EU Initiative Aims to Reduce Fuel and Heating Costs

In recent years, energy prices have experienced a relentless upward trend. However, a promising shift may soon emerge from the European Union, which has long faced criticism. Starting in 2027, fuel and heating expenses in Germany are projected to decrease significantly. Initial estimates suggest that the price of gasoline could drop by up to 7 cents per liter, given that the current average price stands at approximately EUR1.69 per liter.

This anticipated reduction is primarily attributed to a decline in the carbon dioxide (CO2) price. In 2027, Germany's national CO2 pricing mechanism will transition into the European Emissions Trading System (ETS), leading to a standardized EU-wide pricing framework. The CO2 charge is levied per ton and affects fuels like gasoline, heating oil, and gas. Currently, the CO2 price in Germany is set at EUR55 per ton, which translates to around EUR0.157 per liter of gasoline, according to data from the ADAC.

Moving forward, the national CO2 price is expected to rise to as much as EUR65 per ton in 2026, equating to about EUR0.186 per liter of fuel, before being incorporated into the broader European system in 2027. An internal communication from the European Commission indicates that the CO2 price is likely to start at just EUR30 per ton in 2027, corresponding to approximately EUR0.084 per liter of gasoline. For context, this price level was already reached in Germany in 2022.

In subsequent years, the EU anticipates only a gradual increase in the CO2 price:

• 2028: EUR50 per ton (approximately EUR0.14 per liter of gasoline)
• 2029: EUR55 per ton (about EUR0.157 per liter)
• 2030: EUR60 per ton (roughly EUR0.17 per liter)

Germany is expected to hit the EUR60 per ton mark as early as next year, prior to the transition to the EU-wide pricing structure. The European Commission has confirmed that internal modeling projects a CO2 price of EUR60 per ton for 2030. It is important to note that the EU does not directly set the CO2 price; instead, it has established a mechanism to determine the price based on market dynamics. However, the EU retains the ability to intervene if prices escalate excessively. Several Eastern European nations, including Poland, which relies heavily on coal power, are particularly concerned about abrupt price fluctuations.