Tracking the CO2 price debate in Germany
[Also read the factsheet Putting a price on emissions: What are the prospects for carbon pricing in Germany? and the article Fear of public backlash and complexity hold back German CO2 price]
Mere days ahead of the decisive meeting of Germany's climate cabinet, Chancellor Angela Merkel's Christian Democratic Union (CDU) has finally presented its very own climate concept, calling for a national CO₂ emissions trade for transport and buildings, with an upper and lower price limit.
The conservative CDU/CSU alliance has proposed setting up a national emissions trading system for transport and buildings, with an upper and lower price limit, as part of major climate action decisions planned for a government meeting on 20 September. The unpublished joint 7-page climate action concept, seen by Clean Energy Wire, contains a wide range of proposals for all sectors.
In its climate action concept, the CSU rejects a CO₂ tax in the transport and buildings sectors, instead calling for an emissions trading system with upper and lower price limits for the allowances – to be updated regularly. "Due to rising CO₂ prices, carbon intensity will become a key economic indicator in the short to medium term," the CSU writes. It proposes to use the revenues from the trading system to pay for Germany's feed-in tariffs for renewable power, thus lowering the current renewables surcharge.
In a climate action working group paper drafted by the SPD parliamentary group, seen by the Clean Energy Wire, the Social Democrats do not explicitly call for a CO2 tax – so far a point of contention with the conservatives, who largely support an emissions trading system. However, the SPD writes: "A national emissions trading system in the transport and buildings sectors could not be implemented in the short term and would cause high bureaucratic effort."
Following key regional elections in eastern German Saxony and Brandenburg, the conservative parties in Chancellor Angela Merkel's grand coalition – the Christian Democratic Union (CDU) and the Christian Social Union (CSU) – have started to intensify their work on proposals to bring Germany back on track to reaching its climate targets. The parties plan to agree a joint position ahead of final negotiations with their coalition partner, the Social Democratic Party (SPD). Internal papers from both parties show that the conservatives continue to favour a national allowance trading system over a tax to reduce CO₂ emissions in transport and buildings. CDU head Annegret Kramp-Karrenbauer said Germany had to introduce a national price first, as it could not wait for EU neighbours to agree on a European solution.
Germany should combine uniform CO2 price with tax reform – researchers
Experts at a research project on energy systems of the future recommend that Germany combines the introduction of a uniform CO2 price with a reform of existing energy taxes and levies in order to reduce the country's greenhouse gas emissions. A uniform CO2 price would place an equal burden on all energy sources and thus improve the competitiveness of climate-friendly technologies, said co-leader of the so-called ESYS research group Felix Müsgens. If the revenues from CO2 pricing were used to reform existing taxes and levies, "a double dividend for society" could be achieved. The researchers propose to reduce Germany's electricity tax to the European minimum and to significantly reduce the renewables levy. The ESYS initiative is a collaboration between the German National Academy of Sciences (Leopoldina), National Academy of Science and Engineering (acatech) and the Union of the German Academies of Sciences and Humanities.
Putting a price of 50 euros per tonne on carbon emissions would allow for a "socially balanced" climate policy in Germany, a study commissioned by the Agora Energiewende and Agora Verkehrswende* think tanks has found. "Social balance is achieved by repaying all of the earnings to citizens. Low-income households on balance will even be better off," the think tanks say.
A German business initiative called "Entrepreneurs for Future" will join the global climate strike on 20 September and call for a price on CO₂ emissions with the slogan "No exceptions, fast introduction, effective amount", reports Steffen Herrmann in Frankfurter Rundschau. In a press release, the initiative with 2,300 participants said that many businesses will close shops and offices on the day of the strike to make it possible for employees to join.
Introducing an emissions trading scheme in the sectors of transport and heating in Germany would take at least two to three years due to "long and complex implementation", shows a study by the German Institute for Applied Ecology (Öko-Institut) commissioned by the think tank Agora Energiewende*. As a result, "emissions trading in the heating and transport sector is useless as a short-term climate protection measure before 2020," says head of Agora Energiewende Patrick Graichen.
Influential German industry association BDI has published a paper on measures for CO2 pricing, recommending that the government continues to advocate a scheme that is "as global as possible" while conducting thorough analysis on its possible effects and risks. The industry association stressed that a CO2 price was not a "cure-all" and would only have an effect if consumers had realistic, more climate-friendly alternatives to choose from. The BDI said that the introduction of a national CO₂ price is "conceivable and doable", if it does not harm the international competitiveness of German businesses.
A system to trade CO₂ emission allowances, rather than a carbon tax, is the better way to steer Germany towards climate neutrality in the long run, Chancellor Angela Merkel said in a town hall meeting in the northern city of Stralsund organised by regional newspaper Ostsee-Zeitung. "In the beginning, the effect is similar, but the precision in reaching the target is better with allowances", as the exact amount available could be stipulated at any given moment, Merkel said.
