Environmental and social welfare organizations have echoed these concerns, advocating for stronger social safeguards alongside the carbon pricing mechanism. Stefanie Langkamp, policy director at Climate-Alliance Germany, stressed, "For emissions trading to be effective and accepted by the public, it must be accompanied by social measures from the outset." Proposals include flat-rate public transport tickets for low-income households and targeted subsidies for renovating social housing.

The EU Commission is expected to present its 2040 climate target proposal next week, with ETS 2 forming a critical component of the bloc’s broader climate strategy. Germany, which already implements a national carbon price for transport and buildings, aims to align its policies with the EU system. The debate underscores the delicate balance between achieving climate goals and ensuring social equity in the transition to a low-carbon economy.