nEHS primary market

The national emissions trading scheme (nEHS) is a climate protection instrument introduced by Germany in 2021 with the aim of reducing CO₂ emissions in the heating and transport sectors. Under this scheme, companies must purchase and surrender an nEHS certificate for every tonne of CO₂ that can be released through the combustion of fuels. https://www.dehst.de/DE/Themen/nEHS/nehs_node.html

The nEHS complements the existing European Emissions Trading Scheme (EU ETS), which mainly covers large industrial plants and power stations. The introduction of the nEHS means that areas that were previously not included in the EU ETS are now also covered, in particular the combustion of fuels in the heating and transport sectors. https://www.dehst.de/DE/Themen/nEHS/nehs_node.html https://www.umweltbundesamt.de/sites/default/files/medien/479/publikationen/cc_42-2022_das_konzept_von_brennstoffemissionen_im_nationalen_emissionshandel.pdf

The system works by requiring the purchase of a certificate for every tonne of CO₂ potentially emitted. These certificates can be purchased either directly on the EEX (European Energy Exchange) or via intermediaries such as q-bility GmbH. Companies are obliged to surrender the corresponding number of certificates by September 30 of the following year. Fines of up to 500,000 euros can be imposed for non-compliance with this obligation. https://www.uniper.energy/de/ueber-uniper/unternehmensportfolio/energy-sales/behg-faq

By pricing CO₂ emissions, the nEHS provides financial incentives for companies and consumers to reduce their CO₂ emissions and switch to more climate-friendly technologies. The revenue from the nEHS is used, among other things, to reduce the EEG surcharge, which leads to relief for electricity customers.

https://www.dehst.de/DE/Themen/nEHS/nehs_node.html https://www.ccl-d.org/klimawissen/

Overall , national emissions trading is an important building block in Germany's climate protection strategy in order to achieve national and European climate targets.

https://www.dehst.de/DE/Themen/nEHS/nehs_node.html

The national emissions trading market (nEHS market) is the trading and regulatory system that supports national emissions trading (nEHS) in Germany. It is used to price CO₂ emissions in the heating and transport sectors that are not covered by the European Emissions Trading System (EU ETS).

Companies that place fossil fuels (e.g. gas, heating oil, diesel, petrol) on the market must purchase certificates for the associated CO₂ emissions.

• These CO₂ certificates are traded on the nEHS market.
• The price of the certificates will be set by the state until 2025 (_€55/tCo2), from 2026 it will be determined by auctions on the market.
• Companies surrender the corresponding number of certificates each year to offset their emissions.

Targets:

• CO₂ pricing is intended to create economic incentives to reduce emissions.
• Revenue from trading is used to promote climate-friendly technologies and provide financial relief for consumers.

The nEHS market is therefore a central component of German climate protection policy and contributes to the achievement of national climate targets.

• The primary market is the first source of emission allowances and ensures predictable CO₂ pricing.
• The secondary market enables subsequent adjustment if companies need additional certificates or want to sell surplus ones.

The secondary market will become particularly important from 2026, when certificate prices will no longer be set by the state but will be determined via auctions and trading. This will create more flexibility for companies, but also greater price dynamics due to supply and demand.

CO₂ price development in the nEHS market from 2021 to 2027.

Period: June 03, 2025 - December 04, 2025
Trading days: Tuesdays and Thursdays
Trading hours: 09:00 - 15:00

More info: EEX calendar

• The nEHS market is a key climate protection instrument in Germany and supports the reduction of CO₂ emissions.
• The primary market ensures predictable CO₂ pricing, while the secondary market will gain in importance from 2026.
• The revenue from emissions trading will be used to promote climate-friendly technologies and provide financial relief for consumers.
• From 2027, the nEHS will be transferred to the EU ETS II, which will make pricing completely market-based.

Legal basis & regulatory framework

• The nEHS is based on the Fuel Emissions Trading Act (BEHG), which defines the legal basis for emissions trading in Germany.
• The DEHSt (German Emissions Trading Authority) is responsible for implementation and monitoring.

Impacts & challenges

• Economic impact: Companies with high energy consumption must factor in additional costs, which can lead to higher consumer prices depending on the sector.
• Social aspects: Relief mechanisms such as climate money or support programs are intended to cushion social hardship.
• Integration into the EU ETS II: In 2027, national emissions trading is to be transferred to the new EU ETS II, which will enable more uniform pricing for CO₂ emissions throughout Europe.

Technical implementation & reporting obligations

• Companies must report their emissions to the DEHSt via an emissions reporting system.
• Verification by third parties (e.g. auditors) is necessary to ensure correct submission.

Market dynamics & factors influencing the price

• Factors influencing the price on the secondary market:
  • Supply and demand
  • Political decisions (e.g. new climate targets or regulations)
  • Developments in the energy market (e.g. oil and gas prices)
  • Technological advances in renewable energies