Main climate regulations, policies and authorities
International agreementsDo any international agreements or regulations on climate matters apply in your country?
Paris AgreementGermany is party to many international treaties on climate matters. An important treaty is the Paris Agreement, which is part of the UN Framework Convention on Climate Change (UNFCCC) and succeeds the Kyoto Protocol. The Paris Agreement entered into force in November 2016 and became legally binding, after 55 countries (issuing at least 55 per cent of the worldwide emissions) ratified it. It will become effective in 2020. The parties undertake to limit the temperature increase to well below 2°C above pre-industrial levels and pursue the more ambitious limit of a 1.5°C increase. For this reason the states set up plans with ‘Nationally Determined Contributions’. As of 2018, every five years, the plans are reviewed to ascertain whether the states have met their objectives and to determine new contributions, which have to be more aspirational every time (‘ambitious mechanism’).
German Climate Plan 2050 and Climate Protection PackageGermany has developed a climate change long-term strategy as required by adopting the ‘Climate Plan 2050’ only 10 days after the Paris Agreement entered into force. The plan implements the obligations of the Agreement by setting national climate protection measures, for example the reduction of greenhouse gases (GHGs) until 2050 by 5-20 per cent compared with 1990. Each individual economic sector is allocated its own set climate target. In addition, the German Climate Protection Package of autumn 2019 provides for a bundle of measures aimed at steeply reducing GHG emissions.
Montreal ProtocolOn the basis of the Montreal Protocol, the EU adopted the ‘F-gas Regulation’ to reduce emissions of fluorinated GHGs that have a global warming effect up to 23,000 times greater than CO2. The F-gas Regulation is directly applicable in all EU member states. It limits the placing on the market of hydrofluorocarbons and products and imposes conditions on the use of products and equipment that contain F-gases. By 2030, it aims to cut the EU’s F-gas emissions by two-thirds compared with 2014 levels, which would slow down global warming considerably.
International regulations and national regulatory policiesHow are the regulatory policies of your country affected by international regulations on climate matters?
The 20-20-20 goals of the EUAccording to the 2020 Climate and Energy Package, EU member states have to cut their GHG emissions by 20 per cent (compared with 1990 levels), increase their use of energy from renewables by 20 per cent and improve energy efficiency by 20 per cent by 2020. The EU further undertakes to reduce GHG emissions by at least 40 per cent by 2030 compared with 1990, to comply with the Paris Agreement.
German goalsGermany will achieve the EU’s 2020 cut in GHG emissions. Yet, it had set the more ambitious goals of cutting emissions by 40 per cent in 2020 and by 55 per cent in 2030. Currently, only an emissions reduction of 32 per cent by 2020 is expected. Regarding the 2020 Climate and Energy Package goals, the government has issued the programme ‘Climate Protection 2020’ encompassing further measures. To implement the Paris Agreement, Germany has a long-term strategy (Climate Plan 2050) with the goal of cutting climate-damaging emissions by 80-95 per cent by 2050.
Main national regulatory policiesOutline recent government policy on climate matters.
Phaseout of coal-fired power plantsIn Germany, the mining of black coal ended in 2018. To further reduce CO2 emissions, the German government launched a Commission to develop a strategy for the phaseout of coal-fired power plants all together. In its final report (January 2019), the Commission recommended a step-by-step withdrawal, with the last German power plants to be decommissioned by 2038. By 2022, the capacity must be reduced by 30GW and by up to 17GW until 2030. In 2032, a review must be performed on whether the last power plants can be taken off the grid earlier than 2038. The phaseout should not harm either power consumers or energy companies. Based on recommendations of the Commission on economic, social and structural side measures, the government has adopted a bill strengthening the ‘structures’ in the coal areas by subsidies and other measures in summer 2019. Parliament will adopt the bill by the end of 2019.
German Climate Protection ActThe German bill on climate protection is to be passed by the end of 2019. It aims at achieving the 2030 climate target of a 55 per cent reduction in emissions. All sectors (eg, traffic or industry) will be assigned a fixed saving target to be reached and fixed amounts of annual CO2 emissions. Under the bill, each ministry decides on measures to achieve the required reductions. Moreover, the government decided on further reduction measures which still have to be implemented.
