Germany’s economy and climate ministry (BMWK) wants to take off the market all CO2 certificates from the EU Emissions Trading system (ETS) that will become available owing to the country’s coal exit policy. Even after the latest tightening of the ETS at EU level, the coal exit would still leave a residual quantity of ‘free’ certificates, and the ministry wants to have these residual allowances cancelled, according to a ministry spokesperson speaking to the newsletter Table.Media. NGOs and climate experts had expressed fears that the country’s coal phase-out, which the government hopes to bring forward to 2030 from the originally agreed 2038 phase-out date, would do nothing to alleviate climate change if the freed-up emissions certificates can be used elsewhere – a phenomenon sometimes referred to as the ‘waterbed’ effect’.
But a cancellation of emissions certificates could also mean that the German government would forego billions in revenue from ETS auctions. According to the economy and climate ministry, bringing forward the coal exit to 2030 in the western Rhineland region will save a total of 280 million tonnes of CO2 emissions. At today's market prices, that would translate into about €28 billion the federal budget would have to forego as revenue between 2030 and 2038.
The federal government and the state government of western coal mining and heavy industry state North Rhine-Westphalia, along with energy company RWE, agreed in late 2022 to bring forward to 2030 the coal phase-out in the state eight years earlier than agreed in German coal exit law. Green economy and climate minister Robert Habeck has called for pulling forward the coal exit to 2030 in the east of the country as well, but eastern German coal mining state premiers want to stick to the previous agreement.