Definition and background
A carbon tax is a government-set price per tonne of carbon dioxide levied on fossil fuels. It is meant to internalise climate damage and create incentives to save energy, replace heating systems or switch to renewables. Unlike conventional fuel duties, the carbon component has been listed separately on heating-oil invoices in Germany since 2021 and follows a statutorily defined price trajectory.
On a German heating-oil bill, the carbon component now appears alongside the pure fuel cost, the mineral oil tax and VAT. At a carbon price of EUR 55 per tonne, every litre of heating oil carries roughly 14.6 cents of carbon charges. At EUR 65 per tonne (planned for 2026) the figure rises to 17.2 cents. For a 3000-litre tank fill that means about EUR 517 of carbon charge alone.
Three mechanisms shape carbon pricing in Europe. First the EU Emissions Trading System ETS 1 (since 2005, industry and power, currently around EUR 60-80/t). Second national systems for buildings and transport such as the German nBEHG (EUR 55/t in 2025, EUR 65/t planned for 2026) or the Austrian carbon tax (EUR 55/t from 2025). Third, from 2027 the new ETS 2 for buildings and transport EU-wide, with an expected starting price near EUR 45/t plus stability buffer.
History of carbon pricing
Roots (1972-1997)
The idea of pricing environmental externalities traces back to the 1972 Stockholm Conference. Nordic countries (Finland 1990, Sweden 1991) were the first to introduce real carbon taxes. The Kyoto Protocol 1997 established internationally that greenhouse-gas emissions ought to carry a price.
EU ETS launch (2005)
The Emissions Trading System for industry and electricity began in 2005 as the EU’s first wide-coverage carbon market. Allowances were initially handed out generously for free, which is why the price stayed below EUR 10/t until 2017. Only the 2018 reform and the gradual end of free allocation pushed it sustainably above EUR 60-80/t.
Paris Agreement and national paths (2015-2020)
The 2015 Paris Agreement obliged countries to strengthen their climate targets. Because the EU ETS did not cover buildings and transport, several countries went their own way: Switzerland with a CO2 incentive tax (now CHF 120/t on fossil fuels), France with the Contribution Climat-Énergie (EUR 44.60/t, frozen since the 2018 Gilets-Jaunes protests), Sweden with over EUR 130/t.
Germany - nBEHG since 2021
Germany launched its national Fuel Emissions Trading Act (nBEHG) on 1 January 2021 at EUR 25/t. The path is fixed by law: EUR 30 (2022), EUR 30 (2023, originally EUR 35 but frozen for relief), EUR 45 (2024), EUR 55 (2025), EUR 65 (planned 2026). From 2027 the law specifies a EUR 55-65 corridor, then a free market price aligned with ETS 2.
Austria carbon tax (since July 2022)
Austria started on 1 July 2022 at EUR 30/t via the national carbon tax (BMK). The schedule: EUR 30 (2022/23), EUR 45 (2024, revised), EUR 55 (2025). The original Klimabonus that refunded the revenue per capita was discontinued at the end of 2024 and replaced by a tripled commuter allowance (Pendlereuro x 3).
EU CBAM (Phase 1 from Oct 2023, Phase 2 from 2026)
The EU Carbon Border Adjustment Mechanism (Regulation 2023/956) has required reporting since October 2023 for imports in carbon-intensive sectors (steel, aluminium, cement, fertilisers, electricity, hydrogen). From 2026 (Phase 2) importers must purchase certificates whose price tracks ETS. CBAM is intended to prevent carbon leakage and keep ETS industry competitive.
ETS 2 from 2027
The new ETS 2 for buildings and transport launches EU-wide in 2027. The expected price is around EUR 45/t with a market stability mechanism (Price Stability Reserve) releasing extra allowances when the price rises too quickly. National systems such as the German nBEHG or the Austrian carbon tax will be folded into ETS 2.
How the surcharge is calculated
Calculating the carbon surcharge per litre of heating oil is simple: carbon price per tonne x emission factor per litre / 1000 = surcharge per litre.
Emission factor: One litre of heating oil emits roughly 2.65 kg of CO2 on complete combustion (source: German Federal Environment Agency, BAFA). The factor is 2.64 kg/L for diesel, 2.32 kg/L for petrol and around 2.0 kg/m³ for natural gas.
