At the start of the year, the German government quietly launched a novel system of carbon pricing that could revolutionise who pays for the cost of polluting in Europe. Since January, the EU’s largest economy has introduced a de facto tax of €25 per tonne of carbon on petrol, diesel, heating oil and gas to ramp up the cost of dirty energy and incentivise greener ways of living. It means millions of Germans will be paying more at the petrol pumps and in their heating bills.

Germany’s experiment, known as the National Emissions Trading Scheme, is enlisting consumers to help the country meet its aggressive emissions reduction targets.

The German carbon pricing model may soon go Europe-wide. Brussels is using it as a blueprint for its plans to extend the emissions trading scheme — its carbon pricing market — to swaths of the economy this summer as part of its goal of becoming the world’s first net zero emissions continent by 2050.

A Mercedes production line in Germany. Europe’s largest economy has introduced a de facto tax of

€25 per tonne of carbon on petrol, diesel and other fossil fuels O Michaela HandrekRehle/Bloomberg

Climate scientists and economists largely agree that putting a prohibitively high price on C02 — using a market-driven system or more crude carbon taxes — is an indispensable way to encourage  companies into switching to greener ways of living.