There is no general recipe for a successful carbon pricing scheme, but its introduction should be accompanied by open and targeted communication, according to an analysis by Berlin-based think tank adelphi.
The head of Germany's conservative Christian Democratic Union (CDU), Annegret Kramp-Karrenbauer, wants to step up climate action through a "fundamental overhaul" of Germany's energy taxes and levies. In a joint guest commentary with party colleague Andreas Jung in Welt am Sonntag, the two politicians suggest making greenhouse gas emissions the main criterion and introducing an emissions limit for the transport and buildings sectors – without going into details – while lowering the renewables levy and power tax.
Coordinated action on climate by Germany and the Netherlands is critical for Europe, several researchers wrote ahead of a joint German-Dutch climate cabinet meeting on 22 August in an article on energypost.eu.
Finance minister Scholz promises socially just CO2 price
German finance minister Olaf Scholz has promised that a CO2 price will be shaped in a socially just manner, reports Spiegel Online. It should be ensured that “those who have little money and who cannot change their way of life from one day to the next will not be the victims," the minister said. A climate premium for citizens could guarantee this as part of an “overall solution”.
Existing CO2 prices should be taken into account - German Economic Institute (IW)
A number of different German implicit CO2 prices already exist – but are for the most part forgotten in the national debate around setting a price on CO2, according to a paper by the industry-sponsored German Economic Institute. These existing prices “should be taken into account” when Germany decides on how to put a price on CO2, write the researchers. They point to the different energy tax rates on petrol, diesel fuel, natural gas and light heating oil, which according to them could be interpreted as a price on carbon emissions.
DIHK says companies will need economic relief in return for CO2 price
If Germany decides to put a price on CO2, “companies need relief through the renewables surcharge and the electricity tax in return”, Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry (DIHK), told Frankfurter Allgemeine Zeitung. It must be possible to link a national CO2 price to the rest of Europe as Germany already has “the highest power prices in Europe”, he added. Schweitzer proposed that new policies should support infrastructure and framework for heating and fuel alternatives such as e-vehicles and hydrogen technology.
Economy minister Altmaier proposes lowering renewables surcharge and electricity tax
A CO2 price must not lead to further burdens for German consumers and industry, economy and energy minister Altmaier told Focus Online. "This can be avoided by reducing the levy for renewable energies or lowering the electricity tax, or both," he suggested. The reformed Renewable Energy Act (EEG), through its switch to auctions, would also push electricity prices to a lower level, said the minister.
Merkel backs national CO2 price
In her annual mid-year press conference, Chancellor Angela Merkel backed the introduction of a national price on CO2 emissions as part of a package to reach the country’s 2030 climate targets. “I advocate such a price,” Merkel said, adding that “new paths” had to be tried in order to reach future climate targets. She said the country's climate cabinet would take a decision about the measures on 20. September, a “decisive day” for German climate policy.
WWF Germany calls for regional CO₂ floor price in power sector to help Germany reach climate goals
Environmental organisation WWF Germany has called for an initial 25 euro European-regional CO₂ floor price in the electricity sector that would then rise to 40 euros by 2025. Such a floor price would “usefully supplement” the coal exit commission’s recommendations and guarantee higher emission reductions. WWF warns that even though the allowance prices in the European Union Emissions Trading System (ETS) have risen recently, future fluctuations are expected.
With European cooperation and an “appropriate design” of climate policy, the seemingly diverging calls for change by French yellow vests and German Fridays For Future student protesters can be reconciled, write economic advisors of both countries’ governments in a joint guest commentary in Frankfurter Allgemeine Zeitung. In a separate joint statement published in French and English, the French Conseil d’analyse économique and the German Council of Economic Experts call on the European Commission and the Member States to expand the EU Emissions Trading System (ETS) to other sectors, “because a homogeneous treatment of CO₂ emissions would be an important element for the completion of the EU Single Market.”
Economy ministry advisors call for CO₂ pricing through emissions trade in transport and buildings
The Board of Academic Advisors of the federal economy ministry has recommended introducing emissions trading systems for the transport and building sectors to meet climate targets and promote international cooperation on climate action. The advisers said introducing a national CO2 tax could be counter-productive to the latter goal, unlike trading systems, which should be integrated into the existing European Union Emissions Trading System (ETS) -- currently in place for energy industry emissions -- in five to 10 years. Other taxes and levies that (effectively) put a price on carbon emissions -- such as the renewables levy or the taxes on electricity and heating oil -- should be abolished. “The swift introduction of a single price signal is essential in view of the forthcoming structural economic change in all sectors, in order to provide households and businesses with the right long-term investment incentives,” the advisors write in their opinion. The Board is tasked with providing the Federal Minister for Economic Affairs and Energy with independent advice on all aspects of economic policy. It is currently comprised of 37 academics teaching at higher education institutions in the fields of economics and law.
