The BEHG: Germany's National Carbon Pricing Instrument
The Brennstoffemissionshandelsgesetz (BEHG) — Germany's Fuel Emissions Trading Act — entered into force in January 2021, establishing a national carbon pricing system covering fossil fuels used in buildings, transport, industry (outside EU ETS), and agriculture. Unlike the EU ETS, which is an emissions trading scheme with a floating price, the BEHG operates as a carbon tax equivalent with fixed statutory prices for a defined introductory period.
The price trajectory established under the BEHG is:
- 2021: EUR 25/tCO2
- 2022: EUR 30/tCO2
- 2023: EUR 30/tCO2 (freeze due to energy crisis)
- 2024: EUR 45/tCO2
- 2025: EUR 55/tCO2
- 2026: EUR 55/tCO2 (confirmed under coalition agreement)
- 2027: Transition to EU ETS2 corridor pricing (EUR 45–65 floor/ceiling initially)
BEHG and Forestry: The Connection
The BEHG does not directly price forestry activities — German forests are neither required to surrender emission allowances nor automatically compensated for carbon sequestration under the BEHG. However, the BEHG creates two indirect channels of relevance for forestry investment:
Channel 1: Opportunity cost of land under carbon pricing. As fossil energy becomes more expensive under BEHG pricing, the relative economics of land use shift. Agricultural land that produces bioenergy crops or that is converted to agroforestry for carbon sequestration gains economic attractiveness relative to conventional production systems. At EUR 55/tCO2, a Paulownia agroforestry system sequestering 30 tCO2/ha/year would generate EUR 1,650/ha/year in carbon value at the BEHG price — a material input to land return calculations in German forestry markets.
Channel 2: BEHG as price signal for voluntary market buyers. German corporations subject to BEHG costs face increasing incentives to reduce their reported Scope 1 and Scope 2 emissions — and to demonstrate carbon removal activities that credibly offset residual emissions. BEHG-priced carbon creates a floor price signal for voluntary carbon removals that benefits high-quality forestry and agroforestry credit sellers. Companies already paying EUR 55/tCO2 in BEHG compliance costs will not pay below that floor for removal credits from credible domestic projects.
Transition to EU ETS2: The 2027 Integration
From 2027, Germany's buildings and transport sectors will transition from BEHG fixed pricing to the EU ETS2 cap-and-trade system. The ETS2 will operate with a price corridor initially capped at EUR 45–65/tCO2 for the 2027–2030 introductory period, with the cap removed and the price floating freely thereafter.
This transition has important implications for forestry investment in Germany and neighbouring countries (Austria, Switzerland) that are considering similar carbon pricing trajectories:
- ETS2 integration extends the carbon price signal to the full buildings and transport demand base — the largest sources of national GHG emissions in Germany
- The floating ETS2 price from 2030 is structurally likely to be higher than the EUR 65 corridor ceiling, given EU 2030 and 2050 climate targets and the ETS2 emissions cap trajectory
- Higher sustained carbon prices directly increase the financial value of CRCF-certified carbon removal credits, benefiting agroforestry investments with long holding periods (10+ years)
German State Forestry Carbon Credit Market: The Humus Register Precedent
Several German federal states (Länder) have piloted voluntary payment programmes for forestry carbon sequestration. Bavaria's Humus Programme, launched in 2020, pays farmers EUR 50–100/ha/year for soil organic carbon enhancement practices. While modest in scale, these programmes establish the precedent for public payment for land-based carbon sequestration — a precedent that strengthens the political feasibility of CRCF-based payment frameworks at the federal and EU level.
At EUR 55/tCO2, the BEHG creates a concrete national carbon pricing baseline that makes agroforestry carbon economics compelling in the German-speaking market — and the transition to EU ETS2 from 2027 will likely extend and intensify this dynamic across the broader EU carbon pricing landscape.