Main national legislationIdentify the main national laws and regulations on climate matters.
Industrial installationsOne of Germany’s key pieces of legislation regarding climate matters is the Greenhouse Gas Emissions Trading Act (TEHG) and pertinent regulations and guidelines. On the basis of the new regulations for the fourth trading period (2021-2030), industrial operators submitted their applications to the national emissions trading authorities by end of July 2019 and are currently awaiting decisions on the allocation of allowances. Another important regulation is the Renewable Energy Sources Act, aimed at the sustainable development of energy supply. The share of electricity generated from renewable energies in gross electricity consumption is to increase to 40-45 per cent by 2025, 55-60 per cent by 2035 and at least 80 per cent by 2050.
Car trafficGermany has implemented the EU Air Quality Directive imposing limit values for particulate matter, NO2 and CO2 from car traffic. Yet, in many German cities these limits have been clearly exceeded for several years so that the European Commission has initiated infringement proceedings against Germany. A German environmental NGO has in an unprecedented way sued these cities aiming at mandatory measures to reduce the emissions from car traffic. Ultimately, cities like Stuttgart and Hamburg had to issue local driving bans especially for older diesel cars. These cars were found in the ‘Diesel scandal’ to exceed the limits allowed per vehicle and, thus, disproportionately contribute to the exceedances. Further driving bans in other cities are expected unless other measures are taken to reduce traffic emissions.
National regulatory authoritiesIdentify the national regulatory authorities responsible for climate regulation and its implementation and administration. Outline their areas of competence.
MinistriesIn Germany, the responsibilities for climate regulation are split between the Federal Ministry for the Environment and the Federal Ministry for Economic Affairs and Energy.
Environment AgencyThe Environment Agency gathers data concerning energy generation, consumption and environmental impacts. It commissions expert opinions and provides policy advice to the public sector and information to the public.
Network AgencyThe Network Agency is competent for approval proceedings for the 380kV networks intended to transport electricity from the windy North of Germany to the more industrialised South. In August 2019, it auctioned the frequency blocks for the 5G mobile broadband system. The auction ended after numerous bidding rounds with total proceeds of approximately €6.6 billion. With regard to the promotion of renewable energies, the Network Agency organises tender procedures for capacities of electricity from renewable energy sources and determines the level of remuneration for electricity generated from the various renewable energy sources. The competition among bidders in the tender procedures relates to the guaranteed feed-in tariff per kWh for 20 years.
Emissions Trading AgencyThe Emissions Trading Agency (DEHSt) handles all matters regarding emissions trading of industrial installations and energy producers under the European Union Emissions Trading Scheme (EU ETS) including allocation, exchange of data with the European Commission (such as the list of installations covered by the EU ETS and the number of allowances applied for) and related litigation. It further manages a compensation scheme for the extraordinary financial burdens imposed on operators by the energy turnaround. Ultimately, DEHSt is also ‘Designated National Authority’ for Clean Development Mechanism projects and the ‘Designated Focal Point’ for Joint Implementation projects.
General national climate matters
National emissions and limitsWhat are the main sources of emissions of greenhouse gases (GHG) (or other regulated emissions) in your country and the quantities of emissions from those sources? Describe any limitation or reduction obligations. Do they apply to private parties in your country?
National emissionsIn 2018, Germany released in total 868.7 million tonnes GHG into the atmosphere. Renewable energies have, according to the Environmental Agency, avoided approximately 184 million tonnes of CO2 equivalent. Among GHGs, CO2 has the biggest share with around 88 per cent.
Combustion of fossil fuelsThe main source of emissions in Germany is the combustion of fuels releasing GHG emissions (ie, energy-related emissions) (84.5 per cent), followed by industrial processes (7.1 per cent), agriculture (7.3 per cent) and waste treatment (1.1 per cent) (all figures relating to 2017). Energy-related emissions encompass generation of electricity (40 per cent), and heating and traffic (60 per cent). Emissions from certain industrial operations are capped by the national ceiling set by the European Commission under the EU ETS and progressively reduced.