German gov’t advisors call for CO2 price to revamp inefficient climate policy
The German government should establish a price for CO2 emissions in the buildings and transport sector, which is currently not covered by the EU Emissions Trading System, as a fresh start for the country’s climate policy, the government’s top economic advisors said in a special report. “The current debate offers the historic chance, to change the fragmented, expensive and inefficient German climate policy in a way, that CO2 pricing becomes the centrepiece,” said Christoph Schmidt, the chair of the German Council of Economic Experts, an independent body of five renowned economics professors that advises the government. A carbon tax would be easier and faster to establish, said the report, which Angela Merkel’s Chancellery had asked for to inform the ongoing debate about a German climate law. On the other hand, a separate new trading scheme would be easier to communicate and faster to integrate in the EU ETS later. The advisors stressed that any proceeds from a carbon pricing scheme should be handed back to citizens, either through a per-capita pay-out or a cut in the electricity tax. Energy industry welcomed the proposal and Chancellor Angela said the council’s report “encouraged” the government to use market economy-based measures to reduce CO2 emissions. The decisions were not easy, but the government wanted to decide by the end of September.
Industry and unions present joint CO₂ price position
In a broad alliance, industry associations and workers’ unions have developed joint “Guidelines for CO₂ pricing” in Germany. In a position paper, energy industry associations BDEW and VKU, the Federation of German Industries (BDI), the Association of German Chambers of Commerce and Industry (DIHK) and the German Trade Union Association (DGB) say that CO₂ pricing should be one climate action instrument among many in sectors not covered by the European Union Emissions Trading System (ETS). They reject the integration of transport and buildings in the ETS and instead come out in favour of a CO₂ price built on the existing energy taxes and levies. This would be better for planning security, social fairness and it would be more feasible politically.
Majority of Germans favour CO₂ tax – online survey
Fifty-five percent of Germans are in favour of the introduction of a CO₂ tax in Germany, according to a YouGov online survey commissioned by the business daily Handelsblatt. Thirty-nine percent of respondents are against it. Support was higher for proposals that included financial support for low and medium income households.
German economists call for emissions trading in transport and heating, then expansion of ETS
The Kiel Institute for the World Economy (IfW) has called for a coalition of willing EU countries to set up an emissions trading system for sectors not covered by the EU Emissions Trading System (ETS), such as transport and buildings. This coalition should be expanded to include other countries step by step and in the end be merged with the ETS. Such a “dual system for CO₂ pricing in Germany and Europe” is a “realistic way” to include those sectors, because it makes a “step-by-step alignment of [their] CO₂ abatement costs” possible, say the researchers. In Germany, revenues should be used to abolish the electricity tax, decrease the renewables surcharge and pay out an “energy premium” to citizens.
Energy industry association BDEW recommends socially balanced CO₂ price in transport and heating
The German Association of Energy and Water Industries (BDEW) has recommended using the revenues from a future CO₂ price in transport and heating to lower the electricity tax and raise housing benefit and other social service payments (“Hartz IV”). As a start, BDEW recommends setting the price for CO₂ emissions in transport and heating according to the relevant allowance price in the EU Emissions Trading System (ETS). BDEW’s recommendations are based on a study conducted by the Rhineland-Westphalia Institute for Economic Research (RWI).
8 July 2019
Conservative politicians have criticised coalition partner environment minister Svenja Schulze’s (SPD) call for raising taxes on transport and heating fuels. German economy minister Peter Altmaier (CDU) said the proposal would do little to protect the climate “because it burdens many without sustainably reducing CO₂ emissions,” Altmaier told Bild am Sonntag. He said it is important to save jobs and ensure that rural regions are not put at a disadvantage.
German engineers call for CO₂ price of 110 euros per tonne
The German Mechanical Engineering Industry Association (VDMA) has called for the introduction of a CO₂ price of 110 euros per tonne. VDMA commissioned a report from Green Budget Germany (FÖS), which urges a comprehensive reform of the country’s energy taxes and levies. VDMA proposes to make electricity cheaper by replacing the EEG (Renewable Energy Act) surcharge and the electricity tax with a CO₂ component. For natural gas and heating oil, the CO₂ price would replace the current energy tax, making them more expensive. The energy tax on transport fuels should be replaced by an infrastructure and CO₂ component, VDMA said.
5 July 2019
Increasing existing taxes on petrol, diesel, heating oil and natural gas is the “most practicable” way of introducing a price on CO₂ emissions in transport and heating to help Germany reach climate targets, Germany's environment minister Svenja Schulze told journalists at a press event in Berlin. However, she added that CO₂ pricing is “not the silver bullet” and must be introduced in close coordination with other climate action measures. “If we have a good climate package for the transport sector on the table, we have to regulate less with CO₂ pricing,” said Schulze. The Social Democrat (SPD) based her assessment on the findings of three reports on the effects of CO₂ pricing commissioned by her ministry she unveiled at the event.
