Procurement Glossary
CO2 price: definition, application and strategic importance in Procurement
November 19, 2025
The CO2 price is a key instrument for evaluating and managing climate impact in procurement. It enables purchasing organizations to integrate emissions costs into supplier decisions and product evaluations. Find out below what the CO2 price is, which methods are used and how you can use it strategically in Procurement .
Key Facts
- CO2 price quantifies the monetary cost of greenhouse gas emissions per metric ton of CO2 equivalent
- Enables the integration of climate costs into purchasing decisions and total cost of ownership
- Varies between 10-200 euros per ton of CO2 depending on region, sector and calculation method
- Increasingly driven by regulatory requirements such as CBAM and internal sustainability targets
- Supports supplier assessment and decarbonization of the supply chain
Contents
Definition: CO2 price
The CO2 price represents the monetary valuation of carbon dioxide emissions and serves as a control instrument for climate-conscious procurement decisions.
Basics and components
A carbon price quantifies the social and economic costs of greenhouse gas emissions in euros per tonne of CO2 equivalent. It includes both direct climate damage and regulatory costs.
- Social costs of climate change (Social Cost of Carbon)
- Regulatory prices from emissions trading systems
- Internal shadow prices for corporate decisions
- Avoidance costs for emission reductions
CO2 price vs. emissions trading
While emissions trading determines market-based prices through supply and demand, internal CO2 prices can be set strategically. The Carbon Border Adjustment Mechanism creates additional price signals for imported goods.
Importance in Procurement
CO2 prices enable the integration of climate risks into procurement strategies and support the decarbonization of the supply chain. They create transparency about the true costs of emissions-intensive products and suppliers.
Methods and procedure
The implementation of CO2 prices in Procurement requires systematic approaches to evaluation, calculation and integration into procurement processes.
Pricing and valuation approaches
Various methods make it possible to determine appropriate CO2 prices for purchasing decisions. The choice depends on corporate strategy and available data.
- Market prices from emissions trading systems (EU ETS, national systems)
- Science-based shadow prices according to science-based targets
- Sector-specific benchmarks and peer comparisons
- Internal assessment based on climate targets
Integration in supplier evaluation
CO2 prices are systematically embedded in tenders and supplier analyses. This requires a link to product carbon footprint data and emissions inventories.
Data acquisition and monitoring
Successful CO2 price implementation is based on robust data. Scope 3 emissions often make up the largest share of the climate impact to be assessed in procurement.
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Key figures for controlling the CO2 price
Effective CO2 pricing strategies require systematic monitoring using suitable key figures and control parameters.
Financial performance indicators
Monetary indicators quantify the financial impact of CO2 prices on procurement costs and supplier evaluations.
- CO2 costs per procurement volume (€/€ purchase value)
- Share of CO2 costs in total cost of ownership (%)
- Average CO2 price by Categories (€/t CO2e)
- Cost savings through low-emission alternatives
Emission-related performance indicators
Climate-related KPIs measure the effectiveness of CO2 pricing initiatives on the actual reduction in emissions. Integration with supply chain carbon footprint measurements is central to this.
Supplier performance metrics
Supplier-related KPIs assess the responsiveness and improvement performance of suppliers to CO2 price signals. This supports strategic supplier development and ESG improvement plans.
Risk factors and controls for CO2 prices
The use of carbon pricing in Procurement harbors various risks that need to be addressed through appropriate control mechanisms and governance structures.
Data quality and availability
Incomplete or inaccurate emissions data can lead to incorrect CO2 price valuations. Robust due diligence processes are essential for reliable carbon cost assessments.
- Inconsistent data quality between suppliers
- Lack of transparency in complex supply chains
- Time delays for data updates
Price volatility and planning uncertainty
Fluctuating CO2 prices make long-term procurement planning and budgeting more difficult. Hedging strategies and scenario analyses can mitigate these risks.
Compliance and regulatory risks
Changing regulations can make established CO2 pricing models obsolete. Continuous monitoring of regulatory developments and flexible adjustment mechanisms are required. Compliance structures must be expanded accordingly.
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Practical example
An automobile manufacturer implements an internal CO2 price of 150 euros per ton of CO2e for supplier decisions. When choosing between two steel suppliers, the company evaluates the climate impact in addition to the basic costs: Supplier A offers steel for €800/t with 2.1 t CO2e/t steel, Supplier B for €850/t with 1.4 t CO2e/t. Taking into account the CO2 costs (€ 315 vs. € 210 per tonne of steel), this results in a total cost assessment of € 1,115 vs. € 1,060 per tonne, which makes the lower-emission supplier B economically more advantageous despite higher basic costs.
- Integration of CO2 prices in tendering procedures
- Transparent communication of evaluation criteria to suppliers
- Continuous monitoring and adjustment of internal CO2 prices
Current developments and effects
The development of CO2 prices is characterized by regulatory tightening, technological advances and changing market dynamics.
Regulatory drivers
New EU regulations are increasing the pressure on companies to take CO2 prices into account in procurement decisions. The Corporate Sustainability Reporting Directive significantly increases transparency requirements.
- Extension of EU emissions trading to new sectors
- Tightening of national CO2 taxes
- International harmonization of price mechanisms
Technological support
Artificial intelligence is revolutionizing the application of CO2 prices in Procurement through automated data analysis and forecasting models. AI-based systems enable real-time assessments of suppliers and products based on current emissions data and price signals.
Market dynamics and price volatility
CO2 prices are subject to increasing volatility due to geopolitical events and market speculation. This requires flexible procurement strategies and risk management approaches for climate-related cost risks.
Conclusion
CO2 prices are becoming an indispensable tool for climate-conscious procurement strategies. They enable the systematic integration of climate costs into purchasing decisions and promote the decarbonization of supply chains. Successful implementation requires a robust data basis, clear governance structures and continuous adaptation to regulatory developments. Companies that use carbon pricing strategically create competitive advantages through forward-looking risk assessment and sustainable supplier partnerships.
FAQ
What is a CO2 price and how is it determined?
A carbon price is the monetary valuation of greenhouse gas emissions, typically in euros per metric ton of CO2 equivalent. It can be determined by market mechanisms such as emissions trading, regulatory requirements or internal company valuations. The amount varies depending on the methodology and is between 10-200 euros per ton.
How do I integrate CO2 prices into purchasing decisions?
CO2 prices are included in the total cost of ownership by multiplying them by the product-specific emissions data. This requires reliable emissions data from suppliers and clear internal evaluation guidelines. Tenders should transparently weight both cost and emissions criteria.
What are the advantages of using CO2 prices?
CO2 prices create transparency about climate costs, promote low-emission procurement alternatives and support regulatory compliance. They enable well-founded decisions to be made between cost-effective and climate-friendly options and strengthen the negotiating position with suppliers on sustainability issues.
What are the risks of CO2 price implementation?
The main risks include incomplete emissions data, price volatility and regulatory changes. A lack of data quality can lead to incorrect assessments, while fluctuating CO2 prices affect planning certainty. Robust data validation and flexible adjustment mechanisms are therefore essential.
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