ADAC Warns of Significant Fuel Price Increases from 2027
The German Automobile Club (ADAC) has issued a warning about substantial fuel price increases starting in 2027. According to ADAC President Christian Reinicke, the carbon dioxide (CO2) price is expected to rise significantly from 2027 onwards, far exceeding the moderate increases seen in 2022 and 2023.
Projected Price Increases
For 2026, the ADAC anticipates a price hike of a maximum of 3 cents per liter for gasoline and 3.1 cents for diesel, similar to the increase witnessed in 2022. However, from 2027 onwards, the ADAC forecasts an additional surge of up to 19 cents per liter for both gasoline and diesel, contingent upon the pace of climate protection progress.
Emission Trading Reform
The anticipated price increases stem from a reform of the European Union’s (EU) Emissions Trading System (ETS). The German Bundesrat is currently examining amendments to the ETS passed by the Bundestag, which aim to align with EU regulations.
Calls for Mitigation Measures
Reinicke emphasizes the effectiveness of the EU ETS in incentivizing the adoption of low-emission vehicles. However, he also acknowledges the challenges faced by individuals who are unable to switch to alternatives to conventional cars, such as electric vehicles or climate-neutral fuels. Therefore, he urges the government to implement effective mitigation measures to address the escalating CO2 prices.
Proposed Relief Measures
Reinicke suggests implementing relief measures such as a "climate dividend" to redistribute a portion of the CO2 tax revenue, particularly to low-income households. Additionally, he advocates for permanently increasing the commuter allowance for individuals who rely heavily on their vehicles. A climate dividend has been a topic of debate in Germany for some time.
Kerstin Andreae, Chief Executive of the Association of Energy and Water Industries, stresses the importance of utilizing ETS revenue solely for the targeted relief of affected consumers. This could take the form of a climate dividend or subsidies for energy-efficient renovations.
Germany’s Climate Goals
Germany has set the ambitious target of achieving climate neutrality by 2045, in line with international climate agreements and the imperative to mitigate the most severe consequences of global warming. To this end, the country aims to significantly reduce its CO2 emissions. The rising CO2 prices are intended to incentivize energy efficiency and the transition to climate-friendly technologies such as electric vehicles and sustainable heating systems.
EU-Wide CO2 Emissions Trading
As of January 1, 2023, the CO2 price in Germany increased from 45 to 55 euros per ton. According to the Fuel Emissions Trading Act, a price corridor has been established for 2026, with a minimum price of 55 euros per emission certificate and a maximum price of 65 euros.
From 2027 onwards, an EU-wide CO2 emissions trading system will be introduced for building heating and the transport sector, extending an existing system that currently covers the industrial and energy sectors. The German Fuel Emissions Trading Act will be superseded by the EU system, and the CO2 price will be determined by the market.
Andreae highlights the uncertainty surrounding the price of European CO2 certificates from 2027 onwards. She notes that this uncertainty poses economic risks for energy providers, as they must disclose emissions trading costs separately on invoices and are already negotiating contracts for 2027/28.
