German NGO alliance urges government to resist proposals to weaken EU emissions trading
Clean Energy Wire
Eight German environmental organisations have urged the government to push back against the existing European Commission proposal to loosen the EU’s carbon market for power and industry, warning that the changes would put the bloc’s 2040 climate target at risk. The proposed flexibilities would create a surplus of emission allowances, so that power generation and industry would fail to deliver their share of the 2040 climate target, the groups wrote in an open letter to chancellor Friedrich Merz, economy minister Katherina Reiche and environment minister Carsten Schneider.
The EU Emissions Trading System 1 (EU ETS 1) is a central pillar of European climate policy and a "success story" because it has contributed to lowering emissions mainly in electricity generation, wrote the signatories, who included environmental NGO umbrella groups DNR and Klima-Allianz, as well as individual organisations such as WWF, Germanwatch, Nabu, and BUND. “We therefore view the proposals for reforming emissions trading and the resulting threat to the achievement of climate targets with great concern,” the letter said.
The European Union has started to overhaul its climate and energy rules in line with its new 2040 climate target of cutting net greenhouse gas emissions by 90 percent compared with 1990. The reform of the ETS is at the centre of these efforts, and is one of the most important EU climate policy decision of the decade.
In response to calls from some member states, including Germany, and industry for a relaxation of the rules, the Commission unveiled its reform proposals in July. At their core is a slower reduction of the emissions cap after 2030, alongside new “flexibilities” such as counting carbon removals and international carbon credits, more free allowances for industry, and changes to the market stability reserve, which manages the number of allowances in circulation. The German government welcomed the proposals. Environment minister Schneider praised the additional flexibilities for industry, saying that “not every industry can move towards climate neutrality at the same pace.”
The NGOs viewed the flexibilities much more critical. “Relief and flexibility are right. But they must not throw the system off balance,” said Jörg-Andreas Krüger, head of NABU. “Each individual relief measure may make sense on its own. Taken together, however, they could significantly weaken the reduction path of emissions trading and its steering effect.”
The coming weeks will bring a series of milestones in negotiations among member state governments and the European Parliament. EU environment ministers will discuss the ETS review on 12 October, followed by a summit of EU leaders on 15–16 October. Negotiations are complicated by major national elections in key member states like France, Poland, Italy, and Spain where parties critical of the EU and ambitious climate and energy transition policy increase the pressure on incumbent governments.
“Calculations suggest that the proposed flexibilities (additional allowance sales for negative emissions, weakening of the market stability reserve) will lead to a surplus of allowances, meaning that, with the resulting emissions, the contribution of the ETS1 sectors towards achieving the EU climate target by 2040 would fall short,” the organisations warned.
They said the planned use of foreign emission reductions and negative emissions represented “a risky gamble on uncertain reduction and removal capacities” that would provide disproportionate relief compared with other sectors, such as agricultural and buildings.
Missing the targets in power and industry would increase financial pressure on many countries and citizens, because the switch to electric cars and climate-friendly heating would then have to happen faster, the groups warned. They called on the government to push for an emissions cap in line with the 2040 target, keeping the current reduction path until at least 2035 and without counting international credits or negative emissions.
In contrast to the NGOs, an alliance of German industry groups warned earlier this month that the Commission’s reform proposals did not go far enough. In an open letter also addressed to the government, they took particular issue with the plan to link the allocation of additional free allowances to sustainable investment obligations.