Decarbonizing Germany’s power sector: ending coal with a carbon floor price?
Setting a regional carbon floor price for power generation within the EU Emissions Trading System (ETS) would make Germany’s efforts to reduce greenhouse gas emissions more consistent and contribute to phasing out coal, Felix Matthes of the Institute for Applied Ecology writes in a paper for Institut français des relations internationals (Ifri). “At this point France, Germany, Austria, the Netherlands and other countries need to work together to introduce a harmonised floor price for power generation in the heavily interconnected Central Western European regional electricity market,” Matthes writes. Germany’s “target-driven” approach to climate policy was increasingly being challenged over its lack of progress on emission reductions, he argues. Changing views on carbon pricing currently created a window of opportunity to make it a more prominent mechanism in German and European energy policy, Matthes says, but stresses that carbon pricing is only part of the solution.
For background, read the news digest entry Five EU countries want to “examine” the option of a CO2 price.