Berlin Pushes For a 60 Euros Minimum Price on EU Carbon Markets

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Discounting allegations of speculation on the EU carbon market, Berlin is throwing its weight behind a minimum price of 60 euros per ton of CO2, saying it will ensure this through national measures if the EU does not take action.

After prices on the EU carbon market soared in 2021, EU capitals are now seizing the chance for reform as discussions in Brussels continue over the proposed revision of the EU’s Emissions Trading Scheme (ETS) directive.

Many governments are unhappy with the rapid rise of carbon prices, which they accuse of pushing up the cost of electricity.

Among the critics, 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 who fear a voter backlash in the face of rising prices.

Minimum price

Undeterred by critics, the German government, on the other hand, wants to ensure prices are kept high enough to encourage private investments in low-carbon technologies.

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

To the German government, a price of around 60 euros per ton appears as an optimal middle ground between ambitious climate action and social acceptance. Shortly after it came to power last year, the new German government made its position on this very clear.

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

In comments to EURACTIV, the ministry for economy and climate action now reiterated Germany’s continued support for “an ambitious reform – including a minimum price” for EU emission allowances.

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

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

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

More recently 2021 survey conducted by VKU, the association of local public utilities, found that 69.4 per cent of local utilities saw a lack of planning and investment security as the biggest barrier to Germany’s Energiewende. 56.3 per cent of members cited a reform of carbon pricing as their top priority for the German government.