The GHG premium: What it is – and how to apply for it
Electric vehicles do not emit any direct CO2 emissions compared to combustion engines. This makes them an important building block in the effort to achieve the climate targets in Germany. The CO2 saved not only helps the climate, but can also be turned into money with the GHG premium.
The most important things at a glance
- Owners of e-vehicles can have their CO2 savings certified and turn them into money within the framework of the GHG quota.
- This GHG premium is intended to promote the switch to electric mobility and thus increase the share of renewable energies in the transport sector.
- The applications are processed by special GHG quota brokers. It is worth comparing providers.
- The amount of the GHG premium is subject to market fluctuations and has recently fallen sharply.
- It is difficult to predict how the premium will develop in the further course of the year.
What is the GHG premium and how does it work?
The GHG premium or greenhouse gas reduction premium is a financial incentive for owners of electric vehicles in Germany. The GHG premium was introduced as part of the GHG quota, which obliges oil companies to reduce their greenhouse gas emissions. If the companies do not manage to do so to the prescribed extent, penalties are due. One way to improve the greenhouse gas balance on paper is to buy emission certificates. This is why the GHG quota is also referred to by critics as greenwashing.
Every owner of a purely battery-powered e-vehicle that requires registration – in addition to e-cars, e-buses, e-transporters, e-scooters and e-motorcycles – or a publicly accessible charging point can have the CO2 emissions saved compared to a combustion engine certified and receive an annual bonus by selling the certificates to companies.
The idea: Pure electric vehicles have a better eco-balance than combustion engines. They do not cause any direct CO2 emissions and thus contribute to the overall reduction of greenhouse gas emissions.
This is how the GHG premium works:
- Certification of emission reduction: Electric vehicle owners can have the emission savings of their vehicle compared to a combustion engine certified by the Federal Environment Agency. This is done by providers who specialise in applying for the GHG premium.
- Sale of certificates: The certified emission reduction is sold by these GHG quota brokers in the form of certificates to oil companies that have to compensate for their own CO2 emissions.
- Payment of the premium: Part of the income from the sale of the certificates is distributed to the electric vehicle owners as a premium. The amount of the premium varies and depends on various factors, such as the current market price of the certificates.
GHG quota versus GHG premium: What's the difference?
The GHG quota is a legal requirement that obliges fossil fuel suppliers to reduce their CO2 emissions. In 2024, the rate will be 9.25 percent compared to the reference value, and by 2030 it is expected to rise to 25 percent. The GHG quota is regulated in the Federal Immission Control Act. The companies can meet GHG quotas by using renewable energies or buying certificates.
The GHG premium is a financial reward for owners of e-vehicles or public fast-charging stations who sell their saved CO2 emissions as a certificate to companies subject to quotas. The proceeds they receive for this are called GHG premiums.
Who gets the GHG premium? Are you eligible?
Private individuals as well as companies and public institutions that own or operate pure electric vehicles can apply for the GHG premium.
The prerequisites for this are:
- It must be an all-electric vehicle – hybrids and plug-in hybrids are not eligible for quota trading.
- The electric vehicle must be registered in Germany. E-vehicles that do not require registration, such as e-scooters, cannot participate in GHG quota trading.
- The applicant must be entered in the vehicle registration document as the owner of the vehicle. Whether the electric vehicle is bought or leased does not matter.
Whether you charge your vehicle with green electricity or conventional electricity is also irrelevant. Operators of public charging stations have also been granted the GHG premium for several years. Likewise, owners of a private wallbox can theoretically be entitled, provided that they make the charging point publicly accessible at least temporarily. However, there is no clear legal basis here.
Deadlines and applications: How do you apply for the GHG premium?
Individuals are not eligible for quota trading. The GHG premium is processed by electricity providers, automobile clubs or special service providers. The effort for e-vehicle owners is therefore low.
All you have to do is:
- Choose a GHG quota broker and register the vehicle online (you can find an overview of different providers on comparison portals such as Verivox or Check24)
- upload the vehicle registration document
- Enter your account details
Important deadline: The GHG premium can only be applied for for the current year until 15 November. A retroactive application is not possible. Even if you bought the vehicle after 1 January of the year for which you are applying for the premium, you will receive the full GHG premium – provided that the previous owner has not yet submitted an application for the current year. Due to the processing times of the intermediaries, applicants should submit the application for 2024 before November 1.
The providers usually report the electric cars to the Federal Environment Agency in bundles in order to reduce the authority's effort. When selling to companies, they receive a total sum as a bonus, which they distribute proportionately to the registered customers. The providers usually deduct a commission for their service.
Depending on the agreed model, the provider transfers the premium directly or only after the certificates have been sold. The GHG premium is only granted once a year for each vehicle. Anyone planning to sell their e-vehicle should submit their application before the change of ownership – a second application for the same calendar year is not possible.
Amount of the GHG premium: How much do you get?
The amount of the GHG premium depends on the vehicle class and the respective estimated value of the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV). For e-cars, it is currently 2,000 kilowatt hours per year.
The estimated value applies equally to all registered e-vehicles in a vehicle class – regardless of size, energy consumption or mileage. A heavy SUV with high power consumption receives the same premium as an economical small electric car. Only the vehicle classes M1 (passenger cars), N1 (commercial vehicles) and M3 (buses) are distinguished here – all other vehicle classes subject to registration automatically slip into the M1 category.
The amount of the premium may vary and is subject to market fluctuations. For this reason, many service providers specify a revenue corridor in which the premium moves. Some odds brokers also offer the choice between fixed and flexible premiums:
- With the fixed premium model, a fixed amount is agreed and paid out in advance.
