The European Emissions Trading Scheme (ETS) is not functioning as planned. In 2011 the cost of an emission certificate was 17 euros. Today, companies pay only 3 or 4 euros per tonne of emitted CO2. In January, the German federal government stopped an auctio of allowances because the demand was not high enough. In an article, the newspaper “Süddeutsche Zeitung” criticised the system because “polluters have hardly if any incentive to invest in emissions-reducing technology.”
The price decline has far reaching implications and threatens especially the successful implementation of the 2020 German climate targets. For example, funding for the renovation of buildings to decrease their CO2 consumption, urban energy renovation and energy research and development, for example in the field of electric mobility are all supposed to be financed under the ETS-powered Energy and Climate Fund. The federal government had expected to earn 10 euros per sold certificate.
Nevertheless, not only the federal government is affected. German companies are also worried about their income from certificate sales. In an appeal to Chancellor Angela Merkel, a group of companies such as Alstom, EnBW, E.ON, Otto, Puma and Shell as well as the non-governmental organization German Watch
jointly called to protect investments made towards climate friendly technology. The “one-time removal of surplus emission allowances from the market” is absolutely necessary”, said the joint statement and added: “specifically, we ask the federal government, to approve the proposal of the European Commission to change the schedule for the auction of emissions allowances. “In addition, we ask for a more stringent annual adjustment during the issuance of new certificates.
Christoph Bals, political director of the NGO German Watch, stated: “The federal government has, thanks to the uncertainty of the economy minister not even its own position to repair the system of emission trading. All of Europe is waiting for Germany to take action… therefore, more and more companies require the federal government to take the lead.”
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