GERMANY Law and Practice Contributed by: Friedrich Gebert, Hannah Düwel, Bernhard Gröhe and Clara Schmidt, ARQIS Partnerschaftsgesellschaft mbB
lar the priority of avoiding and reducing greenhouse gas emissions over offsetting emissions. Providers of offsetting services should clearly emphasise this priority and first inform customers about options for avoiding and reducing emissions before addressing carbon offsetting. The European Commission has recently announced plans to submit concrete pro - posals for the certification of measures (monitoring, reporting and verifying) that serve to avoid or offset greenhouse gas emissions, with a particular focus on the agricultural sector (Carbon Farming). Numerous experts and stakeholders are to be involved in devel - oping scientifically sound certification methodologies in order to create reliable and transparent standards across European borders. National Recognition of the Voluntary Carbon Market In Germany, voluntary carbon credits are not recog - nised for use within the EU ETS or other domestic compliance schemes for meeting regulatory emis - sion reduction obligations. Voluntary carbon credits are rather explicitly excluded from both the EU ETS and Germany’s national fuel emissions trading system (nEHS/BEHG). The voluntary trade in emission certifi - cates is attributable to neither the EU Emissions Trad - ing System nor the national emissions trading system. This is explained by a fundamental structural differ - ence between the two systems: whereas in existing trading systems certificates are issued for the emis - sion of greenhouse gases, voluntary CO₂ certificates are linked to the offsetting or avoidance of emissions elsewhere. Voluntary carbon credits may, however, be used by companies on a voluntary basis for cor - porate climate strategies, sustainability reporting or net-zero claims, provided that such use complies with applicable integrity and disclosure requirements, but they have no formal role in statutory emissions trad- ing compliance. The Paris Agreement’s corresponding adjustment mechanism is designed to address this at international level, and future domestic or EU-lev - el rules could potentially create a pathway for link - ing high-integrity voluntary credits with compliance frameworks – but no such mechanism currently exists in Germany. Information about voluntary carbon markets is pub - licly available:
• German Federal Ministry for Economic Affairs and Energy (BMWE) – Voluntary Carbon Markets: Frei - williger Kohlenstoffmarkt | BMWE (last accessed 1 June 2026). • Federal Environment Ministry – Carbon Mecha - nisms (last accessed 1 June 2026). • The German Environment Agency (Umweltbunde - samt – UBA) (last accessed 1 June 2026). 3.2 Carbon Pricing and Trade Impacts International Trade Considerations of the German Government The German government considers a functioning global carbon market to be a key instrument in inter - national climate protection and has worked to anchor carbon markets in the Paris Agreement and thus establish a stable long-term price for greenhouse gas emissions. Hence, Germany’s carbon pricing frame - work, based on the EU ETS (implemented domesti - cally via the TEHG – the Greenhouse Gas Emissions Trading Act) and the national emissions trading sys - tem (nEHS, enacted through the BEHG), is closely linked to both EU climate policy and international trade considerations. The primary international trade concern is carbon leakage: the risk that energy-intensive industries relocate production to jurisdictions with lower car - bon costs, undermining both EU competitiveness and global emissions reductions. This is addressed through the CBAM, which imposes a carbon cost on certain imports to ensure a level playing field between EU producers and importers from jurisdictions with lower environmental standards. CBAM is also func - tioning as a driver of global carbon pricing uptake, incentivising trading partners to introduce equivalent mechanisms. Implications for Importers and Exporters For importers into Germany/the EU Since January 2026, importers of goods in the six CBAM sectors (aluminium, cement, electricity, ferti - lisers, hydrogen, iron and steel) must purchase CBAM certificates reflecting the embedded carbon cost of their products, linked to the EU ETS price. Importers may deduct carbon costs already paid in the country of origin. Excluded are EEA states (Norway, Iceland and Liechtenstein) and Switzerland, which participate
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