Government plans to grant generous carbon pollution permits to Germany’s industry under the second phase (2008-2012) of the EU’s emissions trading scheme could face rejection by the European Commission.
The German government on Wednesday (28 June) submitted a plan to the European Commission aiming to achieve further cuts in carbon dioxide emissions under the second phase of the EU’s CO2 emissions trading scheme (EU-ETS).
The plan defines individual emission ceilings for energy-intensive industrial plants and power utilities for the trading period 2008-2012. It is meant to be in line with Germany’s target to reduce CO2 emissions by 21% compared to 1990, the reference year of the Kyoto Protocol.
The German government said it plans to cut CO2 emissions by 6% compared to the period 2000-2002. But it would only mean a reduction of 0.63% compared with 2005, experts said.
If the figure is confirmed, it would mean the plan could face rejection by the European Commission. In a set of guidelines published in January, the Commission said the EU as a whole should aim for a 6% emissions reduction compared with the first trading period (2005-2007).
“We are not commenting on the plans until we have studied them in detail,” said the Commission’s environment spokesperson Barbara Helfferich. She indicated that every aspect of the plan needed to be assessed including a potential increase in the number of installations covered by the scheme.
“If more plants are covered, then it will have to be taken into account. We have to see what the precise circumstances are,” Helfferich said.
But the government also suggested leaving out of the system the potential new power plants to be built between 2008 and 2012. Those plants would be freed of CO2 reduction commitments for a period of 14 years, a move which it said is meant to encourage much-needed investments in power generation capacity.
In May, Germany handed in CO2 emissions data which showed it was left with 21 million tonnes unused allocations since the launch of the ETS in January last year. Data for the entire EU indicated that there was 44.1 million tonnes extra CO2 pollution credits in 2005, according to the Commission. The news sent carbon prices plummeting.
However, Angela Merkel’s coalition also ruled out making use of an option that allows it to auction up to 10% of permits, a solution which would have helped keeping carbon prices up. So far, only Ireland, the Netherlands, Lithuania and the UK are planning to auction part of the emission allowances, but at a level much lower than 10%.