Industry calls for better CO2 price protection measures against competitive disadvantages

Sectors of German industry are struggling with rising carbon prices and demanding help from the government, which has made CO2 pricing a key part of its climate protection strategy. While many political leaders want to raise the price of CO2 as quickly as possible, its price is already causing problems for many industries, Klaus Stratmann writes in financial daily Handelsblatt. The CO2 price of 25 euros per tonne has been in force in the transport and building sectors since the beginning of the year. While the federal government promised companies in the affected sectors protection against double burdens and compensation for disadvantages in international competition (so-called carbon leakage protection), industry associations and lobby groups now accuse the government of not honouring its commitments, Stratmann adds. Carbon prices are regulated in Germany’s Fuel Emissions Trading Act (BEHG), which contains several statutory measures to protect various industries. While some of these measures have been implemented, industry representatives argue that the BEHG’s carbon leakage regulation needs considerable improvement. The federal cabinet passed the ordinance in March, which is now making its way through parliament. Germany’s metal industry association, the Wirtschaftsvereinigung Metalle (WVM), has complained that the draft regulation only provides the illusion of effective carbon leakage protection. Some energy-intensive sectors largely made up of medium-sized companies and facing international competition would not receive any protection, according to the WVM. In a hearing on Monday with the Bundestag’s committee on the environment, the Association of German Chambers of Commerce and Industry (DIHK) called for a rapid expansion of the carbon leakage list and a reduction of bureaucratic hurdles. The relief regulations are hardly manageable for energy-intensive SMEs in their intended form and are not suitable for reducing the disadvantages they face compared to rivals in the EU, said DIHK expert Jakob Flechtner.