New figures show that the amount of CO2 recorded by the European emissions trading system is falling significantly. Germany is even earning 18 billion euros.
Greenhouse gas emissions in the energy sector, energy-intensive industry and European air traffic fell by 18 percent last year. Emissions recorded by the European Emissions Trading System (EU ETS 1) in Germany therefore amounted to only around 289 million tonnes of CO₂ equivalents in 2023. The Federal Environment Agency (UBA) of Germany announced this data on July 16. This is the largest decline since the start of the EU ETS 1 in 2005.
“The significant reduction in emissions in the energy sector is a major step towards achieving our climate protection goals,” said UBA President Dirk Messner. The main reasons for this reduction are the expansion of renewable energies and the decline in coal-fired power generation in Germany. Emissions trading plays an important role in this.
Fewer emissions in the energy sector
In the energy supply sector, emissions fell by 22 percent to 188 million tons in 2023. In fact, the federal government has significantly increased the pace of expanding solar energy; the expansion of wind power is also progressing. In addition, significantly less coal is being used to generate electricity. The fact that emissions in this sector fell so sharply was also due to lower demand from industry and households.
In industry, too, the decline of 10 percent to 101 million tons of CO₂ equivalents is mainly due to the German economic weakness. In air transport, emissions even rose by 4.5 percent compared to 2022 to 7.6 million tons (which is still less than before the outbreak of the Covid-19 pandemic).
Revenues from CO2 trading rise to 18 billion euros
Emissions have also fallen outside Germany as part of emissions trading. According to the EU Commission, the decline is only slightly weaker at 17 percent. The EU ETS 1 covers around 40 percent of total greenhouse gas emissions in the EU. In addition to the 27 member states, Norway, Iceland and Liechtenstein also participate. Since 2005, emissions across Europe have fallen by almost half (48 percent).
Every year, the upper limit of permissible emissions is reduced, making it increasingly more expensive and therefore less economical to produce CO₂. Emitters must purchase certificates through emissions trading, which they use to buy the right to emit CO₂. The proceeds from trading in these CO₂ certificates flow back to the state – in Germany, to the federal government. For Germany, these proceeds also rose last year to a new record of 18 billion euros.
Climate money should be used the vulnerable
“In order to ensure compensation for private households, politicians should now quickly introduce the climate money agreed in the coalition agreement combined with specific funding programs for vulnerable households,” said UBA climate expert Jürgen Landgrebe. In this way, emissions trading can combine ambitious climate protection and social acceptability even when prices are rising.
Across all sectors, greenhouse gas emissions in Germany fell by 10 percent last year, the largest drop since 1990. The reduction in the EU ETS 1 was therefore significantly greater than the development of total emissions.
On July 15, President of Germany Frank-Walter Steinmeier signed the Climate Protection Act. This Act abolishes enforceable sector targets for reducing greenhouse gas emissions. This means that there is no longer a requirement to submit emergency programs for individual sectors, such as the transport sector, if other sectors overcompensate for the exceedance. Environmental groups are criticizing the change in the law and have announced or already filed lawsuits against it.