Example Germany 2026: EUR 65/t x 2.65 kg/L / 1000 = EUR 0.172 per litre of heating oil. For a 3000-litre tank fill: 3000 x 0.172 = EUR 517 from the carbon component alone, in addition to VAT (19 % on the full price), mineral oil tax and the underlying fuel cost.
Example Austria 2025: EUR 55/t x 2.65 / 1000 = EUR 0.146 per litre. 3000 L = EUR 437 carbon share.
Example Switzerland 2024: CHF 120/t x 2.65 / 1000 = CHF 0.318 per litre. 3000 L = CHF 954 carbon charge (Federal Office for the Environment, BAFU). Switzerland is therefore the most carbon-expensive heating-oil country in the region.
Comparison with a Brent shock: If global Brent crude rises by USD 20 per barrel, the pass-through effect adds roughly 15 cents per litre at the German heating-oil pump. A simultaneous carbon-price rise of EUR 10/t adds another 2.65 cents. Both components act cumulatively. More detail on the heating oil price page.
What does this cost my household?
A typical detached-house household in Germany with an oil heating system burns 2500-3500 litres of heating oil per year. For a 3000-L tank fill at EUR 65/t (Germany 2026) that is about EUR 517 per year for the carbon component alone. Before 2021 (pre-nBEHG) this line item was zero.
DACH comparison, 3000-L tank fill (2026):
- Germany (EUR 65/t): ~EUR 517 carbon share
- Austria (EUR 55/t, subject to revision): ~EUR 437 carbon share
- Switzerland (CHF 120/t, 2024 baseline): ~CHF 954 carbon share
- France (EUR 44.60/t, frozen): ~EUR 355 carbon share
Rebates - what does the citizen get back?
The German Klimageld debate (per-capita refund of the carbon revenue) has been running for years. The 2021 coalition agreement promised it; as of May 2026 it has still not been paid out. EEG levy cuts and higher housing benefit have been the main compensating measures. Switzerland’s refund system works more reliably: two-thirds of carbon revenue flow back via mandatory health-insurance premiums, a third feeds the buildings retrofit programme. Austria abolished its Klimabonus at the end of 2024.
Distributional effect: Studies by the German Institute for Economic Research (DIW) and the Mercator Research Institute (MCC) show that an unrefunded carbon tax acts regressively - lower-income households spend a larger share of disposable income on energy. A full per-capita Klimageld would reverse this: poorer households would end up with more cash than without the carbon price, because they typically consume less energy.
Options and outlook 2026-2030
Unlike the Brent price, the carbon-price trajectory is politically plannable. That is both an opportunity and a risk.
German trajectory (planned, as of May 2026):
- 2025: EUR 55/t (~14.6 ct/L heating oil)
- 2026: EUR 65/t planned (~17.2 ct/L)
- 2027: EUR 55-65 corridor, then free market price under ETS 2
- 2030 (estimate): EUR 80-120/t (market price with stability mechanism)
ETS 2 from 2027 - what changes: Buildings and transport across the entire EU will be moved into a market mechanism. The national fixed-price regime is replaced by a traded price. If it rises too quickly above EUR 45/t a stability mechanism releases additional allowances. Even so, analysts (Agora Energiewende, MCC) expect EUR 60-90/t through the second half of the decade.
What households can actually do:
1. Recalculate heat-pump ROI. Heat pumps become more economic with every carbon-price uptick. At EUR 65/t a heat pump saves around EUR 500-700 per year versus an oil boiler simply by avoiding the carbon component; at EUR 100/t (2030) the saving is EUR 750-1000 per year. The methodology page shows how we model such path calculations.
2. Prioritise energy refurbishment. Insulation, window replacement and heating optimisation amortise faster as the carbon price rises. KfW and BAFA in Germany subsidise up to 70 % of investment costs through the BEG programmes.
3. Track the political path actively. Unlike oil prices, the carbon-price trajectory is largely known years in advance. Subsidies (BAFA, KfW, BEG) are explicitly designed to cushion that path.
4. Model your own path. Use the calculator to run your heating-oil scenario under different carbon-price assumptions.