A pollution tax actually works
Fewer certificates, more climate protection
"We are right here in the trading room of Commerzbank in Frankfurt. This is where raw materials, interest, stocks and exchange rates are traded."
Ingo Ramming is one of the bank's numerous dealers. He stands in the midst of long rows of tables. His colleagues sit there in their suits and costumes, the phone within easy reach, surrounded by half a dozen monitors. On which the traders follow what is happening on the markets in real time. Ingo Ramming's profession is special:
"We are trading emissions here within the framework of the EU emissions trading scheme."
Since 2005, industrial companies in the European Union have had to present so-called pollution certificates for every ton of CO2 they emit. These are issued by the EU. Politicians determine - and limit - the amount of climate-damaging gas that enters the atmosphere in Europe. The companies can trade the certificates with one another. So everyone decides for himself whether it is cheaper for him to invest in new technology with lower CO2 emissions in order to save greenhouse gases, or instead to buy certificates from other companies on the market.
Regardless of how each individual company decides, the total amount of CO2 that can be emitted by industry in the European Union per year is limited. This is exactly what makes emissions trading so popular with its proponents: It is a market instrument for climate protection. The price per traded tonne of CO2 can vary: it rises or falls depending on how successfully the companies avoid CO2. When emissions trading started in 2005, however, nobody had the financial crisis and the subsequent euro crisis on their radar. Ingo Ramming points to a graphic on his computer - the price development on the emissions market:
"We see the strong trends here. And these trends are characterized by the recession in Europe, the financial crisis in 2008/2009, in which prices fell from thirty euros to below ten euros. Then we had a stable phase from 2009 to Mid-2011. And since 2011 with a view to the euro crisis, prices have fallen again accordingly. "
Since the beginning of the year, the price for one tonne of CO2 emissions has fallen below eight euros several times. When they started trading in pollution certificates in 2005, it was expected in Brussels that it would settle at around 30 euros. The crux of the matter: At the beginning of emissions trading, politicians set the number of certificates for years to come, based on the status quo at the time.
"The companies get a fixed allocation every year. And so it is of course clear: If we have an economic weakness, a recession, and thus simply have a lower production capacity utilization, that means companies accordingly have a surplus of certificates, because compared to the allocation that was then less utilization and fewer emissions. "
The economic crisis is therefore beneficial to the climate because less CO2 is blown into the air in Europe. Except that the companies didn't have to invest in climate protection at all. Instead, they are now sitting on an excess of pollution rights. Politicians gave them the majority of these certificates free of charge in advance.
In addition, many companies still rate the certificates in their price calculation at current market prices. These costs, which were not incurred at all, are billed to the customer. That annoys consumers and environmentalists. For example, the SPD MEP Jo Leinen:
"It was not intended that the customer, the electricity consumer, pays for something for which he does not get anything, and it is pure booking profits in the billions that have been pocketed, not only in the electricity industry, but also in the steel industry, in the chemical industry. This is also a mistake, where countermeasures must now justifiably be taken so that the CO2 certificates get a decent and fair price again and the citizens then also benefit from them, namely more environmental protection and more climate protection. "
In general, emissions trading has not been going smoothly since its inception in 2005. The fact that companies sometimes raise prices for their customers without investing a cent in climate protection is just a nuisance. In addition, in recent years fraudsters have specifically exploited loopholes in the trading system and enriched themselves on a large scale at the expense of companies and citizens - including with VAT fraud. Since emission certificates are a purely virtual commodity, they can be traded quickly and easily across borders in Europe - and in so-called carousel shops, the tax offices can sneak sales tax refunds. The tax rules were then changed - the perpetrators went to court. In addition, the so-called "indulgence trade" by critics has fallen into disrepute: companies can buy some of their CO2 certificates by investing in climate protection projects in emerging and developing countries - their benefits for the climate are at least dubious in many cases.
Recently there has also been a dispute with the USA, Russia and other countries whose airlines fly to European airports and have also had to show certificates for their CO2 emissions since the beginning of 2012. Your governments want to prevent this and are putting pressure on the EU. And then there is also the economic crisis, which is causing prices on the emissions market to plummet. EU environmental politicians like Jo Leinen have therefore long seen emissions trading as a dead end:
"Emissions trading no longer works. It has lost its role in initiating innovative investments because the price for CO2 certificates is far too low."
