• Natural Gas News

    German Climate Law Needs Work: Gas Industry


Although it is a start, it needs a major adjustment to the tax regime to have its intended effect, argues Zukunft Erdgas.

by: William Powell

Posted in:

Natural Gas & LNG News, Europe, Premium, Carbon, Renewables, Gas to Power, Corporate, Investments, Political, Ministries, Tax Legislation, Environment, News By Country, Germany

German Climate Law Needs Work: Gas Industry

Germany's coalition government agreed September 20 a law intended to bring the country back on course to meet its climate target for 2030 – just in time for a UN summit on climate change September 23.

The aim of the law is to cut greenhouse gas emissions by 55% from 1990 levels and the law will come at a cost estimated at $60bn by 2023, with new taxes on emissions from transport and heating. These sectors do not fall under the European emissions trading scheme. The taxes will rise from €10/metric ton in 2021 to €35/mt in 2025.

Industry lobby group Zukunft Erdgas said that a key part of the mechanism for lowering emissions, the harmonisation of the tax system, is missing. Such a reform would penalise gas less heavily than fuel with higher carbon content. The tax is levied on a kilowatt-hour of energy, so there is no distinction between heating oil and gas and so no financial incentive to switch, ZE head Timm Kehler told NGW

Bringing the heating market and the transport sector into the emissions trading scheme "has enabled a pragmatic entry into CO2 pricing. The already existing law must in future be geared towards CO2 savings. If politics does not put the starting blocks in line now, the CO2 price will go nowhere," ZE said. 

Gas can contribute to a rapid reduction in CO2 emissions both in the electricity and heating markets and in the transport sector. "Federal government must therefore now also take into account in particular the potential of green gas, if it is serious about climate protection. So now it's time to build on the solid foundation of the benchmark law and further strengthen the importance of gas for smart sector interconnection," it said.

The text was agreed on another Climate Strike day – the series of global protests against the quantity of man-made carbon dioxide emissions – led by schoolchildren inspired by Swedish teenager Greta Thunberg. Media have reported that the UN is only allowing countries announcing ambitious new carbon-cutting targets, or assisting developing countries fight climate change, to speak at the event to be held in New York.