- The flexible premium model is based on how well the provider can sell the GHG certificate. Depending on demand, the premiums can be significantly higher – or even lower.
- With the combination of both models, the provider guarantees a minimum amount, which can increase depending on the sales price achieved.
In 2023, the GHG premium was 300 euros and more. In 2024, however, the GHG premium will probably be significantly lower. Many GHG quota brokers will only offer between 50 and 100 euros as a premium in 2024. There are two main reasons for this:
- As a result of the Ukraine war, more electricity has been generated from fossil fuels in Germany again. Although the electricity mix has now become "greener" again compared to 2022, the emission savings are calculated on the basis of the electricity mix two years ago. The Federal Environment Agency has raised the average greenhouse gas emissions from 135 to 138 kilograms of CO2 equivalent per gigajoule of electricity – this reduces the possible CO2 savings of an electric vehicle and thus also the GHG quota.
- According to media reports, oil companies are now buying significantly more biofuels in order to achieve the required emission savings. As a result, the demand for GHG allowances has decreased, which ultimately affects the level of the GHG premium. However, as the Handelsblatt reports, there is a suspicion that large quantities of incorrectly certified biofuels were imported from China.
It is difficult to predict how the GHG premium will develop in the further course of the year.
Calculate and compare GHG premiums: Where do you get the best premium?
Electricity providers, automobile clubs, specialised companies – although the number of GHG quota brokers fell last year, there are still a large number of providers, some of whose offers differ greatly.
To secure the best reward and get an overview of the different service providers, you should use comparison portals and pay attention to the following criteria:
- Amount of the GHG premium
- A fixed GHG premium or at least a guaranteed minimum amount
- Amount of commission retained
- No long contract periods or subscription models, so you can compare providers again the following year and possibly switch to a better offer
How much a provider pays can change quickly due to market fluctuations. It is also not always obvious at first glance whether it is a best price (flexible premium) or a fixed price (fixed premium). Before you decide, you should therefore definitely read the terms and conditions of the provider.
GHG premium with e-car and green electricity: Are you driving in a climate-friendly way?
In contrast to combustion engines, electric vehicles do not emit any direct CO2 emissions. Anyone who drives electrically contributes to the reduction of greenhouse gas emissions in the transport sector – that is climate-friendly.
However, how climate-friendly you actually are on the road with your electric car depends on the electricity mix you use to charge it. This is because greenhouse gas emissions are also generated during the production of electricity. Green electricity has a better environmental balance than electricity from fossil fuels.
However, the electricity you use to charge your electric vehicle has no direct influence on the amount of the GHG premium: This is awarded at a flat rate per electric vehicle - regardless of whether you charge your vehicle with green electricity or conventional electricity.
Indirectly, however, the GHG premium is also intended to promote green electricity: With more electric vehicles, the overall demand for electricity and a better charging infrastructure as well as awareness of climate-friendly mobility increases. Charging station operators can also have the self-produced electricity from solar or wind power plants certified and participate in quota trading. This makes green electricity an attractive option for oil companies to achieve their GHG quota targets.
GHG premium for companies: Does your company benefit?
More and more companies are equipping their fleets with electric cars. This not only shows a growing ecological awareness, but also offers companies economic advantages. In principle, all electric company cars – whether purchased or leased – can be taken into account for the GHG premium.
Fleet managers and fleet operators can sell the GHG quota for each of their EVs, which reduces fleet costs. This makes the switch to more environmentally friendly means of transport more attractive for companies.
For companies, too, the application process runs through a GHG quota provider. In contrast to private individuals, however, fleet operators and fleet managers have to pay tax on the GHG premium as operating income in most cases.
Whether employees with company cars benefit from the GHG bonus depends on the company's company car policy. Only if the employee is registered as the holder in the vehicle registration document (registration certificate Part I) can he apply for the GHG premium.
GHG premium: What's new? Looking to the future
The amount of the GHG premium depends on supply and demand and is therefore subject to strong fluctuations. Over the course of 2023, the GHG premium has fallen drastically – and in all likelihood, this trend will continue in 2024.
Experts do not currently advise waiting to apply for the GHG premium in order to speculate on higher premiums. It is difficult to predict how the GHG premium will develop in the further course of the year – and whether it will possibly rise again in the autumn or the following year. It is also unclear how long the GHG premium will be in place. Theoretically, trading in emission certificates could be abolished at some point. It was similar with the environmental bonus: At the end of 2023, the sudden end of the e-car subsidy came.
If the GHG premium remains at a low level, its importance for the mobility transition, as an incentive to buy an electric vehicle, is likely to decline in the future anyway.
In the long term, the energy transition also has a significant impact on the GHG quota: Although the possible CO2 savings of an electric vehicle compared to a combustion engine increase as the share of renewable energies in Germany increases; and if the electricity mix becomes greener, premiums will also rise. However, a higher share of renewable energies, on the other hand, makes it easier for companies to meet their GHG quota, so that they are less dependent on the purchase of GHG certificates. In the long term, this is more likely to lead to a decline in demand for certificates and lower the level of GHG premiums.
Conclusion and further information: All right?
The GHG premium is a financial incentive to promote the switch to more environmentally friendly vehicles and the reduction of CO₂ emissions in the transport sector. Owners of pure electric vehicles can have their saved emissions certified and sell them to companies that have to offset their emissions due to the GHG quota. The application and sale are carried out via GHG quota brokers, who sell the certificates and pay out the premium. The amount of the GHG premium varies depending on the market price and has recently fallen sharply. It is difficult to predict how the GHG premium will develop in the future.
source : The GHG premium explains: What is it — and how do you apply for it? | mobile.de