4 July 2019
Expanding ETS to transport legally possible – Free Democrats
A unilateral integration by Germany of the transport sector in the European Union Emissions Trading System (ETS) is legally possible without a reform of the relevant EU directive, says Free Democrats’ (FDP) parliamentary group based on a legal opinion by Martin Nettesheim of the University of Tübignen. However, the European Commission has to approve. The opinion appears to contradict statements by Chancellor Angela Merkel and a paper by the environment ministry.
28 June 2019
Germany’s parties are hastening to put together proposals on how the country can reach its national and international climate targets - including concepts on CO2 pricing - as pressure from recent election results, ongoing climate protests and an early heat wave continues to mount. Germany’s environmental protection agency UBA also weighed into the debate with its own proposal for a fast start to putting a price on emissions.
27 June 2019
German Chancellor Angela Merkel has come out against putting a price on CO₂ emissions by expanding the EU Emissions Trading System (ETS) to the transport, building and agriculture sectors. “I believe that the idea that we can convince all European countries to expand the ETS system to the transport, building and agriculture sectors with the required urgency is not expedient because we need unanimous decisions for this. It can’t be done without the European Council,” Merkel told parliamentarians during a question time in the German Bundestag.
11 June 2019
Germany’s governing conservatives to propose CO2 pricing model by September
The governing conservative CDU/CSU alliance of German Chancellor Angela Merkel will present a possible model for carbon pricing in the country, Thomas Gutschker writes in the Frankfurter Allgemeine Sonntagszeitung. The CDU’s vice parliamentary group leader, Andreas Jung, said the timing would allow the conservatives’ proposal to be included in the upcoming government deliberations about Germany’s Climate Action Law. “The existing system of surcharges, taxes, support programmes and levies has to be consistently geared towards climate action,” Jung said, adding that the extension of emissions trading to the heating and transport sectors is as much a possibility for the CO2 pricing proposal as are “tax-based incentives,” Gutschke wrote.
Head of German Council of Economic Experts says chances greater than ever for introducing CO2 price
There has “never been a better time” to introduce a price on carbon dioxide emissions in Germany than today, the head of the German Council of Economic Experts (Wirtschaftsweise), Christoph M. Schmidt, says in a dpa news agency article carried by the Welt Online website. Reiterating earlier calls, the economist says carbon pricing remains the most cost-efficient measure to reduce greenhouse gas emissions.
Abolishing renewables surcharge should be first step of any energy taxes and levies reform - dena head
The head of Germany’s energy agency dena, Andreas Kuhlmann, says ending the renewable energy surcharge, which customers pay with their power bill and which amounted to about 25 billion euros in 2018, should be the first step of any reform of the system of surcharges and levies on energy in the country. “The surcharge is a drag for many business models in the energy transition” by making electricity unnecessarily expensive, Kuhlmann says in a guest commentary in the business newspaper Handelsblatt, arguing that it could be replaced by a higher direct tax on electricity and a parallel pricing of carbon emissions either through an emissions trading scheme or a minimum price per tonne of CO2.
6 June 2019
Germany has a rare window of opportunity to introduce CO₂ pricing as part of a comprehensive reform of the country’s energy taxes and levies and must urgently use it, according to economist and government advisor Andreas Löschel. To encourage the use of renewable electricity in sectors such as transport and buildings, Germany should start with a CO₂ tax, Löschel argues, adding that an expansion of the European emissions trading (ETS) to other sectors could follow at a later date as it needs some form of approval at the European level.
4 June 2019
The German government will decide whether to follow a sectoral emission reduction approach or a general pricing of carbon emissions in its bid to get on track in achieving the country’s binding 2030 climate targets, Chancellor Angela Merkel said at an event by the government’s sustainability council (RNE) in Berlin.
The German conservative party CDU has said it will work on a reform of the country’s system of taxes and levies on energy to better align fiscal measures with climate action. The leader of Chancellor Angela Merkel’s governing party, Annegret Kramp-Karrenbauer, said the CDU would come up with proposals for a reform of energy taxation but stopped short of promising that a CO2 price would be part of these reforms. “Very different ideas exist within the CDU as to what a rearrangement of the system could look like,” Kramp-Karrenbauer said after a party meeting.
29 May 2019
German Chancellor Angela Merkel’s climate cabinet has announced it will make key decisions about climate action legislation and measures in September and adopt these by the end of 2019. During its second meeting today (29 May) in Berlin, the ministers with key responsibilities for climate issues debated additional climate action measures in those economic sectors which substantially contribute to Germany’s greenhouse gas emissions, such as energy, buildings and transport, according to a press release. “As the next step, the climate cabinet will address the issue of CO₂ pricing in July on the basis of expert opinions currently being prepared.”
