Germany's weak targets threaten future of carbon trading

29 June 2006, source edie newsroom

The ETS aims to put a price on carbon emissions

Germany has faced strong criticism over its "unambitious" carbon cut targets for the next phase of the European Emissions Trading Scheme, and is being blamed for undermining the scheme Europe-wide.

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Other EU countries are setting themselves weak targets for the 2008-12 period of the ETS ahead of the European Commission's deadline this Friday, environmentalists have complained.

Germany, one of Europe's biggest emitters, is planning to cut its emissions by less than 1% by 2012. It also wants to exempt all new power stations from the emission limits, including coal-powered plants. This may be encouraging similarly lax targets in other countries, environmentalists and experts have said.

The worry is that excessively high allocations will undermine the value of credits - as Europe recently found when credit prices plummeted after several countries revealed low emissions (see related story).

Europe's flagship ETS could fail to deliver significant incentives for the development of a low-carbon economy if the German example sets a Europe-wide trend, critics have said.

"Negative signals" from several other member states already indicate that cuts in carbon allocations will be low overall. A number of countries are also likely to miss Friday's deadline altogether, a group of environmental NGOs said.

"It is very likely that Austria, Belgium, Czech Republic, Denmark, Finland, France, Hungary, Italy, Netherlands, Slovenia, Latvia, UK, Spain and Sweden will miss the deadline," said a coalition of NGOs including Friends of the Earth, Greenpeace and WWF.

"In addition, the countries that have already made information on their plans available seem very reluctant in embracing strong measures that could help tackling climate change. Most draft national allocation plans are weak," the NGOs said.

Professor Michael Grubb, chief economist at Britain's Carbon Trust, said that stronger targets and some auctioning of credits were needed to stop credit prices slumping, and that Germany's position could adversely affect the scheme Europe-wide.

For more information on the European Emissions Trading Scheme see here.

Goska Romanowicz