The EU’s Emissions Trading System (ETS) is the subject of much political controversy. The EU government is seeking to reduce the impacts of the ETS on energy in the midst of a global energy crisis. Some countries propose a full pause, arguing that allowance increases aren’t enough. Others feel that by expanding allowances, the EU is failing to deliver on the ETS’s policy goals. Germany is now taking matters into its own hands. The government of Germany recently proposed a bill to separate national carbon prices from the EU. Carbon Herald reports:
“The German government has approved a draft bill to keep the country’s national carbon price within a fixed band through 2027, preventing it from being tied to the more volatile European emissions trading market after a key European Union policy was delayed, Table. Briefings reported Thursday.
The amendment to the German Fuel Emissions Trading Act, known as the BEHG, sets a price corridor of €55 to €65 (approx. $64 to $75) per metric tonne of carbon dioxide (CO2) for 2027—the same range in effect this year.”
Germany is home to one of the larger industrial centers in the EU. This means that ETS pricing impacts the German economy at a disproportionate level. The German government’s primary concern doesn’t appear to be high allowance prices. Instead, price volatility seems to be the driving factor. By keeping carbon prices stable, the German government hopes to keep its industrial sector and larger economy stable. If this law to separate national carbon prices passes in Germany, it will be interesting to see if other member states follow suit.
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