15 May 2019
A carbon tax would be superior to the current climate policy patchwork of subsidies and regulatory law for both environmental and economic reasons, argues Eric Heymann, analyst at Deutsche Bank in a policy brief. However, while a tax sets a price for carbon emissions, it does not set a cap, he writes. "That is why emissions trading is even superior to a carbon tax." Despite advantages of market-based in-struments, a fundamental re-orientation of German and European climate policy appeared unlikely. Instead, existing instruments will probably be adapted again and again once their negative side effects become too obvious, making climate policy less efficient than it could be and more expensive than necessary, he says.
10 May 2019
Germany's Chancellor Angela Merkel has proposed forming a coalition of the willing among European Union countries for CO₂ pricing in transport, buildings and agriculture to meet 2030 climate targets. At a meeting of EU leaders in Romania, Merkel also said she partly supported an appeal by France and other countries to boost EU climate action, but said Germany could not fully sign on, because Germany’s 2050 targets differed from the proposed net-zero objective. Environmental NGOs criticised that many EU leaders fail to recognise their responsibility to act on climate.
Regional environment ministers calls on federal government to examine CO₂ price
The conference of Germany’s regional environment ministers has called on the federal government to examine the introduction of a CO₂ price in the current legislative period. The ministers also demanded that German Chancellor Angela Merkel’s grand coalition push for the goal of climate neutrality by 2050 in the European Union.
The Bavarian Christian Social Union (CSU) – part of Chancellor Angela Merkel’s alliance of centre-right parties – is sceptical regarding the introduction of a new CO₂ tax. The party is calling instead for a reduction in existing energy taxes, such as the electricity tax, to steer Germany towards a low-carbon future.
8 May 2019
Germany's Manfred Weber and the Netherlands' Frans Timmermans – the two most likely candidates succeed Jean-Claude Juncker as European Commission President – clashed over the question whether the EU should introduce a carbon tax to protect the climate.
7 May 2019
German climate cabinet to debate CO₂ price in July
German Chancellor Angela Merkel’s climate cabinet, a round of ministers relevant for Germany’s climate policy, will use a meeting on 17 July to debate CO₂ pricing, said a spokesperson of the environment ministry during a regular government press briefing. Environment minister Svenja Schulze plans to present her own proposal of a CO₂ price concept ahead of the parliamentary summer break, the spokesperson added. After much delay, German ministers will present their proposals for sector-specific climate action measures at the upcoming meeting of the climate cabinet, planned for 29 May, the spokesperson said.
Expanding the European Union emissions trading system (EU ETS) to transport and buildings as an instrument to reach climate goals would be an “ideal solution” in principle, but the necessary reform would be “very difficult” to enact in the European reality, write Ottmar Edenhofer and Nicolas Koch of the Mercator Research Institute on Global Commons and Climate Change (MCC) in a guest article in Die Welt. “Such institutional changes at EU level cannot be expected at present,” they note, and instead call for a national overhaul of Germany’s energy taxes and levies. “Otherwise, the enormous investments required for sustainable mobility will not get off the ground.”
6 May 2019
Merkel’s CDU struggles to find position on CO2 price
Comments by several politicians from German Chancellor Angela Merkel’s conservative CDU party over the weekend indicate dissent over how best to put a price on carbon emissions. Party head Annegret Kramp-Karrenbauer called for a smarter solution than simply raising taxes. “I’m convinced there are more intelligent solutions than simply raising a tax or introducing a new one,” she said at a regional party conference in Saxony-Anhalt. “The term CO₂ tax simply means an additional burden on fuels, diesel, petrol heating oil and gas.” This particularly impacts low-income households that depend on their cars to get to work, she added.
Some media commentators took her remarks as a clear rejection of a CO₂ tax, which prompted several of her party colleagues to call for an open debate, among them Armin Laschet, state premier of North Rhine-Westphalia.
In a radio interview with Deutschlandfunk, Kramp-Karrenbauer on Monday qualified her statement from the weekend. “We only said we wouldn’t make a CO₂ tax the first point of discussion,” she said, adding that her party prefers an emission allowance trade system. “The steering effect, the leverage effect, is much better when it comes to allowance trading, when it comes to emissions trading. This is what we are now concentrating on in the discussion,” Kramp-Karrenbauer said.
“We will not protect the climate and reach targets without the measures being felt at the end of the day – both in the economy and by the end consumer,” she added.
3 May 2019
A large majority of Germans (81%) see a great need for action to protect the climate and say that climate change cannot be stopped without restrictions on people’s lives, according to a representative survey conducted by pollster infratest dimap and commissioned by public broadcaster ARD. However, 62 percent of respondents said they are against the introduction of a CO₂ tax.
