Germany’s economy ministry wants to delete CO2 certificates from coal exit

Germany’s economy and climate ministry (BMWK) wants to take all CO₂ certificates from the EU Emissions Trading System (ETS) that will be freed up by the country’s coal exit off the market. Even after the latest tightening of the ETS at EU level, the coal exit would still leave “a residual amount” of free certificates, and “we want to have this residual amount of allowances cancelled,” a ministry spokesperson told newsletter Table.Media. NGOs and climate experts had expressed fears that the country’s coal phaseout, which the government hopes to pull forward to 2030 from the agreed 2038 phaseout date, would do nothing for the climate if the freed-up emissions certificates can be used elsewhere – a phenomenon often referred to as the “waterbed effect”.   

But a cancellation of emissions “also means that the German government will forego billions in revenue from these auctions,” writes Bernhard Pötter, who warned the initiative by Green economy and climate minister Robert Habeck is set to meet resistance from the finance ministry. “Heated debates between Habeck and Finance Minister Christian Linder are guaranteed.” According to the economy and climate ministry, pulling forward the coal exit to 2030 in the western Rhineland region will save a total of 280 million tonnes of CO₂ emissions. At today's market prices, that would translate into about 28 billion euros the federal budget would have to forego as revenue between 2030 and 2038, according to the article.

The federal government and the state government of western coal mining and heavy industry state North Rhine-Westphalia, along with energy company RWE, agreed in late 2022 to pull forward the coal phase-out in the state to 2030, eight years earlier than agreed in German coal exit law. Habeck has called for pulling forward the country’s coal exit to 2030 in the east of the country as well, but eastern German coal mining state premiers want to stick to the previous agreement.