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03 Dec 2014 | Kerstine Appunn

Question marks remain as Germany steps up efforts to cut CO2 emissions

The government approved what it claims to be the largest climate action package in the country’s history. Most observers applauded the commitment to emissions reduction goals by 2020. But environmentalists criticised the lack of a strategy to exit coal-fired power generation, while utilities warned that the big test for energy policy was still ahead with next year’s decision to reform the power market.

The cabinet waved through the hotly debated Climate Action Programme (CAP) in combination with a National Action Plan (NAPE) for Energy Efficiency and a Progress Report on the Energiewende. On several hundred pages – which the opposition called “nothing but paper” –  the plans detail measures that will cut an additional amount of CO2 emissions from the German energy, transport, agricultural and building sectors.

Known for its leading role in climate action and the Energiewende, Germany was hard-pushed to find the extra ways to reduce emissions. But without them, the country will fail to meet the self-imposed greenhouse gas reduction targets of 40 percent fewer CO2 emissions in 2020 compared to 1990.

Environment Minister Barbara Hendricks looked upbeat when she presented the results to the media in a joint press conference with fellow Social Democrat, Economy and Energy Minister Sigmar Gabriel. “Today is a good day for climate protection: Germany will reach its 40 percent reduction target,” Hendricks said. Referring to the ongoing climate conference in Lima, she added: "You can rely on Germany."

Question marks

In particular, measures boosting energy efficiency (aimed at saving 25-30 million tonnes of CO2) and cutting emissions from the power sector (22 million tonnes of CO2) should help to bridge the emissions-gap of 62-100 million tonnes of CO2 and ensure Germany reaches its climate target. Sectors such as transport and agriculture will also contribute to a total of 62-78 million additional tonnes of CO2 reduction to be achieved by 2020 (see factsheet The Climate Action Programme). But the opposition Green Party and environmentalists say these numbers don't add up.

“The real deficit amounts to over 200 million tonnes. All the measures are aimed at a downsized deficit and even that will not be fixed,” Bärbel Höhn, member of the Green Party parliamentary group said, calling the plan a “fraud.”

Consultancy Ecofys wrote in a report assessing the draft version of the programme that several of the measures, particularly in the transport and electricity sector, won’t be sufficient in achieving extra emission reductions. “It is still a step in the right direction,” Ecofys author Katja Dinges told the Clean Energy Wire. However, she added that there are several uncertainties when it comes to the reform of the European Emissions Trading system (EU ETS) or the reduction impact of energy efficiency.

Hendricks rejected criticism and stressed that informal talks with representatives of other EU member states showed that 14 countries already support Germany’s push for reform of the EU ETS, including bringing forward the transfer of excess allowances to a reserve by 2017.

Power market design

Energy minister Gabriel held back on details of the most controversial item: the 22 million tonnes of carbon emissions that must be cut by the power sector. Gabriel confirmed that there will be a law defining an emissions cap for the year 2020. Using this limit, emissions reduction requirements will be given to power plant operators based on their historic emissions levels. Operators may then be allowed to exchange them among themselves, the minister said. The bill will be drafted in 2015 and, according to Gabriel, will have to be closely linked to the new design of the power market, also due early next year. However, he also stressed that he is very much opposed to a capacity market where redundant power stations would be paid for providing a power reserve, something that has been suggested by utilities and their lobby group, the BDEW.

Despite these plans, Claudia Kemfert, head of the department of Energy, Transportation and Environment at the German Institute for Economic Research (DIW), doubted enough was being done to target emissions from coal-fired stations: "This is not the beginning of a coal exit because there are no details on how the reduction by 22 million tonnes (of CO2) will be achieved. Emissions trading alone will not provide the necessary financial incentives.” Looking ahead towards the debate about a new power market she warned: “The introduction of a capacity market at this stage could set wrong incentives and suppress the necessary price signals rather than support them."

Energy lawyer Matthias Lang cautioned against various problems with the emissions cap law approach, including the danger that utilities who are forced to shut down power stations or limit power production may retaliate and sue the government as they did when Germany initiated the nuclear phase-out. “The suggestion is still very blurry on how the government wants to force power stations to limit generation without either restricting their property or creating friction with EU law and the EU ETS if they shape a kind of national emissions schem,” Lang told the Clean Energy Wire. If different utilities were permitted to exchange their emissions reduction requirements, this could be in breach of competition law, he added.

The Association of German Chambers of Commerce and Industry warned that any climate action should come without forced shutdowns of coal power plants. "The Climate Action Programme 2020 and the National Action Plan on Energy Efficiency have to be implemented in a business-friendly way," said DIHK President Eric Schweitzer.

Focusing on energy efficiency

Sigmar Gabriel focussed on the efforts in energy efficiency that the NAPE prescribes. Some 1.2 billion euros in state funded programmes for energy-efficient housing re-fits and over 20 other measures will trigger 70 – 80 billion euros worth of private investments, Gabriel said. The NAPE was not only good for the climate but also for the national economy and everybody who would pay less in heating costs after having their houses refurbished, he added.

A plan for 2050 and Lima

Confirming that she will be travelling to the UN Climate Summit in Lima next week, Environment Minister Hendricks promised that the government would start preparing a Climate Action Programme 2050 as early as next year and present it shortly after the UN Climate Conference in Paris.

Claudia Kemfert at the DIW also believes that the German climate package will have an international impact: "It is an important step to reach the climate goals in the first place. It is important that the programme is put in place fast in order to secure Germany's role as climate action leader," Kemfert said.

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