German Economic Minister Wants Changes In NAP2
Posted by Jos Cozijnsen in ManagingBERLIN (Dow Jones)--German Economics Minister Michael Glos said Tuesday that he wants „a shift of stress” in the German emissions trading rules because utilities gain high windfall profits. Utilities generate high windfalls by factoring in emission certificates, which they received free of charge. The windfall profits are much higher than expected, Glos said, according to a prepared speech text that he was to deliver at an energy conference Tuesday. „We will discuss at the energy summit (due at the beginning of April) whether the windfall profits that come from trading emission certificates are acceptable at their current levels amid companies' excellent profit situation.”
EU member states has to present to the European Commission their second national allocation plans, or NAP2, by mid-2006. The current German NAP awards individual companies certificates for the first trading period 2005-07 free of charge.
Glos added that companies seem to be able to pass on high carbon dioxide prices to electricity customers, which reduces the incentive to invest in the plants to increase energy efficiency. He also said Germany will look at the emissions trading rules again „to prevent energy intensive companies from relocating” abroad. Energy intensive industry must be disburdened in the second phase from 2008, Glos said. He also said the coal industry must remain an important part of Germany's energy mix because more than half of the country's energy supply is generated from coal. He also said Germany will look until 2007 at the existing renewable energy law and examine the economic efficiency of individual subsidies.
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In the meantime, Dieter Ameling, president of the German steel manufacturers association, has reiterated his claim to "interrupt emissions trading" until what he considers is an unequal allocation between German steel manufacturers on the one hand and companies from Italy, UK, France, Netherlands and Austria has been solved in Brussels. (See http://www.ftd.de/pw/de/40402.html).
Maybe we should stop making any politics until the world is a better place?
The Steel Market is an interesting one and it keeps growing beacuse of China's needs. But I don't beleive that sector is so much hurt by the allocation itself. For the first time this CO2 intensive sector has to meet CO2 rules; they need time to adapt, I can understand. But I also see for example that Arcelor that started a case against the European Commission against emissions caps at all, but the reported the highest revenues last year ever; so did Corus. And then Thyssen: that is supposed to be long and able to generate capital by selling allowances, making up any losses. Of course, there is still distortion in the EU; emissions trading cannot solve that, but is not meant to solve other issues than capping CO2.