The key principles for a Carbon Management Strategy and draft act on the revision of the Carbon Storage Act create new opportunities for investors and project developers.

By Tobias Larisch, Alexander “Stefan” Rieger, John-Patrick Sweny, Jean-Philippe Brisson, and Joachim Grittmann

The German Federal Government’s Carbon Management Strategy and the revision of the Carbon Storage Act (Kohlendioxid-Speicherungsgesetz, KSpG) aim to remove current obstacles to (i) Carbon Capture and Storage (CCS) and (ii) Carbon Capture and Utilisation (CCU)

The court argued that the German government’s 2014 decision on climate protection goals for 2020 was not legally binding.

By Jörn Kassow

On 31 October 2019, the Administrative Court of Berlin dismissed a climate lawsuit brought by German citizens against the government. The plaintiffs had alleged that the government was violating their rights by missing certain climate protection targets.

In 2014, the German government adopted its climate protection goals for 2020, which aimed at a reduction of greenhouse gas (GHG) emissions by 40% (compared to 1990). However, the government now estimates that Germany will only be able to reduce emissions by 32%. Furthermore, Germany will probably not achieve the 14% reduction of GHGs which are not covered by the European Union Emissions Trading System (EU ETS), as required under the so-called Effort Sharing Decision, without credits from emission-reduction projects in third countries.

The Programme includes a new CO2 pricing regime aimed at emissions caused by the building sector and by traffic and transport.

By Jörn Kassow

On 20 September 2019, the German government adopted the Climate Action Programme 2030, a plan to ensure that Germany achieves its climate protection goals for 2030, including a reduction of greenhouse gas emissions by 55% (compared to 1990). The Programme comprises a number of measures for all relevant sectors. Significant measures include:

CO2 pricing: New pricing of CO2 emissions caused by the building sector and by traffic and transport may be the single most important aspect of the Programme. The relevant national emissions trading system will be launched in 2021. Companies selling heating fuel (such as heating oil, gas, or coal) and fuel for vehicles will need to buy one certificate for every tonne of CO2 emitted by the products they sell. While fuel traders will initially bear the costs of these certificates, such costs are likely to be passed on to consumers. The trading system will start with a fixed price of €10 per tonne of CO2 in 2021 and increase to €35 per tonne of CO2 in 2025. After 2025, the market will set the price, within a fixed band. The total quantity of certificates issued throughout Germany shall be in line with the German and European climate targets.

ECJ ruling provides EU Member States more flexibility in designing the promotion of renewable energies.

By Jörn Kassow, Alexander Wilhelm, and Apostolos Papadimitriou 

The European Court of Justice (ECJ) recently ruled that the German Renewable Energy Act of 2012 (Erneuerbare-Energien-Gesetz – EEG 2012) did not constitute State aid (C-405/16 P). The ECJ found that the support mechanism for renewable energies in practice financed by electricity consumers paying the so-called “EEG surcharge”, and the reductions for electricity-intensive companies related to the EEG surcharge, do not constitute State aid because they do not involve State resources.

The ECJ ruling on 28 March annulled a November 2014 decision by the European Commission (EC) that approved the German support mechanism for renewable energies as compatible State aid, and for the most part the reduction of the EEG surcharge for electricity-intensive undertakings. However, in that decision the EC had also ordered Germany to recover a limited part of the reductions that was deemed incompatible.

The Coal Commission’s phase-out proposal includes a €40 billion federal spending package for affected states.

By Jörn Kassow and Patrick Braasch

A German government-appointed body, known colloquially as the “Coal Commission”, has agreed to end coal-fired power generation by 2038. In an effort to meet Germany’s climate goals under the Paris Agreement, the Coal Commission proposes to gradually reduce Germany’s current coal power capacity of 42.6 GW to 30 GW by 2022 and 17 GW in 2030. A review is scheduled in 2032 to decide whether to bring forward the final phase-out from 2038 to 2035.

Coal-burning provided for 40% of Germany’s power mix in 2017, which is well above the EU-28 average of 21% in 2016, and was exceeded only by Bulgaria (45%), Greece (46%), the Czech Republic (54%), and Poland (81%). Coal-fired power plants accounted for 28% of Germany’s total CO2 emissions in 2016, while generating 70% of the energy sector’s total emissions in the same year. Germany will also close its last nuclear plants in 2022, which, as of 2017, still provided for 12% of the power mix. All considered, the country will see a fundamental change in its energy production landscape in the coming years.

After neglecting to heed an initial warning, six Member States may face financial penalties if they do not reduce pollution levels.

By Paul A. Davies, Michael D. Green, and Alexander Wilhelm

The European Commission (EC) has referred the UK, France, Germany, Hungary, Italy, and Romania to the European Court of Justice (ECJ) for failing to adequately tackle and control air pollution in their respective jurisdictions. The Member States, the EC said, had not produced and delivered “credible, effective and timely measures to reduce pollution as soon as possible, as required under EU law”. The EC had already issued these Member States with a warning in January 2018. Polluted and toxic air is thought to cause over 400,000 early deaths each year in Europe. The actions against the UK, France, and Germany concern exceedances of nitrogen dioxide (NO2), while the actions against Hungary, Italy, and Romania target particulate matter (PM10).

The ECJ can impose significant fines stretching to millions of euros, for Member States that fail to remedy their behaviour.

In this blog, a more detailed analysis of the current position in the UK, France, and Germany is set out.

German cities face driving bans for diesel passenger cars in order to meet European Union air quality limit values.

By Joern Kassow

The German Federal Administrative Court recently made a fundamental ruling stating that diesel driving bans are generally admissible. German cities may consider general off-limit areas for diesel fueled cars, as well as partial driving bans on certain heavily used streets.

Currently, approximately 70 German cities do not meet the EU’s nitrogen dioxide air quality limit values. To tackle