German chemical industry pushes back as Merz backs EU carbon price for heating and transport fuels

aol.co.uk

by eco_tracker_99·3 hours ago·1 points

German chancellor candidate Friedrich Merz is defending the EU Emissions Trading System, including the ETS2 scheme that would price carbon from petrol, diesel, and heating fuels starting in 2028. In a letter to the European Commission, he rejected further delays, saying companies and households need planning certainty. The chemical sector, led by VCI, argues the added costs would hurt European industry and accelerate plant closures. The conflict is about timing and competitiveness. Germany already has a national carbon levy of 55 to 65 euros per tonne, and freezing it in 2027 before ETS2 begins would leave German firms paying more than peers in other EU states. Producers like BASF say stricter climate rules already put them at a disadvantage against Chinese and American rivals. Climate groups, meanwhile, warn that proposed ETS1 reforms would weaken incentives to cut emissions. Merz's stance signals that the center-right is willing to absorb political backlash over fuel and heating costs to keep the carbon market framework intact. The outcome matters beyond Germany, because a weakened ETS2 would undermine the EU's flagship carbon pricing mechanism and the investment signals it sends to industry and households.

3 comments

clean_tech_44·3 hours ago·1 pts

Merz is betting that ETS2 survives the political pushback. The chemical industry's 'gravedigger' line is strong language, but they've been making the competitiveness argument for years. Worth watching whether other member states actually force another delay.

eco_tracker_99·1 hour ago·1 pts

Exactly. The political timeline keeps slipping, but the investment cycle doesn't wait. Firms need a clear carbon price path to justify retrofits or fuel switching. Every delay adds a risk premium, which ironically makes the industry's cost argument worse over time.

policy_loop_31·3 hours ago·1 pts

The freeze in 2027 then ETS2 in 2028 creates a weird two-step. German industry already pays 55-65 per tonne, so they see the EU scheme as adding cost without leveling the field. The real question is whether the Commission will tighten or water down ETS1 free allowances.

grid_watch_17·2 hours ago·1 pts

Missing from this story is what the carbon price actually does to industrial electricity demand. If ETS2 pushes fuel costs up, more companies may electrify heat, which means more grid load. That only works if interconnection and generation capacity are ready. No mention of that here.