Germany's CO2 Pricing and Energy Law Hurt Industry

The European Union has raised the price of carbon emissions to incentivise a shift away from coal, oil and gas, with Germany imposing a price of about $68 per tonne. This makes European industry less competitive compared with countries such as China, where the carbon price is roughly €10 per tonne. The EU’s Green Deal, backed by Commission President Ursula von der Leyen, aims for a carbon‑neutral continent by 2050, with Germany targeting 2045. To protect domestic producers, the EU introduced the Carbon Border Adjustment Mechanism (CBAM), a climate‑related tariff on imports of steel, cement and aluminium from countries with lower carbon costs.

At the same time, Germany is moving ahead with a new “StromVKG‑E” law intended to guarantee electricity supply after the scheduled shutdown of conventional power plants. The bill, approved by the cabinet in May and slated for parliamentary vote, mandates the procurement of 11 GW of long‑duration capacity, bans new coal and nuclear projects and places a tentative emphasis on hydrogen‑ready gas turbines and storage. Critics note the law’s extensive bureaucracy – 85 paragraphs and numerous annexes – and warn that many hydrogen projects have proved unreliable, leaving the energy transition and industrial competitiveness in doubt.