As Brussels continues talks on an amendment to the EU’s Emission Trading Scheme (ETS) directive, Germany is pushing for a minimum price of 60 euros per tonne of carbon dioxide, claiming that if the EU does not act, it will do so through national measures, reported Euractiv.
The price of EU allowances skyrocketed in 2021, prompting outrage in countries such as Poland, Hungary, and Spain, which blamed the price increase for raising electricity prices. Among these countries, Poland is calling for “a profound reform of the ETS system, which will take into account the current situation in the energy market."
The Polish Prime Minister Mateusz Morawiecki even viewed the surge as “speculative bubble,” a stance shared by Spain, Hungary, and other Eastern European countries concerned about public backlash in the face of growing costs.
On the other hand, the German government intends to keep prices above a certain level to encourage private investment in low-carbon technologies. Patrick Graichen, Germany’s climate state secretary, stated during a December meeting of EU environment ministers that the country favor strengthening the ETS system, including a minimum carbon price across Europe.
A price of roughly 60 euros per tonne of carbon dioxide appears to the German government as an appropriate balance between ambitious climate action and social acceptance. The new German administration made its position on this quite plain shortly after taking office last year.
The Ministry for Economic Affairs and Climate Action has now confirmed Germany’s continuous support for ambitious reform, including a minimum price for EU emission allowances. “If the European Union does not agree on a minimum price,” the ministry added, “the German government will decide on national measures to ensure that the carbon price does not fall below 60 euros in the long term.”
According to a 2021 survey conducted by VKU, the association of municipal public utilities, 69.4% of local utilities agreed that the largest impediment to Germany’s Energiewende (energy transition) is a lack of planning and investment security. The top priority for the German government, according to 56.3% of members, is carbon pricing reform.
The government’s primary objective is thus to secure a minimum price signal to stimulate private sector’s decarbonization decisions, a position shared by energy utilities and retail corporations.