Germany’s economy and energy minister Peter Altmaier is sceptical of the idea of introducing a tax on CO₂, he said on Maybrit Illner, a political television talk show by public broadcaster ZDF. “As far as the CO₂ tax is concerned, I say: I am not convinced of it, and I also believe that it would be wrong to rush a decision." While the federal government is currently discussing “all possibilities,” the disadvantages outweigh the positive effects of such a tax, he said, referring to the yellow vests protests in France. “There will be winners and losers. […] In the end, we must not put a heavier burden on either the economy or the people,” he said, adding that it would require a “huge bureaucratic effort” to introduce a CO₂ price in a socially fair way – one that does not overburden low-income households, especially those in the countryside. The minister called emissions trading the most efficient solution from an economic perspective. Altmaier also said Germany must decrease its levy to support renewables expansion, and abolish the electricity tax.
30 April 2019
Germany’s main conservative party (CDU) will present its own concept for a CO2 pricing scheme to reach the country’s climate targets in a few weeks - but not before the European elections, the party’s general secretary Paul Ziemiak said after a party meeting. “We want market instruments to reduce emissions,” Ziemiak said, according to a report by dpa carried by Focus Online. It would be wrong to simply raise the price for petrol and the consumer shouldn’t bear the burden alone, he said.
Carsten Linnemann, of the CDU’s business-friendly wing, said that a national CO2 price would put an additional burden on companies and people, while its climate benefits were doubtable.
CDU state premier Armin Laschet of North Rhine-Westphalia said that he didn’t believe a CO2 price would be implemented within the current legislative period, i.e. by 2021.
29 April 2019
More and more politicians from German Chancellor Angela Merkel’s grand coalition are showing openness to the idea of introducing a price on CO₂ and have entered a debate about its possible form and details, writes Konrad Schuller in Frankfurter Allgemeine Sonntagszeitung. While economy minister Peter Altmaier had long insisted the concept was not on the government’s agenda for this legislative period, a source said his ministry “expects that CO₂ pricing will be introduced in some form or other”, writes Schuller. Several Conservatives from Merkel’s CDU and its CSU sister party have proposed setting up emissions trading for the transport and buildings sectors instead of a CO₂ tax, writes Schuller.
However, current EU legislation stands in the way of extending the European Union’s Emissions Trading System (ETS) to other sectors, Jochen Flasbarth, state secretary in the environment ministry, told Tagesspiegel in a separate article. The relevant EU directive would have to be amended, which would be very complicated politically, said Flasbarth.
A majority of companies from the energy efficiency industry are in favour of a CO₂ price in the buildings sector, said the German Industry Initiative for Energy Efficiency (DENEFF) in a press release. However, the government has to make sure such a price will actually help steer investment decisions and that it is flanked by other climate action measures.
26 April 2019
Germany’s liberal, pro-business Free Democratic Party (FDP) said it rejects “national solo-runs like a CO₂ tax”, writes Daniel Brössler in the Süddeutsche Zeitung. Instead, the main instrument should be Europe’s Emissions Trading System (EU ETS), which should be expanded to the transport and buildings sectors, the party declared ahead of its party conference. The FDP leadership opposes sector-specific CO₂ targets as outlined in the government’s Climate Action Plan 2050. “Under no circumstances should such goals be enshrined in law, or enforceable in court,” it writes. Environment minister Svenja Schulze aims to do just that with her draft Climate Action Law.
25 April 2019
As new warnings of drought show that "the climate crisis is intensifying", the German government must implement effective climate policies, and fast, Annalena Baerbock, co-head of the opposition Green Party says in an article by Cerstin Gammelin for Süddeutsche Zeitung. A carbon tax is not enough, Baerbock argues. “We need a mix of instruments, strong regulation and, most of all, a coal exit law,” she told the paper, adding that a carbon tax would have to price a tonne of CO2 at at least 40 euros. This would increase the cost of a car journey from Berlin to Munich by 3.50 euros. Revenue from a CO2 tax should go back to consumers in the from of “energy money” which would benefit lower-income households with smaller carbon footprints most.
23 April 2019
The debate over a price on CO₂ emissions gathered pace over the Easter break, after Chancellor Angela Merkel said her new “climate cabinet” would discuss the idea over the coming months.
Environment Minister Svenja Schulze (SPD) – who has been calling for a debate over CO₂ pricing almost since she took office over a year ago – told weekly news magazine Spiegel she will work out a proposal by summer that will not burden low-income households. “We want to reimburse the people with the money from CO₂ revenues, taking the burden off medium and low-income households,” Schulze said. “Those with a higher income, or big cars or houses will carry a greater burden because they can afford it.” The minister did not suggest a definite price, but mentioned 20 euros per tonne of CO₂, as proposed by experts, as a first step.
In a guest commentary for Tagesspiegel Background, former Economy and Energy Minister Sigmar Gabriel (SPD) said 20 euros would be a “low-threshold opening offer” but for Germany to reach its 2030 climate targets, it would need to rise to 200 euros per tonne. He argues that a CO₂ tax would have “significant advantages compared to emissions trading”. Introducing a tax would be much faster than reforming the EU Emissions Trading System (ETS), Gabriel writes. He says the revenue from such a tax should be paid out to citizens per capita, “the same amount for everyone” meaning that those on lower incomes who emit less CO2 receive back a higher proportion of the tax they pay or even more. Companies covered by the ETS would be exempt from the tax, Gabriel writes.