Environmental politicians are currently receiving support from an unexpected source.
At an event of the US Chamber of Commerce in March this year in Frankfurt am Main, of all people, the head of the German energy giant Eon, Johannes Teyssen, campaigned for emissions trading.
"The European emissions trading is unfortunately very sick. And either we in Germany and Brussels decide together to let it recover or it will wither and die; it has no effect, neither in the short nor in the long term."
No longer an effect: a company like Eon should actually benefit from this. After all, emissions trading causes the manufacturers of conventional, i.e. climate-damaging, energy to incur additional costs. Does Eon suddenly plague the environmental conscience? Not necessarily, says emissions rights trader Ingo Ramming. The energy companies, especially in Germany, currently wanted one thing above all: clear announcements.
"If I am an energy company today and want to build power plants, want to invest in power plants, and especially with a view to the energy transition, of course, significant investments are necessary, then I need planning security, the planning periods are twenty, thirty years, and accordingly it is of course good, to have certainty here about how the framework conditions will be in the future. "
The higher the prices for CO2 emissions, the more likely it is to invest in renewable energies or in modern, low-CO2 gas power plants. There are therefore enough voices in favor of reforming emissions trading. Especially since some innovations from 2013 have already been decided: fewer certificates will be distributed to companies free of charge and more will be auctioned. In addition, the much criticized "indulgence trade" with climate projects in developing countries is regulated more strictly.
However, the basic problem remains that there are too many certificates on the market - 2.4 billion, the EU Commission estimates in a current report. For environmentalists it is therefore clear: In the next few years, fewer pollution rights will have to be brought into circulation than had actually been promised. This solution is called "set aside" in Brussels. Both the Environment and Industry Committees in the European Parliament have recently advocated this.
The European Commission will decide whether certificates will actually be withdrawn from the market in the end. The Danish climate commissioner Connie Hedegaard is in favor - but it has not yet been decided whether she will get the other commissioners, for example the one for energy, Günther Oettinger, on her side.
Even Eon boss Johannes Teyssen is in favor of retrospectively reducing the quantities of CO2 certificates that companies are supposed to receive in the next few years, which have actually long been promised.
"That would be an ad-hoc measure that can also have an effect, the so-called set-aside. The fact that this is also discussed shows how great the need is, a system that no longer has any effect, no more fiscal revenue brings lignite first and does not allow investments, nobody in Brussels can celebrate as a success. "
The fact that an energy manager like Johannes Teyssen is committed to emissions trading also has to do with the German energy transition. Two years ago Teyssen was one of the signatories of a large-scale public appeal for nuclear power. Now he wants to come to terms with the decision to exit and the energy transition - at least that's how he presents it in public. Eon now wants to invest more in renewable energies and more efficient power plants. And that only really pays off if there are financial incentives to avoid CO2, as is the case with emissions trading.
"I think there is a very open discussion in Brussels these days about how emissions trading should be repaired. I believe that Ms. Hedegaard and Mr. Oettinger have understood their responsibility together. We can only hope that the heads of state of the 27 member states are willing to put their national egoisms aside and really pursue an energy and climate policy together. "
A common energy and climate policy: Brussels is currently a long way from that. There are clear climate targets up to 2020. Among other things, 20 percent CO2 should be saved - which the EU should actually achieve. When it comes to investing in new technologies and new power plants, companies have planning periods of at least twenty-five or thirty years in mind. Well beyond 2020. And there are currently only vague plans at EU level in terms of CO2 and climate protection.
Environmental politicians like Jo Leinen, who want to change that, are facing a sharp wind. First, critics say, even less is being done for the climate outside of Europe than here - so why go ahead voluntarily? Second, Europe is currently in crisis. "Crisis" - Leinen no longer likes to hear this word, at least when it comes to climate protection and emissions trading:
"We are falling behind in climate protection, we were better five years ago than we are today in the economic crisis, but the crisis would be a blatant opportunity to modernize the economy in Europe, also to create new jobs, so the crisis must not be used as an excuse for doing nothing Interested parties do that, of course, both in business and in politics, to say that we have crisis, crisis, crisis, that is, no climate protection, no climate protection, no climate protection. But the financial crisis will pass, and the The climate crisis will only really come. "
The emissions trading experts agree on one thing. Even if the EU Commission decides to reduce the number of certificates from 2013, that would only be a kind of emergency repair for the CO2 trading system. In the long term, CO2 prices will only settle back at a higher level and ensure real climate protection investments if the EU commits itself to more ambitious climate targets.
