Emissions trading 2021: record revenues in Germany exceeding 12 billion euros

Revenues promote climate action and save consumers 4.7 billion euros on price of electricity

Kraftwerk mit dampfenden KühltürmenClick to enlarge
Power plants participate in the European emissions trading system.
Source: Lianem / Fotolia

The EU Emissions Trading System (EU-ETS) generated 5.3 billion euros for Germany through auctioning in 2021, a sum double that in 2020. An additional 7.2 billion euros was generated through sales of certificates in the new national emissions trading system (nEHS), which came into effect in 2021 and targets the heat and transport sectors. Both systems thus generated about 12.5 billion euros in 2021, with proceeds flowing into the Energy and Climate Fund. The systems thus open up new scope for government support of climate action measures and are also used in part to stabilise electricity costs in Germany.

“The revenue from carbon pricing makes an important contribution to realising the energy transition, it finances climate protection projects and is also used to relieve the burden on consumers. We are seeing that climate protection and social equity can go hand in hand. This can and must also be possible with further increases in carbon pricing,” said Dirk Messner, President of the German Environment Agency (⁠UBA⁠).

Since 2005, the EU ETS has aimed to curb the greenhouse gas emissions of power plants, industrial facilities, and since 2012, it includes intra-European aviation emissions. In 2021, about 101 million emission allowances valued at more than 5.3 billion euros were auctioned for Germany on the European Energy Exchange (EEX) in Leipzig. Due to the decreasing cap on total tradable allowances in emissions trading, this means six million fewer emission allowances than in the previous year (2020: approx. 107 million). At the same time, however, revenues increased by more than two billion euros (2020: €2.66 billion), which is due to the increased average yield per allowance. The latter more than doubled in 2021 – from €24.61 in 2020 to €52.50. Since the beginning of auctioning in 2010, a 17 December auction fetched the highest price in Germany thus far (€ 82.25).

In addition to the EU ETS, Germany launched its national emissions trading system (nEHS) in 2021 for the heating and transport sectors in order to reduce climate-damaging CO₂ emissions. Until 2022, only major fuels such as petrol, diesel, heating oil, liquefied petroleum gas and natural gas are part of the nEHS. From 2023, all other fuels, including coal, will be included. The nEHS initially has a fixed price set by law until 2025. The fixed price for a nEHS certificate and thus for a tonne of CO₂ started at €25 in 2021, will gradually increase to €55 by 2025, and will transition to an auctioning process from 2026. Since sales began in October 2021, around 287 million nEHS certificates have been sold on the EEX at a fixed price of 25 euros and valued at a total of 7.2 billion euros.

All revenues from the EU ETS and the nEHS flow into the Energy and Climate Fund. The fund supports climate protection measures, including renewable energies, energy efficiency investments, national and international climate protection projects, electromobility and the further development of the National Action Plan for Energy Efficiency. For the financial year 2021, €4.7 billion from nEHS proceeds was also used from the energy and climate fund to reduce the EEG surcharge. This contribution curbed the increase in electricity prices in Germany. The relief on the EEG surcharge from the sales proceeds was 1.37 ct/kWh for 2021.

The German Emissions Trading Authority (DEHSt) at UBA is responsible for the enforcement of national emissions trading and European emissions trading in Germany. The European Energy Exchange in Leipzig is tasked with the sale of the respective allowances and nEHS certificates.

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 DEHSt  EU-ETS