It is about the most important instrument of climate protection in the EU: The “Emission Trading System” – the European one – has been in effect since 2005 Emissionshandel ETS. According to this, industrial companies need “permission” to emit greenhouse gases – in the form of a certificate. These certificates are traded according to the so-called “Cap & Trade” principle: There is an upper limit (cap) that determines how many greenhouse gas emissions can be emitted in total. If you need more, you have to buy additional certificates. Last autumn, the EU decided on a new climate target: by 2040, the greenhouse gas emissions of the 27 member states should be reduced by 90 percent below the 1990 level. And although only 37 percent of this has been achieved, Brussels is apparently planning to weaken the ETS.
Initially, the certificates were issued free of charge, which gave many corporations billions in profit: they priced in the costs and passed them on to consumers. The current legal situation is that this free allocation will be significantly reduced from this year onwards; the last free certificates should be discontinued for particularly affected industrial sectors in 2034. In order to actually achieve the climate target, the auction of new certificates should end in 2039. But now plans have become known that these goals will apparently be pushed back significantly Handelsblatt first reported about it.
“The CO2“The fee system must go,” demanded Christian Kullmann, head of the specialty chemicals group Evonik, “but at least be drastically reformed” on Thursday. “The industry is sending SOS,” explained Markus Steilemann, head of the chemical industry lobby association. The industry has been putting pressure on politicians with such announcements for weeks. Especially those corporations that have not made their operations fit for the future in recent years are confronted with millions of dollars that they have to invest for the certificates. This makes their products more expensive and less attractive on the global market. Evonik boss Kullmann warned that emissions trading would endanger at least 200,000 industrial jobs in Germany alone.
However, in 2023 the EU created a compensation mechanism to protect European companies from foreign competition: the „Carbon Border Adjustment Mechanism“, kurz CBAM. According to this, importers of chemicals, metals, cement or fertilizers have had to pay a kind of duty on imports from non-EU countries since this year. The amount depends on the price of the emission certificates, which means that the same conditions of competition apply in the EU internal market as in the rest of the world.
Currently 83 euros per certificate
Emissions trading didn’t work for many years because there were far too many certificates: In addition to those issued free of charge, those that companies had acquired through the “Clean Development Mechanism” CDM also flooded the market. The Kyoto Protocol stipulated that companies that invested in climate protection in another country could credit the amount of greenhouse gases they saved there as a certificate here. In the meantime the price hovered around 3 euros. According to the Paris Protocol, such a transfer option no longer exists; since 2020, prices have risen noticeably to over 100 euros at times. A certificate is currently trading at a good 83 euros.
According to the EU’s plans, it was originally planned to start next January Emissions trading to be extended to the areas of transport and buildings. This makes fossil fuel heating or refueling more expensive. However, the Eastern European member states in particular have taken a stand against it; the start of the so-called “ETS2” was postponed last year to January 2028. The further postponements now being discussed should result in a plan that will be presented by summer: The European Parliament and the member states would then have to agree to this plan.