Wolfgang Schäuble (CDU), president of the German parliament and former finance minister, told the Neue Osnabrücker Zeitung it would be better to reach an agreement at a European level. “Making [CO₂] allowances more expansive or introducing a tax, is the same general idea and should be examined by the responsible politicians,” Schäuble said. He called for decisions on climate action to be made quickly, saying “we cannot afford ten more years of discussions.”
16 April 2019
By the end of 2019, the German government will decide whether to introduce CO₂ pricing to reach its 2030 climate targets, Chancellor Angela Merkel said in her weekly video podcast. Germany must make “tremendous efforts” to reach its 2030 target of reducing greenhouse gas emissions by at least 55 percent below 1990 levels, the chancellor said. She added that her government’s move to set up a “climate cabinet” was a measure of the importance of climate protection. “Our goal is to have the legal framework in place by the end of the year to enable us to achieve the 2030 climate targets,” Merkel said, referring to her government’s planned “climate action law.” She said the government would decide on measures to reduce emissions from all relevant sectors – energy, buildings, transport and agriculture – but would debate “whether we will save CO₂ by sector, or whether we will focus more on general CO₂ pricing” over the coming months, and make a decision before the year is out.
A spokesperson for the environment ministry said a CO₂ price should not be seen as an alternative to specific climate action measures in each economic sector. “We don’t see it as an alternative. […] We see it as one part of a necessary programme of measures,” the spokesperson told journalists at a regular government press briefing.
11 April 2019
Germany considers CO2 price to reach climate targets- Merkel
German Chancellor Angela Merkel (CDU) has put carbon pricing on the government’s agenda as a possible measure to reduce greenhouse gas emissions enough to meet 2030 climate targets. The government’s new ‘climate cabinet’ – a round of ministers with key responsibilities on climate issues – will look at recent expert opinions on CO2 pricing schemes, Merkel said in a question and answers session in parliament. With a wealth of research and advice available on carbon pricing, it would be “ignorant if we did not include the latest reports in our considerations”, Merkel said.
10 April 2019
Germany’s climate cabinet ready to discuss introduction of carbon price
Germany's so-called climate cabinet - a round of ministers with key responsibilities touching climate issues - has decided to discuss options for a carbon price at its first meeting in Berlin today. Environment minister Svenja Schulze said the talks had been "very constructive" and confirmed that the government will decide on binding climate legislation for all sectors this year. Young environmentalists called on the climate cabinet to speed up emissions reduction efforts, but the government says that implementation takes time.
09 April 2019
German finance minister lays out vision for climate policies including changes to taxes, levies
Ahead of tomorrow’s first meeting of the so-called climate cabinet, German finance minister Olaf Scholz has launched his vision for Germany’s energy transition. In his “Energy Concept 2038”, a four-page paper seen by Frankfurter Allgemeine Zeitung (FAZ), Scholz calls for more commitment for climate action within the government. “We especially have to focus on the expansion of the energy supply and the grid,” FAZ correpsondent Andreas Mihm quotes Scholz’s paper. Scholz backs the proposal for a climate action law by fellow SPD minister Svenja Schulze, saying that her draft is setting the standards to be followed. He also warns that more CO2 has to be saved in the building and transport sectors, stressing that “two decades of private and public investment in cross-sector transformation of the energy and mobility system” were required. To this end, Scholz suggests a balanced reform of the taxes and levies on electricity so as to ensure an efficient sector coupling and development of power-to-x technologies – without, however, mentioning a price on CO2, Mihm writes.
19 March 2019
German environment minister Svenja Schulze has renewed her call for a price on CO2 emissions, arguing it would be one of the most efficient ways to reduce the transport and buildings sectors’ carbon footprint, Nora Marie Zaremba writes in the Tagesspiegel newspaper. At the Global Solutions Summit in Berlin, Schulze said a carbon price in Germany would bring the country in line with a growing number of states which consider similar pricing schemes to comply with emissions reduction targets, arguing that "international coordination on CO2 pricing can bring us economic, ecological and political advantages” and can help avoid a scenario where emissions saved in one country subsequently occur in another. The minister said a carbon price would not be meant to generate additional income for the state as the earnings generated would ultimately be returned to the public.
27 February 2019
Lack of CO2 price is killing energy innovation – German government advisors
An expert panel advising the German government has called for a price on CO2 to spur the development of new technologies that are key for the energy transition. “Innovations are driven into the ground without a CO2 price signal,” said Dietmar Harhoff of the Max Planck Institute for Innovation and Competition, who chairs the government’s Commission of Experts for Research and Innovation. The panel also emphasized the key role start-ups play in fostering innovation, but warned that many young companies are starved of capital.
