In February this year, the Federal Cabinet adopted a draft amendment to the Greenhouse Gas Emissions Trading Act ("TEHG"). The amendment of the TEHG implements comprehensive amendments to the EU Emissions Trading Directive, which were most recently made by Directive 2009/29/EC, into national law, further integrates the rules of the European emission trading regime into the German legal system and prepares emissions trading in Germany for the next trading period.

According to European stipulations, air transport will be included in the emission trading system as of 2012 and a lowering of the overall amount of permits and the inclusion of further greenhouse gases as well as additional industrial activity is intended to be included as of 2013. The overall emission amount for all facilities subject to the emission trading obligation is intended to be reduced continuously by 1.74 percent as of 2013. In this way, Emissions trading is the key instrument to reduce greenhouse gas emissions in Europe between 2013 and 2020. From 2013, emissions trading will be harmonised to a greater extent throughout Europe. This applies in particular to the rules governing free allocation of allowances and auctioning. Until now, the Member States of the European Union were allowed to stipulate their own rules for free allocation of emission certificates. As of 2013, uniform EU allocation rules will be the basis for allocation for all Member States. For most installations the amount of allowances allocated is based on ambitious benchmarks so that the previous distortion of competition caused by the currently existing different allocation rules will be eliminated (cf. also "Current Developments").

As of 2013, there will be no more free allowances for electricity generation so that power plant operators will have to pay for the emission allowances they need. Consequently, the amount of auctioned emission certificates can be expected to increase exponentially as of the next trading period.

More than 90 percent of the revenues from auctioning will be used for national and international climate protection and measures for the implementation of the energy concept. The objective of emission monitoring is intended to be regulated uniformly throughout the Federal Republic in future, namely by the German Emissions Trading Authority (DEHSt) at the Federal Environment Agency (Umweltbundesamt). The draft envisages less stringent rules for small installations. Operators of systems emitting less than 25.000 tonnes of CO2 per year can thus file a request for exemption from emissions trading if they commit to carrying out equivalent measures to reduce emissions.

The amendment of the TEHG is currently undergoing parliamentary procedure. A decision is only to be expected after summer recess.