German Bundestag to Adapt Emissions Trading Act to EU Directive
On November 27, 2024, the German Bundestag will consider a draft law to adapt the Greenhouse Gas Emissions Trading Act (TEHG) to the amended Directive 2003/87/EC (TEHG-Europarechtsanpassungsgesetz 2024). The draft law is a response to the European Union’s Emissions Trading System (ETS) Directive, which was amended in 2022 to strengthen the EU’s climate targets.
Background
The EU ETS is a cap-and-trade system that sets a cap on the total amount of greenhouse gases that can be emitted by certain sectors, such as power plants and industrial facilities. Companies that emit greenhouse gases must purchase allowances, which allow them to emit a certain amount of greenhouse gases. The price of allowances is determined by supply and demand, and it can fluctuate significantly.
The TEHG is the German law that implements the EU ETS. The TEHG sets out the rules for the allocation of allowances, the monitoring and reporting of emissions, and the enforcement of the ETS.
Proposed Amendments
The proposed amendments to the TEHG will align the German law with the amended EU ETS Directive. The amendments will:
- Reduce the overall cap on greenhouse gas emissions in the EU ETS.
- Increase the number of allowances that are auctioned, rather than being given away for free.
- Create a new carbon border adjustment mechanism (CBAM), which will impose a carbon price on imports from countries that do not have a carbon pricing system.
- Establish a new Innovation Fund, which will support the development and deployment of low-carbon technologies.
Bundesrat’s Position
The Bundesrat, the upper house of the German parliament, has reviewed the draft law and has issued a statement of its position. The Bundesrat supports the overall goals of the proposed amendments, but it has raised concerns about the impact of the CBAM on German industry. The Bundesrat has also called for the government to provide financial support to German companies that are affected by the CBAM.
Government’s Response
The German government has issued a response to the Bundesrat’s statement. The government has stated that it is committed to mitigating the impact of the CBAM on German industry. The government has also stated that it is working with the European Commission to ensure that the CBAM is implemented in a way that is fair and effective.
Next Steps
The draft law will now be considered by the Bundestag. If the Bundestag approves the draft law, it will be sent to the Bundesrat for final approval. The law is expected to enter into force in 2025.
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Drucksachen a new article on 2024-11-27 11:00 titled “20/13962: Unterrichtung Entwurf eines Gesetzes zur Anpassung des Treibhausgas-Emissionshandelsgesetzes an die Änderung der Richtlinie 2003/87/EG (TEHG-Europarechtsanpassungsgesetz 2024) – 20/13585 – Stellungnahme des Bundesrates und Gegenäußerung der Bundesregierung (PDF)”. Please write a detailed article on this news item, including any relevant information. Answers should be in English.
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