EU must stick to expanded emissions trading, curb price jumps – German state sec
Clean Energy Wire / Tagesspiegel Background
Expanding the European emissions trading system (ETS 2) to the transport and heating sectors across the EU must not be put into question and requires determined political action to cushion the social impact of rising prices, Germany’s state secretary in the environment ministry, Jochen Flasbarth, has warned.
“The ETS2 is under massive political pressure,” Flasbarth said in an interview with energy policy newsletter Tagesspiegel Background, explaining that the mechanism slated for introduction in 2027 would raise costs for heating and transport fuel for all citizens at once. “The CO2 price in Paris will be the same as in eastern Romania, meaning it lands on vastly different economic and social conditions,” Flasbarth said.
The state secretary from the Social Democrats (SPD) added that Germany together with other EU countries would continue to “push for introducing mechanisms into the ETS2 that further dampen price jumps down and up,” while upholding the market signal. An environment ministry spokesperson told Clean Energy Wire that the necessary reforms would not require changes to the ETS directive itself, but rather amend rules on auctions and the Market Stability Reserve.
The EU has decided to expand its emissions trading system, one of its key climate policy instruments, to push CO2 reduction in the transport and building sectors. The new ETS 2 is set to take full effect in 2027, but there is political pressure in many countries to weaken, postpone, or prevent the system’s introduction. Abolishing the policy likely would be pricier for public budgets, as states would have to rely on costly support mechanisms – and unpopular direct regulation – to ensure decarbonisation is in line with the EU climate targets, Flasbarth told Tagesspiegel Background.
The state secretary also said that his government expected the European Commission to demand additional climate action from Germany by autumn. Projections show the country off track to reaching its emissions reduction targets until 2030 under the Effort Sharing regulation, which covers sectors like transport and buildings. The Commission will present a report assessing the EU’s climate progress by the end of October, based on which it would then demand a “corrective action plan” the German government must deliver on within three months.
EU climate commissioner Wopke Hoekstra already in November 2024 informed the German climate ministry that the Commission would "probably have to ask the German government to submit a corrective action plan in 2025 and at the same time called for additional German climate protection efforts," the ministry spokesperson said.
In its coalition agreement, the government has promised to present a comprehensive climate action programme, which will contain policies and measures to ensure that Germany reaches its targets. The coalition agreement had confirmed the legal target for the country to become climate neutral by 2045. The goal also served to justify the massive debt Germany plans to take on to finance its special fund for infrastructure climate neutrality that was adopted by parliament with a two-thirds majority, Flasbarth said. “You cannot ask for more climate action support,” the state secretary told Tagesspiegel.