Coal-fired power plantsGermany currently has more than 100 coal-fired power plants with a capacity greater than 100MW. As Germany is phasing out nuclear energy and simultaneously is obliged to reduce CO2 emissions from power plants, a boost of energy from renewable energy sources is necessary. Under the draft Climate Protection Act, Germany undertakes to reduce CO2 emissions from all sectors by 80-95 per cent by 2050 (see question 3). The Climate Protection Act obliges the public sector, not private parties.
F-gasesF-gases together with solvents accounted for 1.7 per cent of the German GHG emissions in 2017. They are used in daily products such as in insulating materials, climate installations and fire extinguishers. Limits in products are regulated in the EU F-Gas Regulation and address producers and distributors.
National GHG emission projectsDescribe any major GHG emission reduction projects implemented or to be implemented in your country. Describe any similar projects in other countries involving the participation of government authorities or private parties from your country.
Climate Protection PackageIn autumn 2019, the German government issued a ‘Climate Protection Package’ entailing investments of €54 billion to be spent by 2023 encompassing various actions. For CO2 emissions caused by car traffic or domestic heating a rising price has to be paid as of 2021 (ending at €35 in 2026). Fossil fuels for car traffic and heating will, thus, become more expensive. After 2026, these emissions are to be integrated in the EU or a German ETS. Further, the installation of 1 million charging stations for electrical cars by 2030 is subsidised, the costs for train tickets are reduced and air travel charges will be increased. Carbon emissions reductions in housing are incentivised as well as the replacement of oil-fired with more climate-friendly heating systems.
Industrial installations and the EU ETSindustrial installations subject to the EU ETS are preparing for the fourth trading period (2021-2030) with a further reduced cap of total emissions allowances, progressively sinking numbers of allowances and the phaseout of exemptions.
Domestic climate sector
Domestic climate sectorDescribe the main commercial aspects of the climate sector in your country, including any related government policies.
Nuclear phaseout and consequencesThe German government decided the day following the Fukushima nuclear accident in 2011 to phase out nuclear energy. Since then, 10 out of 17 nuclear plants have been decommissioned and the last one will be phased out in 2022. Consequently, Germany depends on energy generated by either coal- or gas-fired power plants or from renewable energy sources. Since coal-fired plants will also be phased out by 2038, renewable and other carbon-neutral energies have to fill in the gap and the high-voltage grids are needed to bring electricity to Southern Germany.
Electricity from renewablesIn 2018, renewables provided approximately 17 per cent of the final German energy consumption. Germany offers various economic incentives to promote renewable energy generation and thereby reduce fossil fuels and GHGs. Producers of electricity from renewable energy sources feed it into the transmission grid and receive a fixed feed-in tariff per kWh for 20 years from the transmission system operators. The difference between feed-in tariffs and prices at the spot market at the European Electricity Exchange is shifted to electricity consumers as part of their electricity price. The mechanism promotes the expansion of renewables. Producers can also sell their ‘green electricity’ directly on the spot market and can claim a market and management premium.
Subsidies and tax incentives for electric cars and decarbonisationSubsidies in the amount of €4,000 are granted for the purchase or leasing of certain new battery-electric vehicle and fuel cell vehicle models. For plug-in hybrids that are rechargeable from the outside, an environmental bonus of €3,000 is granted. Electric car owners do not have to pay taxes for up to 10 years after the registration of their vehicle. Under the Climate Protection Package further subsidies are foreseen (see question 7).
General GHG emissions regulation
Regulation of emissionsDo any obligations for GHG emission limitation, reduction or removal apply to your country and private parties in your country? If so, describe the main obligations.
Emissions controlUnder the German Emissions Control Regulations and the Technical Instruction on Air Pollution, limit values are set for certain emissions of industrial plants at defined measurement conditions. If such limits are violated several times or regularly the emissions control authority can enforce compliance and impose sanctions on the operator.
EU ETSFurther, the duties under the EU ETS apply to certain listed industrial activities releasing GHG emissions. The installations performing such activities require an amount of allowances corresponding to their GHG emissions. Upon application, DEHSt allocates a number of cost-free allowances to the industrial activities for the relevant trading period. Since the number of available cost-free allowances is progressively reduced the operators must either invest into CO2-reducing technologies or acquire the missing allowances.
