“I believe that is right. But that also means that on the other hand we need to keep a social balance,” Chancellor Merkel told a news conference in Berlin.
Reuters Newsagency reports the chancellor added: “Innovation can be incentivised through pricing.”
She said her cabinet aimed to agree a package of measures to meet its environmental targets in September.
Chancellor Merkel said experts had made a convincing case for a carbon price at the previous days’ climate cabinet meeting, though the discussions were ongoing.
Media reports the cabinet will take the decision on the measures on September 20, in time for the climate action summit to be hosted by United Nations Secretary-General António Guterres in New York.
Chancellor Merkel said Swedish teenage climate activist Greta Thunberg and the Fridays for Future protest movement had prompted the government to speed up its decision-making process and act more resolutely.
“I advocate such a price,” Chancellor Merkel said during her annual mid-year media conference, adding that “new paths” had to be tried in order to reach future climate targets.
The chancellor said in the meeting of Germany’s climate cabinet on the evening before the conference, experts again made a case for a carbon price as the most efficient tool for emissions reduction, though the discussions between relevant ministers were not yet finished.
She stressed that meeting Germany’s 2030 emissions reduction targets had a high priority for the government and that the climate cabinet would have the difficult task of laying the groundwork for more effective climate policy.
Reaching the next reduction target was not at all up for the debate in the cabinet, Chancellor Merkel said.
However, the way in which this can be achieved best and to what degree state intervention was necessary still were very contentious issues, she added.
Chancellor Merkel’s government has set out to pass a climate action law this year, which will contain the steps needed to meet the 2030 target to reduce greenhouse gas emissions by 55 per cent compared to 1990.
After initial reluctance, the chancellor has thrown her weight behind the goal of a climate-neutral economy by 2050, which is backed by most countries in the European Union.
A price on emissions would have to be accompanied by “social balance” measures, she argued.