Germany faces costly EU carbon target miss for lagging reductions in transport and buildings – UBA
Clean Energy Wire
[CLARIFICATION: Germany exceeded the emissions cap in the national carbon pricing system by 17 million tonnes of CO2. This does not mean it overshot national climate targets laid down in the country's climate law by that amount.]
The transport and buildings sectors in Germany both significantly missed their 2024 emissions reduction targets, making it increasingly likely that the country will have to purchase emission allocations from other EU member states for the overshoot. An analysis by the Germany Emissions Trading Authority (DEHSt) at the Federal Environment Agency (UBA) found that the two sectors emitted nearly 295 million tonnes of CO2 together, around 17 million tonnes more than the cap in the national carbon pricing system. This is a significant increase compared to the first three years of the system, from 2021 to 2023, during which the aggregate cap overshoot was 3 million tonnes of CO2. Exceeding the cap has no immediate consequences, but it reflects the lagging progress in the transport and building sectors, which could lead to Germany missing EU climate targets.
Both transport and buildings are covered by the national emissions trading system, but not yet under the EU Emissions Trading System. The EU Effort Sharing Scheme (ESR), however, prescribes annual greenhouse gas emission budgets for all non-ETS sectors combined. Under the ESR, member states that miss reduction targets must purchase emissions allocations from other EU members that meet their quotas.
The DEHSt projections show that Germany's ESR deficit - the gap between upper limits on annual emissions under the ESR and actual emissions - will continue to grow in the coming years, meaning that the country is increasingly likely to miss the 2030 ESR target. “To avoid compensation payments to other EU states, effective emission reduction measures in the buildings and transport sectors are urgently required,” DEHSt concluded.
The national emissions trading system for transport and buildings emissions was introduced in 2021 to cover sectors not yet included in the European Emissions Trading System (ETS). Proceeds from the allowances which put a price on greenhouse gas emissions in the transport and building sectors are channelled to Germany’s Climate and Transformation Fund (KTF) and amounted to around 13 billion euros in 2024. The price for emitting one tonne currently stands at 55 euros and will rise to up to 65 euros in 2026.
Germany’s environment minister Carsten Schneider plans to present a revised Climate Action Programme that in particular addresses the lagging transport and buildings sectors before the end of the year.
