TEuropean Emissions Trading Scheme (EU ETS) covers greenhouse gas emissions from energy and energy-intensive industrial plants as well as intra-European aviation. Auction revenue of around 7.7 billion euros were generated in the EU ETS in 2023. This represents an increase of around 12 per cent compared to the previous year (2022: 6.8 billion euros). The main driver for the growth in total revenue from carbon pricing was the national emissions trading system (nEHS) for heat and transport. In the nEHS, revenue increased by 67 per cent compared to the previous year to around 10.7 billion euros (2022: 6.4 billion euros).
“Carbon pricing via emissions trading is a decisive lever for achieving the statutory climate targets. The recently adopted European climate package clearly emphasises the importance of this instrument. In Germany, more than 85 per cent of emissions are already covered by emissions trading, which provides significant impetus for the climate-friendly restructuring of our society. It is crucial that the revenue from carbon pricing is used in full to actively support the climate-neutral transformation in terms of social and economic policymaking. This will enable emissions trading to combine ambitious climate protection, social compatibility and economic competitiveness. In order to ensure compensation for private households even if carbon prices continue to rise, politicians should now swiftly introduce the “climate payment” (Klimageld) agreed in the coalition agreement,” says UBA President Dirk Messner.
EU-ETS: Increase in auction volumes and higher price compared to 2022
In European emissions trading, the quantity of emission allowances allocated is reduced annually in order to gradually limit emissions to an ever greater extent. Due to increasing shortages on the European carbon market, the quantity of allowance certificates auctioned in 2023 was reduced less than in the previous year.
Due to this effect, the number of allowances auctioned rose to 92 million in 2023 (2022: 85 million). At the same time, the average price of emission allowances also rose. At 83.66 euros in 2023, it was slightly higher than in the previous year (2022: 80.32 euros). Compared to 2020 (24.61 euros), the average revenue has more than tripled.
Companies' backlog demand ensures record revenue
In addition to the EU ETS, the national emissions trading system (nEHS) for heating and transport was launched in Germany in 2021. Until 2022, only the main fuels (petrol, diesel, heating oil, liquefied petroleum gas and natural gas) were initially part of the nETS. From 2023, all other fossil fuels, including coal, were added. In 2023, a total of around 358 million nEHS certificates (nEZ) were sold at a fixed price of 30 euros per nEZ on the European Energy Exchange (EEX) in Leipzig. The total revenue from the nEHS thus totalled more than 10.7 billion euros in 2023.
Of these, around 349 million allowances for 2023 and around 9 million additional certificates for 2022 were sold at the previous year's fixed price as part of a limited buy-back option for certificates. Overall, significantly more certificates were sold last year than in the previous year, which led to significantly higher income (2022: 217 million nEZ with the year designations 2022 and 2021 totalling 6.4 billion euros).
“Although we do not yet have complete emissions data for 2023, we expect emissions to fall compared to 2022 based on preliminary estimates. The massive increase in certificates sold in the nEHS is therefore fortunately not due to increased emissions in the transport and building sectors. Rather, it was due to pent-up demand from companies that had postponed the purchase of their certificates until 2023, as the fixed price in 2022 and 2023 was a uniform 30 euros per nEZ,” explains Jürgen Landgrebe, Head of the “Climate Protection, Energy, German Emissions Trading Authority” department at the German Environment Agency.
The German Emissions Trading Authority (DEHSt) at the UBA is responsible for the implementation of national emissions trading and European emissions trading in Germany. The Leipzig energy exchange EEX sells and auctions emission certificates on behalf of the DEHSt.
Click to enlarge