Reduction of capThe allowances available EU-wide are reduced every calendar year, for example in the trading period 2021-2030 by 48 million allowances each year (the EU-wide cap, thus, decreasing from 1.8 billion certificates in 2021 to 1.3 billion certificates in 2030).
GHG emission permits or approvalsAre there any requirements for obtaining GHG emission permits or approvals? If so, describe the main requirements.
Emissions control permitThe operator first needs a permit for the industrial activities under the Emissions Control Act containing overall emissions limits. With regard to GHG emissions the operator must have a GHG emissions permit which is, for old existing plants the (same initial) permit under the Emissions Control Act.
GHG emissions permitFor newer installations a separate permit under the German Emissions Trading Act is required. The operator must submit, together with the permit application, a description of the activity, location, type and scope of activity and applied technologies. Also, the sources and quantities of emissions and the commissioning date have to be provided. In the case of complex installations additional (technical) documentation on the relevant parts, process steps and ancillary installations is to be submitted.
Oversight of GHG emissionsHow are GHG emissions monitored, reported and verified?
See question 14.
GHG emission allowances (or similar emission instruments)
RegimeIs there a GHG emission allowance regime (or similar regime) in your country? How does it operate?
Allowance regimeThe aim of the EU ETS is to cost-effectively reduce GHG emissions. In the third trading period an overall EU cap with the allowances then allocated to single EU member states was established. This cap is reduced every year so that by 2030 a total reduction by 43 per cent compared with 2005 levels is reached. As a result, the costs for GHG emissions are expected to rise, while emissions decrease. For each tonne of CO2 that a company emits, it has to surrender one emission allowance. Some operators receive a limited number of allowances cost-free. If operators emit more GHGs than covered by allowances, they have to purchase allowances from other operators, in auctions or on the spot market. This results in a trading price for CO2 as an always scarcer commodity on the market and a general incentive to reduce emissions through technology.
ValidityEmissions allowances are allocated to activities or installations by an administrative decision, which, according to precedents of the European Court of Justice, can be corrected by DEHSt, also retroactively within a trading period. The German courts in most cases decide in favour of DEHSt since even retroactive withdrawals of allowances serve the overarching objective of reducing GHG emissions.
RegistrationAre there any GHG emission allowance registries in your country? How are they administered?
Union registryIn the third trading period (2013-2020) of the EU ETS a ‘Union registry’ was established. It is the central register for GHG emission allowances of all 31 countries that participate in the EU ETS. All allowances issued under the EU ETS are precisely recorded in this registry.
National registriesIn addition, national registries exist, which, in Germany, are administered by DEHSt. Allowance trading can only be done on the level of national registries.
MechanismEach year in March, operators of installations subject to the EU ETS determine their total GHG emissions of the previous year. They submit the data for verification to acknowledged bodies and the verified data to DEHSt, which transfers them to the Union registry. In April, the operators surrender the required allowances for their emissions of the previous year, which is shown in their account in the Union registry.
Obtaining, possessing and using GHG emission allowancesWhat are the requirements for obtaining GHG emission allowances? How are allowances held, cancelled, surrendered and transferred? Can rights in favour of third parties (eg, a pledge) be created on allowances?
AllocationEmissions allowances are allocated to existing installations upon application by DEHSt for the following trading period according to applicable regulations. The application deadline for the fourth trading period was the end of June 2019. For new installations an application has to be submitted before they become operational. The operator must provide relevant descriptions and verified data regarding the relevant installation, processes and technologies, raw and other materials releasing GHGs, emissions, their sources and planned measures for monitoring and reporting. In its allocation decision DEHSt delimitates the activities performed and emissions of the installation, sets out the monitoring plan, conditions for reporting and the obligation to surrender a number of allowances corresponding to the emissions generated in the previous year and states, where applicable, further duties or conditions.
