Starting in 2027, a portion of Germany’s revenues from the EU Emissions Trading System (ETS 1) will be channeled into the federal budget instead of being reserved for climate and energy projects, according to a draft budget seen by Euractiv. In 2025, Germany earned €5.4 billion from ETS 1, and the finance ministry plans to allocate half of that amount to the general budget, partly to bolster the pension system.
The move confirms earlier signals from Berlin that it would redirect €2.7 billion from the Climate and Transformation Fund (KTF) – which is fed by German ETS revenues – to cover broader state spending. The draft budget is expected to be adopted on Monday. The document does not specify exactly how much will be diverted in future years, but it suggests that an annual quota will be set later.
The decision has sparked sharp criticism from industrial associations. Kerstin Maria Rippel, president of the German Steel Federation (WV Stahl), warned that the consolidation of the KTF must not lead to a reversal of recently introduced measures to lower energy prices already in 2027.
Industry warns against weakening competitiveness
– The opposite is necessary: revenues from emissions trading generated by industrial companies must be fully returned to industry – said Rippel. – This is a condition for strengthening competitiveness and supporting the transition to climate neutrality.
The German steel sector, which is heavily reliant on emission allowances, fears that diverting funds will undermine investments in green production technologies. The diversion comes at a time when companies across Europe are struggling with high energy costs partly driven by the ETS system itself. According to European Commission data, the share of ETS in electricity prices across EU member states ranges from 11 to 24 percent, but in countries like Poland it can reach as much as 50 percent.
Brussels reform and Polish expectations
On July 17, the European Commission is expected to present a long-awaited reform of the ETS system, aimed at reducing the burden on industry. Poland, which secured concrete commitments from the Commission at the EU summit in Brussels in June, is counting on the reform to increase the number of free allowances for energy-intensive industries. Warsaw also advocates strengthening the Modernisation Fund, which benefits lower-income member states.
The debate over ETS reform is intrinsically linked to discussions on electricity prices, economic competitiveness, and the cost of decarbonisation. Germany’s move to absorb ETS revenues into the federal budget has added a new layer of tension ahead of the Commission’s proposal.
Źródło: WNP.PL, Fot. RaffMaster / Shutterstock
