The German Cabinet’s new target provides the legal basis for the second emissions trading period. The legislation enacting it is expected to enter into force some time this year and will not be subject to Bundesrat approval.
The aim of the act is to correct the mistakes encountered in the first emissions trading period (2000 – 2006). In efforts to achieve greater emission reductions in the second trading period, fewer emissions allowances will be issued and most of the exceptions now in place will be withdrawn.
Climate change mitigation tops the German government’s agenda, said Environment Minister Sigmar Gabriel after the Cabinet meeting. "This is why we have agreed far more ambitious targets for the next emissions trading period than those we had in the first.”
Minister Gabriel added that the new targets will ensure a 21 percent reduction in greenhouse gas emissions during the period 2008 to 2012 (compared with the base year 1990).
Emissions trading: Market incentive for climate change mitigation
The underlying principle of the emissions trading scheme is for EU Member States to use national allocation plans to allocate emissions allowances to participating industrial facilities. If they achieve lower greenhouse gas emissions than allowed, operators may sell their excess allowances to others who have exceeded their own allowances.
Businesses may only emit more carbon dioxide than their allocated allowance if they have purchased the necessary allowance permits.
Emissions trading is based on the emissions targets agreed by each Member State. The European Union launched the first emissions trading phase in January 2005.
The German Emissions Trading Authority (DEHSt) – Germany’s competent authority for emissions trading – is an arm of the Federal Environmental Agency (UBA).
New emissions standards to cut CO2 emissions
Energy supply facilities receive a standard allowance according to a prescribed emissions standard (known as the benchmark). The more efficient the facility, the closer the allowance to actual requirements.
Less efficient and ageing facilities receive correspondingly fewer emissions allowances than they need. Power stations wanting to emit more greenhouse gases than allowed must either participate in emissions trading or reduce their emissions.
Businesses may also reduce their CO2 emissions by purchasing certified emission reductions (CERs) and so earn additional revenue from their climate change mitigation activities.
In this way, the German government provides businesses with an incentive to modernise energy supply and to replace emissions-intensive and older facilities.
No preferential treatment for lignite
Gas and coal harm the climate to different extents, calling for the setting of two different thresholds. In the case of coal and lignite-fired power stations, the two fuels are treated as one.
Coal-fired power stations have longer operating hours than others and usually run between 20 and 24 hours a day. They are also responsible for base-load supply, meaning they meet the main energy supply demand. This is the basis for authorising their longer operating hours.
Under the Climate Change Convention’s Kyoto Protocol signed in 1997, the industrialised nations agreed to reduce emissions of greenhouse gases by at least five percent by 2012 compared with the base year 1990. The EU agreed to an average eight percent, while Germany committed to a 21 percent target.
