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Amendments to the CO2 emissions trading scheme

2 Mar 2012
In Germany, climate change law and related developments are again on top of the agenda of util-ities and the energy intensive industry. Operators from affected sectors, e.g. power stations, the steel, cement and glass industry are currently preparing for the third trading period of the EU Emissions Trading Scheme (EU ETS). The scope of the EU ETS has been extended, covering also the aluminium industry and chemical installations from 2013.

German operators have been busy over the last couple of months with preparing their applications for a free allocation of emis-sions allowances. There will be no free allocation for the generation of electricity any more but the production of heat by power stations will still receive free allowances. The rules for the free allocation have been set up by the European Commission but have been extended and modified in some way by the German government in an Allocation Ordinance. Some operators are already prepared to challenge this Ordinance as they think that it violates European law.

Since January 2012, aviation is included in the EU ETS, affecting every flight that starts or ends at an EU airport. Germany is the administering State for a number of Chinese airlines. The Chi-nese government has prohibited its airlines to take part in the EU ETS, resulting in an emerging political conflict between the EU and China and leaving Germany in the position to decide on ac-tions against the Chinese airlines which face sanctions of 100 € per tonne of carbon dioxide emit-ted during their flights to and from Europe.

The EU ETS is not the only tool in Germany’s climate change law. More and more federal states are thinking about setting up their own Climate Change Acts, resulting especially in planning law provisions that will make it difficult to build new coal fired power station or any other energy inten-sive operation. The burden on German utilities and the industry may even grow when the EU adopts its overhauled Energy Taxation Directive which is likely to comprise a new CO2 tax.

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