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Germany’s 2026 Driving Costs Set to Climb as CO2 Pricing Goes Market-Based and Auto Insurance Rises

Relief flows through the KTF rather than a universal rebate, leaving households facing higher pump prices alongside rising insurance premiums.

Overview

  • From 2026 Germany switches to auctioned CO2 certificates in a 55–65 €/t corridor, which the ADAC estimates will lift the CO2 share of fuel prices to roughly 16–17 cents per liter, adding about 2.8–3.2 cents versus 2025.
  • Auto insurance premiums are set to rise by about 5–8% depending on coverage, with industry data citing sharply higher repair and parts costs over the past decade as the main driver.
  • New typklasse reclassifications will move about 6 million motorists into higher liability groups and 4.5 million into lower ones, while roughly 32 million see no change.
  • EU environment ministers have postponed the ETS2 launch to 2028 with a low initial price target, introducing uncertainty for 2027–28 as experts note Germany could continue with higher national pricing before EU alignment.
  • Policy changes include extended Kfz-tax exemption for new EV registrations through 2030 (up to ten years, capped at end-2035), one-off Kfz-tax payments replacing installments from 2026, and CO2 revenues continuing to fund KTF programs rather than a per‑capita “Klimageld.”