The German government wants to introduce payments for emissions from old fossil fuel plants above certain levels, a paper seen by the Clean Energy Wire showed. The plans are part of a Climate Action Programme aimed to ensure that the country meets its own emission targets by 2020.
Power stations that have been operating for more than 20 years will be permitted to emit a maximum of seven million tonnes CO2 per gigawatt installed capacity, the government proposal said. The paper was set to be discussed at a meeting of energy experts of the governing coalition of Social Democrats (SPD) and Christian Democrats (CDU) on Saturday. But several newspapers reported that CDU politicians cancelled the meeting, postponing it to Thursday.
The allowed emissions will be reduced further for older plants – down to 3 million tonnes for a 41-year-old station. When emitting more, operators have to pay a "climate contribution" through buying additional European Emissions Trading System (EU ETS) allowances. The value of these additional allowances should amount to 18-20 euros by 2020 for each tonne of CO2 they emit beyond the limit, the paper said. In 2014, the average price of one EU ETS allowance (for 1 tonne CO2) was 5 euros.
Power plants younger than 20 years don’t face any restrictions. Overall 90 percent of the power generation from fossil fuels would not face any additional costs, the paper said.
The paper, which news agency Reuters said was agreed by energy minister Sigmar Gabriel and Peter Altmaier, Minister in the Chancellor’s Office, also laid out a proposal for a reform of the power market, the next big step in the country’s transition to a low-carbon economy (Energiewende). The proposal suggested an overhaul of the energy only market accompanied by a so called capacity reserve and rejected the idea for a full-fledged capacity market. The paper also stressed the need for the much contested new power lines between Northern to Southern Germany.
The emission plans should force the utilities operating power stations like E.ON, RWE, Vattenfall and EnBW to reduce power generation from their most CO2-intensive units while giving them “freedom in their business management”, the document said.
First step of a coal exit?
Model calculations showed that the wholesale power price will rise by 0.2 cent per kilowatt-hour by 2020 because of the new measure, the government documents said.
“The measure is compatible with the European emissions trading system and it allows for a flexible implementation,” the paper said. By introducing the payment for excess emissions, the government wants to make sure that the power station sector contributes sufficiently to reducing Germany’s greenhouse gas emissions by 40 percent by 2020 compared to 1990.
Since the EU ETS itself – despite the current efforts to reform it – will not have any significant impact on the emissions from German power stations by 2020, “we need an additional national instrument for the meantime to reduce emissions”, the government paper said.
The power sector is responsible for 40 percent of the country’s greenhouse gas emissions and projections showed in 2014 that Germany would miss its climate target without further steps. In a Climate Action Programme, published in December 2014, the government said that the power sector would have to cut another 22 million tonnes of CO2 by 2020.
Some members of Chancellor Angela Merkel’s Christian Democrats (CDU) were quick to criticise the proposal. Germany would introduce a national climate protection instrument on top of the European emissions trading scheme, Joachim Pfeiffer, member of parliament for the CDU, told news agency Reuters. “We absolutely oppose this.”
The opposition in parliament also attacked the plans. “This price instrument suggested by the government does in no way guarantee that any coal-fired power station will go offline,” Oliver Krischer, energy expert for the Green Party, told the Clean Energy Wire.
However, Christoph Bals, political director at environmental NGO Germanwatch called the plans “an important step” to close the gap between current emission projections and the 2020 target. “This instrument targets especially the oldest and dirtiest lignite fired power stations in Germany and it contributes to the long overdue reform of the EU emissions trading system,” he said in a statement.
Some media commentators also raised the question what the step meant for the future of coal in Germany. "Gabriel ushers in the exit from coal power", was the title of the front-page article in the Süddeutsche Zeitung, the country's most widely read national quality newspaper. But utilities, the lignite-producing federal states governed by the SPD and dismayed CDU politicians remained a stumbling block for the plans, Michael Bauchmüller wrote in an opinion piece for the paper. "If Gabriel is serious with the beginning of the exit, he can expect a big battle," he wrote.