13 Feb 2024, 13:13
Julian Wettengel

Researchers call for quicker CO2 price increase, compensation to anticipate new EU emissions trading scheme

Clean Energy Wire

An alliance of civil society groups has called on the German government to better anticipate possible carbon price jumps at the time of the introduction of the EU emissions trading scheme (EU ETS II) for buildings and transport in 2027, for example by adapting the national CO2 price and introducing support especially for low-income households. The groups commissioned a report from the Institute for Applied Ecology (Öko-Institut) and Green Budget Germany (FÖS), which warns that certificates in the EU system would initially be in high demand and expensive, because the agreed climate measures for the transport and building sectors are set to still take some time before they lead to considerable emissions reduction. The authors thus recommend raising the German fixed price faster than planned – to avoid price jumps – but in turn supporting especially low-income households.

"For the [EU] CO2 pricing to be effective and socially just, the government must create a smart comprehensive package for the transition" from the national to the EU system, said Stefanie Langkamp, policy director at NGO umbrella group Climate Alliance Germany. This should encompass a national CO2 floor price, the so-called "climate bonus" (Klimageld), and targeted support for poorer households.

The European Union decided to introduce a second emissions trading system for the transport and building sectors alongside its successful system for energy and industry, and Germany will have to align its national CO2 price scheme currently in place for these sectors (covering roughly the same emissions). The German system currently in place for transport and heating fuels is set up to switch from fixed price to a trading system that caps emissions from 2026. However, at least in the first year, there would be a price corridor of 55-65 euros per tonne of CO2, and only from 2027 the actual market price. Think tank Agora Energiewende last year also warned that the German government must quickly devise a plan on how to regulate and manage the introduction of the European Union system.

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