Handelsblatt author Thomas Hanke analyzes interesting data and trends from all over the world in the column.
(Photo: Klawe Rzeczy)
France and Germany are drumming for more subsidies in favor of European industry: This is the only way to keep up with the generous “green” subsidies in the USA and trigger more investments in the climate-friendly conversion of European industry.
The enthusiasm for aid is surprising. Because since 2005, the European Union has been pursuing a completely different path, which is called “cap and trade”. The total amount of climate toxins that can be emitted annually is limited.
Anyone who wants to emit, such as power plant operators or industry, must obtain certificates to do so. This emissions trading system (ETS) is intended to make it cheaper to take precautions than to pollute. And companies should be responsible for reducing their emissions of CO2 or methane where it is particularly cost-effective.
The ETS was new territory worldwide. In the meantime, California, South Korea and Quebec are also beginning to trade in certificates. But the way the EU applies it, emissions trading has shortcomings. The most important: So far, it has recorded less than half of what the EU is blowing into the air in terms of climate toxins.
And the pace of mitigation is too weak. If the trend of the past few years were to continue, the EU would not achieve a minus of 55 percent by 2030, as it intends. It was therefore decided at the end of December 2022 that the upper limit (cap) should fall more quickly in the future.
The British rely on a CO2 minimum price
Unfortunately, the European model pupil in terms of lower CO2 emissions has left the EU: Great Britain applies a CO2 minimum price in addition to the modified ETS. The British House of Commons justifies it this way: “The price floor was introduced on 1 April 2013 to keep the price of carbon at a level that encourages investment in low-carbon technologies, which has not been achieved with the EU emissions trading system”.
A harsh criticism that is not entirely unjustified. Because the weaker performance of the EU in climate protection is also due to the fact that too many certificates were issued free of charge: the recipients could and can pollute to the appropriate extent for free – and do not have to invest.
>> Also read here: Emissions trading brings 13.2 billion euros for climate funds
In the coming years, these free allocations are to be reduced. In addition, activities are included in the CO2 trade that were previously excluded, namely the important polluters buildings and transport. From 2027 they will have their own certificate trading.
Will that be enough to achieve the climate protection goals? The ETS has a bad reputation because it was initially implemented too shyly. It remained a patchwork in the EU, with bids, bans, subsidies and voluntary commitments by large companies alongside certificate trading. However, according to an analysis published by the New Climate Institute on Monday, “in most cases they do not keep what they promise”.
The discreet British are quite different: no other country in Europe has built so many offshore wind farms, the most reliable form of energy supply from wind. The capacity there is 11.2 gigawatts – about as much as eight nuclear power plants can produce – in Germany it is 8.1 gigawatts.
This is also due to the fact that the British are promoting the expansion of renewables with contracts for difference. To put it simply, investors are not guaranteed a specific subsidy, but an electricity price. If the price is lower after completion, they receive a subsidy, if it is higher, the operator has to pay.
The British Conservatives have managed to do what the CDU and CSU in Germany under the eternal Chancellor Angela Merkel failed to do for years. This shows that successful climate protection is not a question of ideology, but of serious politics. Calling for more aid now is not a solution.
More: “Those who voluntarily make losses have other motives” – How trading in CO2 certificates attracts criminals