National Emissions Trading

Experience report

The Fuel Emissions Trading Act (Section 23 BEHG) legally states that an evaluation of the BEHG must be carried out by the Federal Government at regular intervals. To this end, the Federal Government presented the initial experience report to the Bundestag in 2022. Further reports will follow in 2024 and then every four years.

The Federal Ministry for Economic Affairs and Climate Action (BMWK) – supported by us, the German Emissions Trading Authority at the German Environment Agency – is in charge of preparing experience reports and further developing national emissions trading (nEHS).

The experience report for 2022 was officially released on 08/12/2022. The report is based on a research project for which we commissioned the services of the Ecological-Social Market Economy Forum, Prognos and the German Institute for Economic Research to conduct an in-depth expert analysis on the impact of the nEHS. The study examined the effect of the nEHS on the trend in fuel prices for consumers, the nEHS’s effect on CO2 emissions in the relevant sectors and its distributional influence on CO2 prices within private households.

19/10/2023

Situation of emissions

Evaluation report on the emissions situation in 2021 and 2022

The first nEHS evaluation report for the years 2021 and 2022 was published on 26 March 2024. The report contains detailed information on the emissions situation in the nEHS, broken down by obligated parties as per BEHG, fuels and deductible emissions, among other things.

26/03/2024

Reporting of reported data on the emissions and surrender situation

According to preliminary figures from the German Emissions Trading Authority (DEHSt) at the Federal Environment Agency (UBA), around 288.5 million national emission certificates (nEZ) were surrendered in the second year of national emissions trading (nEHS) - each nEZ corresponds to one tonne of CO2. This is 17.9 million tonnes of CO2 or around 5.9 percent less than in the previous year.

For 2022, the obligated companies participating in the nEHS had to submit nEZs in the amount of the reported emissions in the nEHS registry to DEHSt by 2/10/2023. DEHSt made this data publicly accessible via the nEHS registry on 13/11/2023, thereby fulfilling the obligations of Section 33 of the Fuel Emissions Trading Ordinance (BEHV).

A more detailed summary of the surrender situation in 2021 and 2022 in the nEHS and access to the public area of the nEHS register can be found via the links below.

13/11/2023

Cap increment amount and additional demand

Publication of an Additional Demand Pursuant to Section 36 BEHV

In the national emissions trading scheme (nEHS), there is a legally specified volume target for greenhouse gas emissions that serves as a maximum allowable limit for all participants. Since the sale of certificates during the introductory phase (up to and including 2026) follows the actual demand from nEHS participants, there is the possibility that the specified volume target may be exceeded during this period.

We, the German Emissions Trading Authority (DEHSt) at the German Environment Agency, calculate the ‘additional demand’ that arises if the nEHS volume targets are exceeded in accordance with the provisions of Section 36(1) and (2) of the Fuel Emissions Trading Regulation (BEHV).

In cases where there is a positive additional demand and the annual volumes specified by the EU Effort Sharing Regulation are not met simultaneously, the excess demand for emission certificates is covered by utilising flexibilisation options according to the EU Effort Sharing Regulation. This may include the purchase of a corresponding amount of emission allocations from other Member States.

The additional demand in a calendar year is calculated according to Section 36 BEHV from the amount of national emission certificates (nEZ) surrendered in the nEHS Registry minus the fuel emissions of the EU-ETS 1 offsetting and the specified emission volume (Section 34(2) BEHV) in the same year.

For 2021, according to DEHSt calculations, there is an additional demand in the nEHS of 4,623,836 nEZ.

There is no additional demand for 2022, as the calculation in accordance with Section 36(1) and (2) BEHV shows a negative value of -3,962,525 nEZ.

The calculations were based on the certificate volumes surrendered from the nEHS Registry as of 11/03/2024 and data from the offset applications from EU-ETS 1 installations as of 18/03/2024.

The deadline by which the adjusted additional demand for nEZ for the 2021 – 2026 calendar years must be published is specified in Section 36(3) BEHV. These deadlines are shown in the following table:

05/04/2024

Publication of the cap increment amount in the Federal Gazette

The cap increment corresponds to the fuel emissions for which a contribution was made in both the EU ETS and the nEHS. These double-balanced emissions are allocated to the EU ETS and not to the nEHS, which is why the nEHS cap is increased by this amount. We will determine the increased quantity and publish it in the Federal Gazette.

A description of the calculation and estimate of the published cap increase for the years 2021 to 2024 will follow shortly.

27/12/2023

Sales reports

The Federal Republic of Germany has offered emission allowances (‘nEHS allowances’) for sale under the national emissions trading scheme (nEHS) since October 2021. The sales are conducted twice a week on the European Energy Exchange (EEX) in Leipzig. We regularly keep the public and market participants informed about the results of the sales through evaluation reports.

Our regular sales reports contain a detailed evaluation of the German sales results as well as comprehensive information on the sales process.

Carbon leakage

Carbon leakage evaluation reports

Section 26 (1) BECV provides for the regular publication of the results of the application procedure in the year following the submission of the application. Detailed evaluation reports of the results for the accounting years 2021 and 2022 (CLK Report 2021 and 2022) were published on 27/03/2024 and 02/07/2024, respectively.

Transparency reports on carbon leakage compensation

According to the state aid approval of the BECV by the European Commission the Federal Republic of Germany is obliged to publish data from companies with aid amounts of over 100,000 euros. DEHSt complied with this obligation by publishing the transparency reports on carbon leakage compensation 2021 on 27/03/2024 and 2022 on 02/07/2024 respectively.

Reports on the BECV consultation procedure

Since 2022, we have been evaluating the impact of the BECV by conducting an annual consultation (Section 26(2) BECV).

The objective of this is to determine the impact of CO2 pricing within the framework of the national fuel emissions trading system and compensation mechanism for carbon leakage on the competitive situation of companies based in Germany. The consultation is directed at interest groups working for affected sectors and sub-sectors, social partners and other carbon leakage experts.

The consultation process from 2023 involved two main components: firstly an online survey and secondly, a discussion of the results at an expert forum. The final report summarises the results of both sub-processes. It is part of the annual report on BECV, which the Federal Government is mandated to submit to the Bundestag each year by September 30th. It was initially included in this context when the report was first published.

Central topics

• Effect of the CO2 price and carbon leakage offsetting
• Concrete design of the State aid, the environmental service in return and the relief for companies with a low total energy consumption of fossil fuels
• Experiences with the procedure for applying for carbon leakage compensation for the accounting year 2021

As in the previous year, the Ecological-Social Market Economy Forum (Forum Ökologisch-Soziale Marktwirtschaft - FÖS) supported us in the 2023 consultation process following a public call for tenders and the awarding of the project.

The BECV consultation procedure 2024 will again include an online survey and an expert forum. The publication of the final report is planned for autumn 2024. For this, we will again launch a public call for tenders.

19/10/2023

EU ETS 1 Offsetting

Evaluation report on offsetting by EU ETS 1 installations in the nEHS 2021 and 2022

The first evaluation report on offsetting by EU ETS 1 installations in the nEHS for the years 2021 and 2022 was published on 29 May 2024. The main results of the offsetting process are analysed in accordance with Section 11 of the BEHG Double-Balancing Ordinance (BEDV). The offsetting data for the EU ETS 1 is analysed and the enforcement perspective is presented.

29/05/2024