Emissions trading rings up record revenues: More than 13 billion euros for climate protection

Emissions trading squares ambitious climate action with social compatibility and economic competitiveness

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

Germany’s revenues from auctions under the EU Emissions Trading System (EU ETS) totalled more than 6.8 billion euros in 2022, marking a significant increase over 2021 (5.3 billion euros). In contrast, revenues under the national emissions trading scheme (nETS) for the heating and transport sector fell below the previous year’s level (6.4 billion euros in 2022 vs 7.2 billion euros in 2021). Despite this contraction in the nETS, total 2022 revenues for the federal government from both systems (more than 13 billion euros) were slightly higher than the record levels of the previous year (2021: 12.5 billion euros).

"CO pricing by means of emissions trading is a crucial tool for achieving our climate goals. Every tonne of CO emitted comes with a price tag and provides significant impetus for the climate-friendly transformation of our society. It is also crucial that the revenues from CO pricing can be used to support the transformation processes in society as a whole in terms of social and economic policies. Ambitious climate action, social compatibility and economic competitiveness are not at odds with each other here, but rather are brought into harmony thanks to emissions trading. Our current proposals to introduce a climate dividend highlight this fact,” said Dirk Messner, President of the German Environment Agency (UBA).

All revenue from the EU ETS and nETS flows into the Climate and Transformation Fund (KTF). The special fund currently supports programmes such as federal funding in the building sector, the further development of electromobility including the expansion of the charging infrastructure, development of the hydrogen industry and the promotion of energy efficiency. The scrapping of the EEG surcharge is also funded from the KTF and helped to ease electricity costs last year.

EU emissions trading sees real growth in revenues

The EU ETS includes greenhouse gas emissions from power plants, large industrial installations and from inner European aviation traffic. The number of available emissions allowances is reduced every year, aiming to gradually put greater limits on emissions on the path towards climate neutrality. In 2022, for example, significantly fewer emission allowances were auctioned for Germany on the European Energy Exchange (EEX) in Leipzig than in the previous year, namely around 85 million (2021: 101 million). The price of emission allowances rose considerably at the same time. The average price of 80.32 euros in 2022 was significantly higher than in 2021 (52.50 euros). Compared to 2020 (24.61 euros), average receipts have in fact more than tripled. The highest price paid in a German auction since the introduction of the EU ETS occurred on 19 August 2022, fetching a price of 96.87 euros.

“The steep price increases are due mainly to the stepped up European reform process over the past year which aims to raise the ambitiousness of the EU ETS for the period up to 2030. Market participants have realised that policy framework is increasingly geared towards climate action. This is creating the necessary economic incentives for investment in climate-friendly technologies and production methods. The price trend of the past year can also be interpreted as market players’ vote of confidence in the capacity for reform of European climate policy,” said Jürgen Landgrebe, Head of Division “Climate Protection, Energy, German Emissions Trading Authority” at the German Environment Agency.

Absence of price increase would lead to revenue downturn in national emissions trading

Germany launched a national emissions trading scheme (nETS) for the heating and transport sectors in 2021 to complement the EU ETS. The nETS aims to ensure that climate-damaging CO emissions in these sectors are reduced at a faster rate than in the past. More than 198 million nETS certificates in 2022 sold at a fixed rate of 30 euros each on the European Energy Exchange (EEX), totalling more than 5.9 billion euros. A further nearly 18.5 million certificates were sold at the previous year's fixed price of 25 euros as part of a limited opportunity to purchase such certificates at that price, adding a further half-billion euros to proceeds. Overall, fewer certificates were sold last year than in the previous year, resulting in lower revenues despite higher fixed prices (2021: approx. 287 million certificates valued at approx. 7.2 billion euros).

“The noticeable decline of certificates sold in the nETS is unfortunately not linked to decreasing emissions in the transport and building sectors. It is due rather to the legislator’s decision to postpone by one year a CO price hike to 35 euros which was originally envisaged for 2023. As a result, certificates cost 30 euros in both 2022 and 2023, and some companies have postponed acquiring their certificates to after 2023. This means that emissions in 2022 can be offset with certificates from 2023,” explained Landgrebe.

The German Emissions Trading Authority (DEHSt) at UBA is responsible for the enforcement of national emissions trading and EU emissions trading in Germany. DEHSt has commissioned the Leipzig-based European Energy Exchange (EEX) with the sale and auctioning of emission allowances.

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