Beware, emissions trading! More renewables doesn't guarantee less CO2

At 44 percent in the first half of 2019, the share of renewables in German electricity consumption was higher than ever before, according to a recent announcement by the Federal Association of the German Energy and Water Industries (BDEW). Correspondingly, the emissions of harmful greenhouse gases from electricity generation fell by around 15 percent in the same period. This is a good contribution to achieving the climate action targets, as the association's Chief Executive Officer, Stefan Kapferer, commented. Or not?

As laudable the efforts of the power suppliers may be, not a single ton of CO₂ is saved directly. This is due to the European Emissions Trading System (EU ETS), to which European electricity producers are subject: generators who cut CO₂ will no longer need their emission allowances for the amount saved and will sell them on the market. Other electricity producers or operators of industrial plants, for whom CO₂ cuts by technical means are expensive, will buy and use these emission permits. Bottom line is that the only thing that has changed is where the greenhouse gases are emitted, but not how much.

Worse still, if market-mediated adjustments in economic sectors not covered by the EU ETS (which account for around half of total EU emissions) are also considered, more green electricity can even result in more emissions. This is just one example of how unilateral action in conjunction with the EU ETS can lead to outcomes that run counter to the best intentions and the climate action goals the EU has set itself.

The direct way to reduce greenhouse gas emissions under the EU ETS is extremely simple: a reduction in emission allowances. This simplicity and the transparency that comes with it was one of the reasons for choosing the instrument almost 15 years ago in the first place. Every reduction of emissions. clearly defined in tons of CO₂-equivalents, is a political decision at the European level. And this was exactly the intention.

This is my own edited translation of a comment published in originally in German on CEN News. 

Last minor revision on September 10, 2020.

The theme image is derived from a photograph by Karsten Würth under non-commercial license.