Germany Says It’s Open to Talks to Strengthen EU Carbon Market

  • Germany may consider additional tools to shore up market
  • German, French environment ministers to discuss carbon April 7

The German environment ministry is willing to consider measures that would strengthen the European Union’s emissions trading system.

Prices in the world’s biggest cap-and-trade carbon program dropped 37 percent this year amid a persistent oversupply of permits to pollute. It failed to draw support from the global climate deal signed in Paris and an EU agreement to overhaul the emissions market never came to fruition. European policy makers decided last year to introduce the Market Stability Reserve, which will help limit the glut of allowances, starting in 2019.

“From our point of view, the central mechanism of emissions trading -- control over the amount of certificates -- is to be maintained,” said Michael Schroeren, chief spokesman for German Environment Minister Barbara Hendricks. “With the MSR, we’ve sealed a reform that conforms to this principle. Germany is however fundamentally open to a discussion whether additional measures may possibly be needed -- and in which timeframe.”

His comments follow a push by French Environment Minister Segolene Royal for a carbon price corridor that would boost the cost of pollution and encourage investment in low-emission technologies. France, where envoys from more than 190 nations reached a deal in December to fight global warming, holds the presidency over United Nations climate talks until November.

Royal on Monday directed Engie SA Chairman Gerard Mestrallet, WWF France director Pascal Canfin and economist Alain Grandjean to work on options to guarantee more robust emission prices in the EU ETS, identify conditions that will facilitate the introduction of a carbon component in industries not covered by the cap-and-trade program and analyze a floor price for electricity production.

Hendricks and Royal will discuss issues including the EU carbon market on April 7, when they meet in Metz, France, during consultations between the two governments, Schroeren said.

Germany, Europe’s biggest emitter of carbon dioxide, is struggling to stay on track to meet its target of cutting the greenhouse gas by 40 percent by 2020 compared
with 1990 levels. The country had reached 27 percent by last year, the Federal Environment Office said in January.

The 1,900 German power plants, factories and other units in the EU ETS reduced their emissions by 1.2 percent last year, the office said Monday. The carbon market, Europe’s flagship climate tool, imposes decreasing emission caps at more than 11,000 sites owned by utilities and manufacturers.

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