Friday, January 1st, 2021
Petrol and oil now with a CO2 price
Emissions trading brings the tax authorities billions
In the past year, government revenues from pollution rights fell slightly. But now a new phase of emissions trading is beginning, in which not only companies but also consumers are asked to pay.
In 2020, the German state earned almost 2.7 billion euros from the sale of emission rights for the greenhouse gas carbon dioxide. That is around half a billion euros less than in 2019. The Federal Environment Agency is nevertheless satisfied with the result.
"Despite the slight Corona slump from March to May, the prices for European emission allowances are generally stable," said Jürgen Landgrebe, head of the emissions trading office at the Federal Environment Agency. The money is used to finance measures for the energy transition.
Power plants and other industrial plants require the authorizations – they have to submit a certificate to the emissions trading office for each tonne of CO2 emitted. You can acquire the so-called pollution rights at auctions on the energy exchange in Leipzig. Prices there have risen sharply in recent years. While a certificate initially cost less than 10 euros, an annual average of almost 25 euros was due in 2020. At the auction, the price even rose to 30.45 euros.
New phase begins
"The shortage of certificates is having an effect," said Landgrebe. Rising prices are "eminently important for the willingness of companies to invest in climate protection measures". Many market observers expected prices to rise further in the coming years. That must also be the case "if the climate targets from the Paris Agreement are to be achieved".
The effect of rising CO2 prices on electricity generation can be seen: only just under a quarter of German electricity was produced with coal in 2020. The CO2 price made many power plants unprofitable, says Patrick Graichen, director of the energy think tank Agora Energiewende. In addition to renewable energies, gas-fired power plants are also displacing coal from the electricity market because they emit significantly less greenhouse gas and can therefore produce it more cheaply. "This pressure will increase over the next few years with rising CO2 prices," predicts Graichen.
Emissions trading in Germany entered a new phase on January 1, 2021. Pollution rights must now also be acquired for driving and heating. "We do not collect the money from drivers, apartment owners and tenants," said Landgrebe. So-called distributors, such as gas suppliers or mineral oil companies, have to acquire the certificates. "We assume, however, that the additional costs will be passed on 1: 1 to the customers. This provides the desired financial incentive to reduce emissions."
Motorists would probably pay more
However, this is controversial when it comes to heating costs. The SPD-led federal ministries for finance, the environment and justice have jointly proposed that the additional heating costs be divided equally between tenants and landlords. The German Tenants' Association demands that the CO2 price for heating is borne entirely by the landlords.
"This is not yet a real emissions trading scheme, as the certificates are sold at fixed prices in the first few years," Landgrebe admitted. Their number is also not limited. They will only be auctioned from 2026, when the amount of available certificates will also be reduced. In 2021, a certificate costs 25 euros, until 2025 the price will then increase gradually to 55 euros. According to Landgrebes, the federal government expects revenues of 40 billion euros in the first four years. The money is to be used above all to relieve citizens of electricity prices.
According to calculations by the emissions trading office, the price of CO2 increases the price of a liter of diesel and heating oil by 7 cents per liter in the first year, excluding VAT. The premium will rise to 15 cents by 2025. For premium gasoline it is initially 6 cents, for gas for heating 0.5 cents per kilowatt hour. For the time being, Landgrebe does not anticipate any great impact on car traffic. "Driven by the market, the prices would be much higher due to the high willingness of motorists to pay," he said.
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