Administering allowancesEmissions allowances are held in the operator’s account at the national registry. They are transferable by a purchase of rights contract, but the transfer must also be entered in the national registry. Without the latter the transfer is not effective. An entry in the German registry is presumed to be correct (like the land registry). Allowances are now also fully transferable to the next trading period. Surrender of allowances occurs via reporting to the Emissions Trading Agency and leads to their expiry. Pledges can be created on allowances but must also be entered into the German registry.
Trading of GHG emission allowances (or similar emission instruments)
Emission allowances tradingWhat GHG emission trading systems or schemes are applied in your country?
There is no regulatory scheme for emissions trading; the trade occurs based on contracts regulating numbers, price, duration and further stipulations (see question 16).
Trading agreementsAre any standard agreements on GHG emissions trading used in your country? If so, describe their main features and provisions.
There are more and more contract models for trading emissions allowances - either specific contracts for emissions trading or general contracts with appendices tailored to emissions allowances. Examples are the English Agreement for the Sale and Purchase of Allowances on the one hand and the ISDA Agreement with the ISDA Allowances Appendix (similarly the EFET Allowances Appendix) or the Emissions Trading Master or the Emission Allowances Single Trade Agreement for the EU Scheme of the 20-year old IETA on the other hand. In Germany a Master Agreement for Financial Derivative Transactions is available combined with an Annex for Commodities Transactions (including emissions allowances) used between banks and with additional clauses for non-bank purchasers. Single transactions can be agreed orally, but are usually confirmed in writing. The master agreement can only be terminated for cause, which extends to the individual transactions (‘single agreement concept’).
Sectoral regulation
Energy sectorGive details of (non-renewable) energy production and consumption in your country. Describe any regulations on GHG emissions. Describe any obligations on the state and private persons for minimising energy consumption and improving energy efficiency. Describe the main features of any scheme for registration of energy savings and for trade of related accounting units or credits.
Energy productionConventional energy production in Germany was in the past primarily based on lignite, followed by coal and nuclear and natural gas. Energy generated from these sources was also exported. Energy production, however, is currently undergoing substantial changes: coal mining had already ceased by the end of 2018 and nuclear energy is being phased out by 2022. While Germany is still the biggest producer of lignite worldwide (despite shrinking quantities), mining activities will probably end by 2038. In 2018, 22.5 per cent of German electricity was still generated from lignite (166.3 million tonnes).
Energy consumptionThe German primary energy consumption in 2018 was split between crude oil (34.1 per cent), natural gas (23.5 per cent), lignite (11.5 per cent), coal (11.1 per cent) and nuclear energy (6.4 per cent). Crude oil and natural gas are mainly used for heat supply and transportation, while coal serves mainly for electricity generation. Since Germany has hardly any of its own crude oil it must be imported. This applies correspondingly to natural gas, where consumption exceeds the production rate. Both natural gas and coal are mainly imported from Russia.
GHGsGHGs are mainly generated by the combustion of fossil fuels. In 2017, 84.5 per cent of GHGs related to energy generation and 15.5 per cent related to industrial processes, waste incineration and agriculture.
RegulationsGHG emissions have been significantly reduced by around 27 per cent since 1990, among other things due to the decommissioning of industrial plants and the increased use of renewable energies.
Energy savingsOwing to the particularly high energy costs in Germany operators have a vital interest in energy savings and the use of intelligent technologies. Energy savings in energy and industrial installations are further required and incentivised by various regulations (no trading schemes). For example, the Industrial Emissions Directive obliges operators to implement the best available techniques (BAT) over time and correspondingly upgrade and modernise their installations (including energy efficiency measures). Domestic energy savings and instruments are often subsidised by the government (insulation, smart metering, smart home) or imposed by eco-design requirements, but the bulk of energy saving is due to the expansion of electricity generated from renewable energy sources.
Other sectorsDescribe, in general terms, any regulation on GHG emissions in connection with other sectors.
Agriculture and forestryIn 2016, agriculture and forestry accounted for approximately 7.2 per cent of the German GHG emissions either caused by animals and use of their manure or when converting or ploughing carbon-rich soils in forests or grasslands. To address the latter the EU has adopted a regulation directly applicable in Germany to preserve grasslands and forests by prohibitions to convert or plough them and subsidies for extensive use of grasslands and re-forestation.
