Next German gov’t must raise climate ambition to avoid multi-billion-euro EU target miss – env agency

Germany is on track towards missing crucial short-term climate targets under European Union rules, unless the government implements more effective measures and policies to reduce emissions especially in the transport and building sectors, UBA said.

“It is becoming increasingly clear that Germany is at risk of falling well short of its targets under the EU Effort Sharing Regulation (ESR) between 2021 and 2030,” said the agency in a press release on its emissions projections report 2025. Due to lagging progress in the transport and buildings sectors, the country is looking at a gap of 226 million tonnes of CO2 equivalent in that period. The agency’s projections from exactly one year ago had put the gap at only 126 million tonnes of CO2 equivalent.

“Transport has not delivered at all,” said outgoing economy and climate minister Robert Habeck from the Green Party during a press conference in Berlin. Missing the effort sharing target could result in payments “worth billions of euros,” said Habeck.

Transport decarbonisation has long proven to be a weak spot in Germany’s energy transition, as emissions from cars, lorries and other means of transportation have not decreased significantly since the 1990s. The country’s key advisory group, the Council of Experts on Climate Change, has repeatedly warned of target failure for the sector.

“Without rapid readjustment in these sectors, there is a risk of soaring CO2 prices and high payments to other EU countries,” the environment agency said, adding that these compensation payments could be more effectively utilised for investments in domestic transformation and greenhouse gas reduction. The less climate action progress there is in transport and buildings, the higher will be the carbon price in the upcoming new EU Emissions Trading System (EU ETS 2), which puts a CO2 price on fuels such as petrol and heating oil.

Around 60 percent of total emissions in the EU are governed by an joint target for member states under the Effort Sharing Regulation. The scheme covers emissions from transport, buildings, waste, some smaller industries and agriculture, which are not covered by the Emissions Trading System (EU ETS).

Under the regulation, all member states together are to achieve a joint emissions reduction of 40 percent by 2030 compared to 2005 levels. However, member states are required to contribute depending on their relative wealth, meaning Germany has a much higher responsibility than, for example, Poland. Germany’s target is a 50 percent reduction in emissions by 2030 compared to 2005 (Its national target is to reduce emissions by 65 percent by 2030 compared to 1990 levels). Failure to comply with its EU reduction targets could mean Germany would have to buy emission allocations (each worth one tonne of emissions) from other member states that have overachieved their targets — at a high cost.

For the period until 2020, the country already had to buy more than 11 million allocations from Hungary, Bulgaria and the Czech Republic for one euro each, but the price will certainly be much higher for the 2020s, as almost all member states will struggle to reach their targets and there is set to be a high demand for allocations. The EU ETS price is currently around 70 euros per tonne of CO2. At this price, the effort sharing target miss could cost the state almost 16 billion euros. However, the allocation price is negotiated between governments behind closed doors.