Emissions trading: Emissions reductions in Germany only minimal

Energy sector cuts emissions by 0.9 per cent – industrial emissions virtually unchanged

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The energy sector cut emissions by 0.9 per cent in 2016 - industrial emissions virtually unchanged
Source: industrieblick / Fotolia.com

The roughly 1,900 fixed installations participating in emissions trading in 2016 had emissions worth 453 million tons of carbon dioxide (CO2) equivalents, or 0.6 per cent less than in 2015. The lower emissions in the emissions trading sector thus did not offset the 3.8-per cent increase over 2015 in Germany’s transport sector emissions which the German Environment Agency (UBA) had calculated in its short-term forecast.

The emissions reductions of German installations were also far less compared to the previous year than those achieved elsewhere on average in the EU. Independent market analyses based on provisional figures released by the EU Commission have calculated that average to range between 2.4 and 2.8 per cent. “This ranks Germany well below the EU average for the tenth year in a row as concerns overall reductions since 2005”, said Maria Krautzberger, President of the German Environment Agency (UBA). The relatively marginal decline in Germany’s emissions in 2016 is due to the unchanged level of emissions in the industrial sector and a downturn in emissions from energy facilities of 0.9 per cent. This can be explained not only by robust economic development in Germany but also a few other factors: unique phenomena such as the greater share of hydropower in energy production in Spain and trends like the coal-to-gas power shift in the United Kingdom which result in a greater decline in emissions.

The strong decline in emissions across the EU further increases the structural surplus in emissions allowances in the European emissions trading system, because the annual budget established ahead of the third trading period has been higher than actual emissions every year since 2013. “This situation highlights the necessity of an ambitious reform of the EU-ETS. Strengthening the market stability reserve will play a key role in this context. Both the Council and the European Parliament have submitted proposals which take a step in the right direction”, Ms Krautzberger emphasised. In the coming months the Commission, Council and European Parliament will be negotiating the terms of the EU Emissions Trading Directive for the fourth trading period starting 2021.

Industrial emissions: Emissions from the energy-intensive industrial sector remained unchanged compared to the previous year at 123 million tons CO2 equivalents. This amount corresponds to a 27% share of Germany's emissions in the emissions trading system. The emissions from industrial installations have thus remained unchanged since the beginning of the current trading period (2013).

Energy sector emissions: Emissions from the energy supply sector went down by 0.9 per cent, to 329 million tons of CO2 equivalents. This accounts for 73 per cent of Germany's emissions being traded. A decrease in lignite and hard coal emissions of 4.5 and 4.4 million tons of CO2, respectively, contrasts sharply with a rise in natural gas emissions or 4.7 million tons of CO2. These figures confirm the predictions made in the short-term forecast for total greenhouse gas emissions in Germany which was published by UBA on 20 March 2017.

Obligation to surrender: Operators must surrender the number of emissions allowances for 2016 required to offset their actual emissions by 30 April 2017. The German Emissions Trading Authority (DEHSt) at the German Environment Agency is currently reviewing the 2016 emissions reports and is scheduled to publish the detailed assessment of results on 18 May 2017.

Emissions trading and total emissions: UBA estimates that about 50 per cent of Germany's 2016 greenhouse emissions are subject to emissions trading. The official figure of total 2016 emissions for Germany will be published in the national inventory report on 15 January 2018.

German Emissions Trading Authority (DEHSt): The German Emissions Trading Authority at the German Environment Agency is the national authority entrusted with the implementation of emissions trading in Europe for stationary installations and in the aviation sector. Its work includes allocation of emissions allowances, review of emission reports, and accounts management of the emissions trading registry. DEHSt operates auctioning and informs the public and market participants of its results. It is also in charge of the administration of the project-based mechanisms Joint Implementation and Clean Development Mechanism.

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