GHG by exploitation of fossile fuels and industrial processesGHGs generated when exploiting fossile fuels and minerals are subject to the EU ETS as well as the industrial activities (accounting for 7.1 per cent of the GHG emissions in 2017) listed in the Annex to the German Emissions Trading Act.
Waste-to-energyWaste incineration accounted for 1.1 per cent of the German GHG emissions in 2017. This low figure and a reduction of almost 73 per cent of GHG emissions since 1990 are a result of a successful restructuring of the waste management sector phasing out landfilling of untreated wastes, consistent waste separation and energetic use of wastes. Waste-to-energy plants exceeding 20MW of rated thermal input are subject to emissions trading.
TransportationAviation has been included in the EU ETS despite the fierce resistance of the US and China; the shipping sector is likely to follow despite being even more complex. Railways are considered the ‘greenest’ transport means, hence why there is no discussion of GHG in this sector. The traction current of Deutsche Bahn is by 40 per cent supplied from renewable energy sources. Car traffic is still a major contributor of GHG in transportation. Yet, the reductions are not addressed in a single regulation but by a variety of measures (see question 7).
Renewable energy and carbon capture
Renewable energy consumption, policy and general regulationGive details of the production and consumption of renewable energy in your country. What is the policy on renewable energy? Describe any obligations on the state and private parties for renewable energy production or use. Describe the main provisions of any scheme for registration of renewable energy production and use and for trade of related accounting units or credits.
FiguresIn connection with the ‘energy turnaround’ in 2011 as a reaction to the Fukushima nuclear disaster, Germany vigorously promoted and expanded energy generation from renewable energy sources. In 2018, a total of 428TWh were generated from renewable energies. The share of electricity generated from renewable energy sources increased from 20.1 per cent in 2011 to 37.8 per cent in 2018. In the heating sector, renewable energy rose to 13.9 per cent in 2018, while the share in the transport sector remained at a similar level (5.6 per cent). In total, the share of renewable energies in the final energy consumption across all sectors amounted to 16.6 per cent in 2018 (2011: 12.2 per cent).
PolicyThe Renewable Energies Act of 2000 has been a successful instrument in fostering the increase of energy generated from renewable energy sources. The mechanism of the law is that energy from renewable energy plants is fed into the public electricity grid and the operators receive a determined remuneration from the transmission system operators (TSOs). They sell the injected electricity on the electricity exchange. Because the price received on the exchange is below the determined remuneration rate for renewable energy plant operators, the differential amount is shifted onto each electricity consumer. In 2019, the average apportionment amounts to 6,405ct/kWh.
Direct marketingAlternatively, renewable energy installation operators can also market the power directly. In that case, the difference between the price obtained at the exchange and the feed-in remuneration is compensated by a market bonus (‘market bonus scheme’). The distribution system operator pays the market bonus to the plant operator.
Wind energyDescribe, in general terms, any regulation of wind energy.
FiguresIn 2018, wind energy made the largest contribution to electricity generation from renewable energy sources (111.6TWh), compared to 46.5TWh in 2011. Germany ranks third worldwide regarding installed onshore capacity, behind China and the United States. In 2011, the output was still 46.5TWh. In 2017, almost 2,000 offshore wind turbines were installed off the German coast in 20 offshore wind farms with a combined capacity of approximately 5,387MW.
PermitThe approval procedure for wind parks depends on the quantity of the planned installations. Less than 20 plants can be permitted in a simplified procedure under the Emissions Control Act without public participation. In that case, only an abbreviated environmental impact assessment is to be performed. In the case of public participation, typical objections against wind parks are nature protection issues. Often the collision risk of protected birds (such as the red kite) are issues as well as wind parks establishing an obstacle to the flight routes of many birds.
Current slowdownThe number of wind energy plants put into operation has now decreased dramatically. In the first quarter of 2019 only 41 wind energy plants went into operation (compared to 300 plants in the first quarter of 2018). Reasons for this decline may be the long permit procedures (approximately one year) and increasing resistance against new projects.
