EU's Climate Leviathan: CO₂ Trading strategy To Cripple German Drivers By 2027

Submitted by Thomas Kolbe

Starting in 2027, a price shock at the gas station threatens drivers. The EU Emissions Trading System (ETS II) will be extended to include the transport and building sectors.

Another wave of price increases is rolling in. And yes, once again, the engine of inflation will be the European Union’s climate policy, as is so often the case these days. At the end of January, the Bundestag already approved the implementation of the reform of the European Emissions Trading System, which foresees the free trade of CO₂ certificates from 2027 onward in both the transport and building sectors.

What Has Been Decided?

Until the end of 2026, Germany will apply a fixed price on the consumption of CO₂ emitted by the use of fossil fuels. Currently, this price is set at €55 per ton and is planned to rise to €65 next year. After that, the politically defined fee will end. From 2027, the price will be determined by the European emissions trading market — a free exchange where companies must bid for CO₂ emission rights before consumption, and the European Union can set the maximum available number of certificates — a powerful regulatory tool likely to generate significant conflict. It is the strongest instrument the EU Commission has ever held to directly influence citizens’ behavior.

What Does This Mean for Everyday Life?

According to ADAC calculations, from 2027 onward, a price jump of up to 38 cents per liter of diesel or gasoline is expected — depending on market conditions, this could be even higher. For 2026, an increase of about 3 cents is already anticipated. For a family of four with two vehicles and 30,000 kilometers driven annually, the additional costs from the artificial scarcity of certificates quickly add up to between €500 and €800 per year. For many people living in rural or structurally weak regions, mobility thus becomes a question of price. Millions of commuters who depend existentially on their cars are left out in the cold. Politically, they play only a secondary role as paymasters of this spectacle. It is a scandal that the state already collects 54 percent at the pump and remains unsatisfied.

Social Associations Demand Compensation

Only belatedly have social organizations responded to the impending price increases. In a five-point plan, they demand a substantial increase in the EU’s Climate Social Fund, which currently has a volume of €65 billion. This money is intended to ease the burden on low-income households and affected small businesses during the transition to the free emissions trading system.

This is the typical reaction pattern of an intervention spiral: Brussels triggers exorbitant costs in the real economy with its climate policy. Immediately, a flood of cries for help and subsidy demands follow. Naturally, these bring additional fiscal burdens — money neither the EU member states nor the Commission itself can raise.
It is clear who will be billed for this. The taxpayer, who ultimately pays twice: once for the emissions trading and once for the compensatory social policies, whose costs are spinning out of control.

A Look Across the Atlantic

On the other side of the Atlantic, the situation looks different. While Germany raises CO₂ prices drastically from 2027 and fuel prices could rise by up to 38 cents per liter, the average gasoline price in the USA currently stands at about €0.83 per liter. At the same time, under their new president Donald Trump, the US has taken a different path in energy policy: The government is deregulating the energy sector, fast-tracking infrastructure projects such as the construction of new pipelines to increase the production of fossil fuels like oil and gas. Subsidies for renewable energies are being scaled back — the market is to decide where and how much investment should flow into specific energy sources.

This turnaround aims to ensure supply security and keep energy prices stable. Instead of state interventions and taxes, market forces and innovation are relied upon — a pragmatic approach that minimizes economic burdens for consumers and companies and at the same time strengthens the energy sovereignty of the United States as the world’s largest oil producer.

Policy Without Measure or Moderation

By strictly enforcing Brussels’ demand for free pricing of CO₂ certificates, Germany once again does a disservice to the productive part of society reliant on mobility. And this precisely at a time when the German economy is already stagnating under the weight of excessive climate regulation, suffocating bureaucracy, and overwhelming levies — trapped in a recession from which it cannot escape. The planned CO₂ pricing starting in 2027 is not only a social risk but also an economic blind flight that deliberately ignores the economic reality in the country.

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About the author: Thomas Kolbe is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.