Are the EU and Germany too strict with their emission reduction targets?

German energy suppliers criticise Germany’s politics regarding Climate Change. Recently 18 top managers from the energy sector signed a letter addressed to the German Chancellor Angela Merkel, stating that the emission reduction targets claimed by the EU in NAP II for the 2008-2012 phase cause essential problems to the German energy supplying industry. The planning reliability concerning the construction of new power plants is in danger. Some companies even threatened the German Government with a switch of investment to Latin America and Asia. The absence of further major investments would lead to an increase of electricity prices, was the message by top managers in their letter.

However, the drop in the market price for Spot EUAs in the last few months shows that NAP I was not restrictive enough to create a market where large investments in emission reduction technologies in the EU are becoming financially interesting. In order to create a trading market, which will be more vivid for the period 2008-2012 the EU has to be more restrictive with all NAPs. The last two years showed that carbon trading is growing but does not reduce emissions by itself.

Jan-Marten Krebs
Sales Manager