Although the EU has officially decided that it wants to reduce its CO2 emissions by 80 to 95 percent by 2050, it cannot agree on specific measures and steps to achieve this goal. That also makes the goal in itself seem unbelievable - and directly influences the price at which the CO2 certificates are traded. This is the main reason why prices are currently bobbing around at a few euros, says emissions rights dealer Ingo Ramming.
"Emissions trading in itself is of course a political market in the sense that you can neither eat emissions rights nor drive a car with them, but the market only arises because society, because politicians have decided that emissions rights are allocated. This is what happens." a political market, and that is not a problem either, it is only important that there is a long-term and clear framework and, the fundamental problem, there is of course trust in the political framework and in politics. "
At the beginning of March, the environment ministers of the EU countries met in Brussels for deliberations. However, they were unable to agree on specific new climate protection and CO2 targets. The consensus failed mainly because of Poland - whose economy is currently still heavily dependent on coal, the energy that produces the most CO2. Polish industry would therefore be hit particularly hard by higher emission prices. Environmental activist Christoph Bals from Germanwatch relies on diplomacy: the EU must, on the one hand, put pressure on Poland and, on the other hand, promise to help Poland transform the energy industry, including financially.
"Presenting packages here that are really attractive to Poland is the task of the next three months. After the environment ministers have failed, that has to be a matter for the boss. We expect Ms. Merkel to appoint a special ambassador who will do so in the next It's not an easy task. But if that doesn't succeed, the necessary climate signals that we need for emissions trading and climate protection in the next ten years have failed. "
While the environmentalist relies on a pragmatic negotiated solution, Eon boss Teyssen swings the moral club:
"The heads of state of the 27 member states have jointly promised in Brussels that they want to remove 85 percent of the CO2 content from the system by 2050. They have promised to pursue a common policy then. Then every state must, even if it is itself does not seem so useful, already support the basic regulatory policies and put its national peculiarities aside. Otherwise we will experience it like with the euro: We make national peculiarities for a long time, and in the end we pay the damage together and collect the broken pieces. "
In fact, the discussion about emissions trading is similar to that about the euro. "Good idea, but the general conditions are not right at the front and back", this is how one could sum up the opinion of most analyzes. EU politician Jo Leinen is definitely campaigning to save the idea of emissions trading:
"Now we have started with the ETS, the emissions trading system, and I mean, we are promoting worldwide that the Chinese, the Australians, the Americans, that they take part and that you get a world carbon market, so Europe cannot go bankrupt now or allow yourself to fail, we must have an interest in this carbon market fulfilling its economic function for us. "
Externally, the EU is already much more united in matters of climate protection and emissions trading than internally. No matter how much the USA, Russia, India or China are currently complaining that their airlines have recently had to pay for their CO2 emissions when they take off and land in the EU, the EU remains tough: Foreign and European airlines are asked to pay . The European Court of Justice has dismissed the action taken by some North American airlines against emissions trading. Some of the few messages that are currently creating a little more trust among traders in the emissions market, such as Ingo Ramming:
"There are still doubts about the market itself, but European politics have certainly been very, very strong so far with their words that they will insist."
Outwardly resolved, inwardly torn: the European Union's emissions trading system is bobbing around. As long as it is not clear where the EU wants to go in terms of climate protection in the long term, prices will in all probability remain in the basement. The proponents of emissions trading, such as environmental politician Jo Leinen, are convinced: Regardless of whether the rest of the world is currently following suit or not - climate protection and thus higher CO2 prices are in the long-term European interest either way:
"We should use this crisis now to build sustainable economic development, a low-carbon economy, because we urgently need it. In a few years, not only are raw materials scarce and energy becoming expensive, but the true extent of global warming becomes clear, and then we will once again regret bitterly that we may have slept through this decade with cheap excuses. "
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