Germany ceases to allocate budget for possible EU climate target miss

In an updated draft budget for the coming years, the German government no longer allocates funds for buying emissions allocations in case the country misses its climate target in sectors not covered by the EU Emissions Trading System (ETS). The 100 million euros foreseen in the current 2020 budget have not been spent, and funds that had been earmarked for 2021 and 2022 no longer appear in the updated plans for 2021-2024. “The government's draft 2021 budget does not include funds for the purchase of emission allowances under the EU effort sharing decision,” an environment ministry spokesperson told Clean Energy Wire. “If emission allowances have to be bought for the 2013-2020 period, the 2022 budget would have to provide for this.” There is no decision for 2022, yet. Due to the coronavirus pandemic, greenhouse gas emissions this year are expected to fall substantially, meaning that Germany could reach or even surpass its targets. The environment ministry said that until now it has not purchased any allocations for past years and due to the uncertain effects of the pandemic on emissions the government is currently not in negotiations with other countries. Such talks could be resumed once the first emissions estimates for 2020 are published in March next year. Should, however, emissions fall about 10 percent from 2019 to 2020 – something that “should not be ruled out” due to the pandemic – there would be no need to buy allocations, said the ministry.

The EU Effort Sharing scheme prescribes greenhouse gas emission reduction targets in economic sectors not covered by European emissions trade (EU ETS), such as transport, buildings and agriculture, for which each member state must reach annual reduction goals. For years when emissions are lower than the allocated amount, countries can bank surpluses and use them in later years. For years where emissions are above the annual limit, states must buy allowances from other countries. This makes climate action relevant to national budgets, and potentially expensive for countries that widely miss their targets.

Compared to earlier plans for 2021, overall budget expenditures for the climate and energy fund next year are raised by 1.6 billion euros, which is largely due to the compensation payments to lignite operators under the plan to phase out coal, said the draft. “The budget which the federal government adopted today shows how seriously it takes climate action,” said environment minister Svenja Schulze.