25 February 2019
Kay Scheller, president of Germany’s Court of Auditors (Bundesrechnungshof), says the government should “seriously consider introducing a CO2 price” to meet the country’s emissions reduction goals. “Those who have to pay for pollution have an incentive to reduce it,” Scheller said in an interview with Welt Online. At the same time, the government should examine whether existing subsidies, fees and levies are still fit for purpose, he said, referring to lower taxes on diesel compared to petrol, the exemption for certain companies from power and energy taxes, and the buyer’s premium for e-cars, which the government recently extended despite low interest from customers. “I don’t want to advocate any measure that simply increases taxes, but rather call for a thorough trawl through the system of fees and levies,” Scheller said. “Many taxes and regulations that only benefit particular interest groups could be removed.”
21 February 2019
The vast majority (90%) of Germans are supportive of the country's energy transition. However, more and more are losing faith in the government’s ability to pursue this landmark project in a socially just way, a new survey finds. While most Germans are open to changes like CO2 pricing measures, electric mobility and renewables, they don’t support such measures if they perceive them to affect some groups of society more than others, the researchers found. A majority of Germans (54%) said they are in support of pricing CO2 to reduce greenhouse gas emissions. However, if such a pricing scheme would make driving, flying and heating homes more expensive, 46 percent said they would only find it acceptable if some form of compensation was offered.
15 February 2019
Germany will not get a price on carbon emissions during the current legislative period, new energy state secretary Andreas Feicht said at the annual new year’s reception of the renewables association BEE. While the current complex system of energy fees, taxes and surcharges is hindering innovations necessary to drive the energy transition forward, the government will not pass any legislation and will only study concepts and proposals, Feicht said to the audible disappointment of the around 1,000 managers from the renewables sector.
10 January 2019
The new Franco-German treaty (Treaty of Aachen) that was approved by Germany’s government and will be signed on 22 January does not mention a new carbon price initiative despite calls by five political parties in parliament to do so, reports the energy news service Tagesspiegel Background. The Green Party’s climate spokesperson, Lisa Badum, said this was “more than sad,” given that “we would have needed at least a clear commitment to an immediate transformation to a greenhouse gas-neutral economy.” Badum suggested the German government is to blame for the omission given that “it is well known that President Macron is more than open to the subject.”
12 December 2018
An international carbon market is nowhere on the horizon. But for Germany, the topic is nevertheless an interesting one, energy politician and MP in the federal parliament Lukas Köhler from the market-liberal, business-friendly Free democratic Party (FDP), tells Clean Energy Wire CLEW. Caught between the yellow-vest protests in France and upcoming European elections on the one side and the pressure to cut emissions from the transport sector in particular on the other, the idea of expanding Germany’s CO2 price to more sectors will nevertheless not go away again, he says.
03 December 2018
Fear of public backlash and complexity hold back German CO2 price
Politicians across party lines, environmental and industry groups and researchers alike are in favour of a price on carbon emissions in all sectors. There is debate on details such as the pros and cons of a carbon tax versus a trading scheme, but all agree that Germany ultimately needs some form of a CO2 price if it wants to succeed with its energy transition. However, politicians still shy away from introducing what tabloids have already dubbed “yet another tax hammer” for fear of angering voters, and protests against fuel prices in France have made them even less courageous.
12 November 2018
German env minister plans CO₂ price concept to boost climate action
Germany's environment minister Svenja Schulze continued her push for a price on CO2 emissions, announcing plans to team up with fellow Social Democrat Olaf Scholz's finance ministry in order to prepare a concept in line with the German tax system. Schulze acknowledged that the idea had so far not gained support from the conservative coalition partners, chancellor Angela Merkel's CDU/CSU alliance. In her keynote speech about her priorities as minister, Schulze voiced optimism that the coal commission was on track to find a pathway to end coal-fired power generation in Germany. The finance ministry said there are no considerations to introduce a CO₂ tax or a new CO₂ price.
9 November 2018
Environment minister Svenja Schulze’s proposal to introduce a CO2 price could make petrol and heating oil even more expensive, write Fritz Esser, Kai Weise, Karina Mössbauer and Larissa Krüger in mass-daily Bild. “As if petrol and heating oil didn’t have a HIGH price already (…) but it’s also a fact that missing EU climate targets will also become really expensive in two years’ time at the latest.” From 2020 onwards, Germany might have to pay billions if emissions don’t fall rapidly enough, says the article entitled “SPD minister plans special tax on petrol and heating oil”.
23 April 2018
Germany’s new environment minister, Svenja Schulze, has indicated support for a national price on carbon emissions. “I find the idea very plausible,” the Social Democrat told the daily energy and climate newsletter Tagesspiegel Background. She said that a carbon price model needed to be “socially innovative” to ease the burden on poorer households. Schulze also said that, in her view, hardware retrofits for older diesel cars were “the only realistic measure to avoid driving bans” in several German cities struggling to meet current emissions limits.