Solar energyDescribe, in general terms, any regulation of solar energy.
FiguresIn 2018, electricity generated from photovoltaic (PV) installations benefited from record results of sunshine hours and solar radiation, rising to 46.2TWh. The total number of new photovoltaic installations has been steadily increasing for many years. The share of PV in the final elec-tricity consumption was 7.1 per cent in 2018, while in 2011 it was still 3.2 per cent.
PermitIn general, it is not necessary to obtain planning permission for a PV plant, as long as they are built on roofs or fronts. Open area photovoltaic installations require building permits under the Construction Acts of each federal state. In the state of Hessen, for example, a permit is required for photovoltaic plants exceeding 10m2.
SubsidiesBoth small and large solar systems are supported by the market incentive programme of the Federal Ministry for Economic Affairs and Energy. Homeowners who switch to a heating system using solar power or optimise their heating system receive governmental subsidies (€2,000-4,500). Also, companies that set up renewable energy systems with a rated power greater than or equal to 100kW may obtain federal subsidies. Electricity generated from photovoltaic installations is remunerated under the Renewable Energies Act and depends on the award values from two years ago (currently it is 8,91ct/kWh).
Hydropower, geothermal, wave and tidal energyDescribe, in general terms, any regulation of hydropower, geothermal, wave or tidal energy.
HydropowerIn Germany, hydropower is less important than, for example, in Austria or Switzerland. Owing to a long period of drought in 2018, electricity generation from hydropower was with 16.5TWh at the lowest level since 1991. The share of hydropower in total electricity consumption fell below 3 per cent.
PermitApprovals for hydroelectric power generation are governed by the water laws and regularly limited in time. Environmental issues have become the biggest restrictions for the use of hydropower.
Geothermal energyWith a total of 0.172TWh, geothermal energy increased by 5.5 per cent in 2018 for heating purposes and for generation of electricity from hot waters. The share of geothermal, however, remains marginal in the final electricity consumption in Germany. Owing to damages caused by geothermal drillings in Southern Germany the public is rather reluctant to accept deep drillings.
Permit and subsidiesDeep drillings for geothermal purposes and the later operations require permits under the mining and water laws. Energy from geothermal plants is remunerated with 25.20ct/kWh. Further support is provided by the market incentive programme, which subsidises the replacement of old with new heating systems generating heat from renewable energies.
Tidal energyTidal energy plays a subordinate role in Germany due to shallow waters and weak currents in the North and Baltic Seas. Germany, however, is involved in the international research project ‘Seaflow’ together with the UK, which is geared at developing (export) technologies adapted to marine conditions. Researchers are using tidal currents off the coast of Cornwall to generate electricity.
Waste-to-energyDescribe, in general terms, any regulation of production of energy based on waste.
FiguresWaste-to-energy is the thermal recovery of waste, which is, in a closed cycle economy, the option preferred to landfilling or simple incineration. Often, heat and power are coupled. As a result, the energy performance of waste-to-energy plants can be over 80 per cent. One tonne of waste generates about 600kW of electricity. Further, the waste volume is also reduced to 10 per cent (slag, fused metals, which can be reused). Waste-to-energy is currently applied in 18 plants in Germany and neighbouring countries. It generated electricity for around 700,000 households in 2017 (approximately 3.5 millionMWh of process steam and district heating). Currently, waste-to-energy plants are a bottleneck for the huge waste quantities available in the market. As a result, there has been a drastic increase in price.
PermitWaste-to-energy installations require a permit under the Emissions Control Act with prior public participation. They are, thus, typically subject to resistance by neighbours, environmental NGOs and competing industrial players. There are no specific subsidies or incentive schemes.
Biofuels and biomassDescribe, in general terms, any regulation of biofuel for transport uses and any regulation of biomass for generation of heat and power.
Biofuel figuresIn 2018, sales of biofuels increased by almost 5 per cent to a total of 31.6TWh and making up a share of biofuels in renewable energies of 7 per cent.
PermitStarting materials for biofuel production, such as sugar beet, soy products or wood (renewable raw materials), must meet certain sustainability standards (ie, no soils of high biodiversity or high carbon content can be used).
