Merz Resists Another Delay to EU Fuel Carbon Pricing

German Chancellor Friedrich Merz has intervened directly in the European Union's carbon-pricing dispute, urging European Commission President Ursula von der Leyen not to reopen the settlement for the bloc's new fuel and heating emissions market. His letter, reported on November 11 and detailed again on November 12, opposes further changes to ETS2 after lawmakers already postponed its start until 2028.

The decision matters because ETS2 could eventually affect almost every household that drives a petrol or diesel vehicle or uses fossil fuel for heat. It also tests whether the EU can maintain its long-term industrial rules while responding to voters facing another expensive winter. Merz's letter is a political position, not a new law or a newly fixed carbon price.

What the Chancellor wants left alone

ETS2 extends emissions trading beyond power stations and heavy factories to suppliers of road fuels and building heating fuels. Unlike the established EU ETS, the new system imposes compliance obligations upstream on companies that distribute fuels. Those firms may pass some costs through to end users, so drivers and homeowners have a direct interest even if they never trade an emissions allowance themselves.

EU Regulation 2026/667, adopted in March, postponed operation to 2028. The Council in October approved stronger market-stability rules intended to make the release of allowances smoother when the carbon market becomes tight. These measures were negotiated partly to respond to fears of sharp price swings. Merz's position is that a second reopening would erode the certainty needed to invest in cleaner heating, transport fleets and energy infrastructure.

The Friedrich Merz dossier (opens in a new tab) is relevant because the Chancellor is now making a different argument from parts of Germany's industry-facing debate. Economy Minister Katherina Reiche has advocated flexibility for energy-intensive manufacturing, while the Chancellor is defending a stable price signal. They are not necessarily opposites: Berlin can favour targeted compensation for factories while resisting a broader rollback of the emissions market.

The fuel bill is not a fixed surcharge yet

A practical test is how any future allowance price reaches the pump. A carbon price of €50 for each tonne of CO2 would correspond mechanically to roughly 12 euro cents per litre of petrol before taxes and other market effects, using about 2.3 kilograms of CO2 per litre. This is an illustration, not an official 2028 forecast; actual costs could differ with the allowance price, pass-through, blending, taxation and domestic policies. Diesel and heating fuels have different emissions factors.

For families without public transport or affordable alternatives, such costs can be difficult to avoid. A low-income rural commuter may have neither the savings for an electric car nor a train to reach work. A tenant may have no authority to change an inefficient heating system. That is why household purchasing power (opens in a new tab) is a genuine policy variable rather than an abstract climate-policy objection.

Germany's national statistics underline the sensitivity. Destatis reported consumer inflation of 2.8% in October, energy products 12.2% dearer year on year, and motor fuels 28.9% dearer. Those changes reflect a wider oil and energy market, not ETS2, which has not started. Attributing current German pump prices to the future EU system would be false.

The compensation bargain

The European Commission (opens in a new tab) points to the Social Climate Fund as the accompanying distributional safeguard. It says the programme will mobilise €86.7 billion over 2026-32 through EU financing and national contributions, supporting insulation, cleaner heating, public transport and some temporary income aid. The headline is a multi-year funding envelope, not a guaranteed payment to every European driver or gas customer.

Those who benefit from policy certainty include investors in heat pumps, low-carbon buildings and electric mobility, alongside businesses that have already budgeted for a stronger carbon market. Those who pay include households and small companies still tied to fossil fuels, to the extent that suppliers pass their allowance expenses through. The distribution of gains depends on whether national governments deliver real alternatives before charges rise.

The political choice is not simply climate protection versus living costs. Delaying the market could preserve short-run purchasing power while extending dependence on imported oil and gas. Keeping it on schedule can strengthen the case for investment but risks imposing cash costs before people can adapt. Italy, Poland and other sceptical governments are pressing the affordability point; Merz is saying the existing compromise should hold.

Next comes the parliamentary calendar. The European Parliament is expected to take up wider emissions-trading changes in December. ETS1 reforms for major industry and ETS2 for buildings and road transport remain distinct files, as Merz has insisted. Readers should watch whether ministers change the market-stability safeguards, whether national Social Climate Plans release aid promptly and whether Brussels can explain the household impact in euros rather than slogans.

Sources

• Euronews — Merz urges EU to stand firm on carbon-market reforms, 12 November 2026 (opens in a new tab)
• Clean Energy Wire — Merz urges EU to stick to ETS2's 2028 start, 11 November 2026 (opens in a new tab)
• EUR-Lex — Regulation (EU) 2026/667 postponing ETS2, March 2026 (opens in a new tab)
• Council of the EU — ETS2 market-stability reserve rules, 9 October 2026 (opens in a new tab)
• European Commission — Social Climate Fund scope and financing (opens in a new tab)
• Destatis — German October 2026 inflation report, 11 November 2026 (opens in a new tab)