Berlin pushes for a minimum price of €60 in European carbon markets –

Ignoring allegations of speculation in the European carbon market, Berlin backs a minimum price of €60 per tonne of CO2, saying it will guarantee it through national measures if the EU does not act.

After prices spiked in the EU carbon market in 2021, EU capitals are now seizing the opportunity for reform as discussions in Brussels continue on the proposed revision of the EU Carbon Directive. the emissions trading system (ETS).

Many governments are unhappy with rapidly rising carbon prices, which they blame for driving up the cost of electricity.

Among the detractors, Poland is pushing for “a profound reform of the ETS system, which will take into account the current situation on the energy market”.

Polish Prime Minister Mateusz Morawiecki even spoke of a “speculative bubble”, a position supported by Spain, Hungary and other eastern EU governments which fear a voter reaction to the rise prices.

Minimum price

Undeterred by criticism, the German government, on the other hand, wants to ensure that prices remain high enough to encourage private investment in low-carbon technologies.

“We certainly support the strengthening of the ETS system,” said Patrick Graichen, Germany’s climate secretary, at a meeting of EU environment ministers in December.

For the German government, a price of around €60 per tonne appears to be an optimal compromise between ambitious climate action and social acceptance. Shortly after coming to power last year, the new German government made its position clear on this.

“We want a minimum carbon price across Europe,” Graichen said in December.

In comments to EURACTIV, the Department for Economy and Climate Action has now reiterated Germany’s continued support for “ambitious reform – including a minimum price” for carbon emissions allowances. EU.

“If the European Union does not agree on a minimum price, the German government will decide on national measures to ensure that the price of CO2 does not fall below €60/tCO2 in the long term,” said a ministry spokesperson.

For Berlin, the top priority is to ensure a minimum price signal to guide private sector decarbonization decisions, a position supported by energy utilities and retail companies.

“For more investment security, Germany and the EU need an immediate development of emissions trading with accompanying measures for an investment-relevant CO2 price signal,” reads -on in a 2017 report. letter by an industry coalition of 52 major companies, including Aldi, Puma and Siemens.

Most recently 2021 survey conducted by VKU, the association of local utilities, revealed that 69.4% of local utilities considered the lack of planning and investment security as the main obstacle to the Energiewende in Germany. 56.3% of members cited carbon pricing reform as their top priority for the German government.

The problem of speculation

Unlike Poland, Hungary or Spain, the German government has not raised concerns about alleged ETS speculation, reflecting the European Commission’s reluctance to intervene in the market.

After the European Securities and Markets Authority (ESMA) published its report in March, Berlin was ready to end the case.

“The European Securities and Markets Authority (ESMA) has investigated this matter and found no evidence of market manipulation,” the climate ministry said.

“However, he recommends increasing transparency in emissions trading. The federal government will carefully consider ESMA’s recommendations,” he added.

However, not all German politicians are on the same page. Peter Liese, a Conservative MEP who is the lead rapporteur for the ETS review in the European Parliament, said the issue of speculation needed to be addressed.

Speaking to reporters last week, Liese cited a recent example where carbon prices rose by 10% following an article published by the financial news agency Bloomberg.

The price has changed “without the fundamentals changing! It means there is speculation here,” he told reporters on May 11. That “nothing should happen is not a satisfactory answer for me”, he said, backing calls from other MEPs to curb speculation on the ETS.

Liese hails from Angela Merkel’s CDU party, and his views do not reflect those of the current ruling coalition in Berlin, which includes the leftist SPD, Greens and Liberals.

[Edited by Frédéric Simon]