Weekly events in the German federal parliament, Bundestag
In a significant move towards combating climate change, the German government has proposed an amendment to its Fuel Emissions Trading Act (BEHV). The proposed changes aim to establish a consistent and predictable carbon price on all fossil fuels, incentivizing emission reductions and cleaner energy choices across sectors subject to the fuel emissions trading scheme.
Starting from 2026, detailed regulations on national CO2 pricing for all fossil fuels will be established. A key element of this amendment is the capping of a number of emission allowances to be auctioned, with the auction price range for 2026 allowances set between €55 and €65 per allowance.
Companies that fail to obtain allowances at auction can buy additional ones at a set price of €68, slightly reduced from the previously planned €70. Interestingly, a fixed purchase of 10% of allowances in 2027 will be made at €70, replacing an earlier plan based on registry volumes.
If the EU’s new emissions trading system for fuels (EU ETS2) is delayed, Germany’s national system will continue, with auction prices linked to the EU ETS market price. This provision ensures continuity in carbon pricing regulations, even in the event of delays at the EU level.
The amendment also includes adjustments to the emissions trading register to facilitate its implementation. Furthermore, a special provision applies to the marketing of coal not covered by the ETS: as long as it is used tax-free, no CO2 price applies.
The proposed changes are part of Germany's broader strategy to meet its climate goals by using market mechanisms to internalize the carbon cost of fossil fuel consumption. The legislation also implements the tax and duties exemption for inflation compensation payments made by employers to their employees, up to a maximum of 3,000 euros, until 31 December 2024.
Other measures included in the package of laws are the facilitation of the fuel switch within power generation plants, the relaxation of limits on noise and shadow flicker for wind turbines, the discussion of a draft bill for the Whistleblower Protection Act, and the harmonization of various sanctions regimes across the EU.
The package of laws also aims to accelerate the expansion of the power grid and increase capacities in the existing power grid, as well as amendments to several key acts such as the Trade Regulation Act, the Crafts and Trades Regulation Act, and the Agricultural Organizations and Supply Chain Act.
The Renewable Energy Act will also be amended to allow new PV plants to operate at more than the usual 70% capacity from 2023, a rule that will be brought forward with the current draft law and applied to existing PV plants.
This comprehensive package of laws demonstrates Germany's commitment to addressing climate change and transitioning to a more sustainable energy future. The proposed amendments to the Fuel Emissions Trading Act are a significant step in this direction, providing a predictable and consistent carbon price for fossil fuels and incentivizing the adoption of cleaner energy choices.
- The proposals in the Fuel Emissions Trading Act amendment align with Germany's environmental science, as they aim to combat climate-change and transition to renewable-energy sources.
- The predicted carbon price on all fossil fuels in 2026 is expected to range between €55 and €65 per allowance, and this price will impact the finance sector due to industries' increasing energy costs.
- The German government's policy-and-legislation changes, including the capping of emission allowances and the linking of carbon pricing regulations to the EU ETS market price, demonstrate the country's political will to address climate change.
- The amendment to the Renewable Energy Act allows new PV plants to operate at higher capacities from 2023, signaling a move towards a more sustainable energy future, and this change is part of the general-news concerning the global shift towards cleaner energy sources.
- Besides addressing climate change, the package of laws focuses on other areas, such as facilitating the fuel switch within power generation plants, relaxing limits on noise and shadow flicker for wind turbines, and proposing a Whistleblower Protection Act.
