Germany to spend EUA income on climate change policy measures

(pointcarbon,Oslo)Germany will spend parts of the income from selling 40 million EU allowances on promoting renewables and energy efficiency, according to a government spokesperson.

The German parliament in June decided that 40 million EU allowances out of the country's total annual allocation of 453.1 million allowances should be sold into the market each year of the 2008-2012 second trading period of the EU emissions trading scheme (ETS).
Under EU legislation, EU member states have the opportunity to sell or auction 10 per cent of the allowances it can issue, instead of doling them out for free. However, few countries have chosen to do so in significant amounts.

From 2010 the German government must auction the allowances, but in 2008 and 2009 it has the opportunity to sell the allowances directly into the market, according to the country's emissions trading law.

According to Germany’s 2008 budget, it expects sales of allowances to generate income totalling €600 million, based on an expected EU allowance price of €15.00.

Around two thirds of the income will be spent on policy measures designed to lower Germany's greenhouse gas emissions, according to a spokesperson for the German environment ministry.

"In 2008 a part of the revenues will be used for additional climate change policy measures, e.g. for the promotion of renewables in the building sector and measures to improve energy efficiency in industry and households," the spokesperson said.

Part of the EUA income will also be spent on helping poor countries adapt to climate change.

The spokesperson said it was unlikely Germany would auction allowances in 2009, and that no decision had been taken on how auctions would be organised.

Legislation in the pipeline

The German cabinet at a meeting in Meseberg near Berlin in August adopted a policy package designed to bring down the country's greenhouse gas emissions to 60 per cent of what they were in 1990 by 2020. The government is currently carving out legislation to transform the ideas into policy.

"We are very well en route in implementing the corner stones of Meseberg. There will be a package of bills to be presented to the cabinet on 5 December," the spokesperson said.

The legislative package will include an update to the renewable energy law, which provides feed-in tariffs for electricity generated from renewable sources such as wind, and laws to promote renewable heat generation and co-generation of power and heat from fossil fuels.

Oslo