Biomass figuresIn 2018, around 51.3TWh electricity were generated from biomass. Solid biomass (mainly wood) featured the most important share of renewable energies in the sector heat supply. The share of biomass in generation of renewable energies was 22 per cent in 2018.
PermitDepending on the combustion heat output and the type of fuel, combustion plants are generally subject to permitting procedures under the Federal Emissions Control Act. Depending on the type of fuel an environmental impact assessment needs to be performed. Domestic small combustion plants less than 1MW can be operated without a permit, but the operator has to report on their duties.
SubsidiesFor the generation of electricity from biomass an increased basic remuneration is guaranteed for 20 years. The remuneration depends on the rated power. If the rated power is up to 150kWh, the remuneration amounts 13.32ct/kWh; with a capacity of up to 500kWh it is 11.49ct/kWh.
Carbon capture and storageDescribe, in general terms, any policy on and regulation of carbon capture and storage.
CCSCarbon capture and storage (CCS) is generally seen as a promising technology to combat climate change. CO2 could be captured in industrial pre- or post-combustion or oxyfuel processes and stored in depths exceeding 1,000 metres below the surface. According to experts, CCS could contribute to a 14 per cent reduction of CO2 by 2050. Nonetheless, CCS is far from reaching its full potential. Germany enacted a law on the testing and demonstration of CCS technology in 2012; yet, comparable to deep geothermics or fracking, CCS encounters broad public resistance in view of the long-term storage. For large combustion or gas turbine plants generating electricity (greater than 300MW) the possibility of CCS must be tested by law.
ProjectsSome CCS projects in Northern Germany have been either stopped or abandoned while CCS is currently tested on a pilot scale in a few coal-fired power plants.
Climate matters in transactions
Climate matters in M&A transactionsWhat are the main climate matters and regulations to consider in M&A transactions and other transactions?
EnergyIn transactions climate and energy-related issues play an increasing role. The standard programme should, therefore, encompass a review of energy demand and supply as well as new taxes or charges on energy production or consumption. Use and remuneration of renewable energy sources should be carefully reviewed. Also, energy-intensive industries carrying the burden of the German energy turnaround may be eligible for substantial subsidies or compensation of energy costs.
Emissions tradingThe conditions of emissions trading (if applicable to an installation), in particular in the new trading phase starting in 2021, and its continued expansion to new sectors (after aviation, shipping and possibly other sectors of traffic) should be considered. The rising price for CO2 emis-sions may also trigger technical upgrades or changes in an installation. Some technologies may, in the mid- or long-term, have to be phased out altogether. Due diligence must further extend to ongoing litigation of the relevant target company in relation to these matters. Allowances, subsidies or issues are generally linked to the operations and company so that no transfer is required in the case of a share deal.
Climate changeThe changing climate becomes relevant in transactions where, for example, low temperatures are required or water is needed for industrial operations. During droughts water supplies may become expensive and exceptional permits may be required for extracting water from rivers or from the underground. Climate and energy issues are not only reshaping current industrial operations, but will also impact on their value and future.
Update and trends
Emerging trendsAre there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?
Emerging trends27 Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?Decarbonisation of trafficA bundle of different instruments is either in place or to be adopted in the near future to reduce GHG emissions in car traffic. First, vehicles with high CO2 emissions are increasingly being banned from German cities after an unprecedented wave of court actions initiated by a German environmental NGO based on exceedance of limit values of an EU air quality regulation. One reason for these exceedances was manipulated measurements of the exhaust gases by car manufacturers (the ‘Diesel scandal’). All this has led to a turnaround in the production and the use of cars in cities: electrical cars are heavily incentivised, the cost of public transport has been reduced and the infrastructure for public transport is being reinforced and expanded.
Automated drivingThe German government changed the laws to enable the development, testing and marketing of semi-autonomous cars (level 3) in Germany. Autonomous driving is seen as a cornerstone of future public transport, increased safety and smarter traffic control in cities. German car manufacturers are currently testing pilot cars on certain routes. The German Ethics Commission on Automated Driving has developed guidelines for the programming of automated driving systems to reconcile autonomy and liability of drivers with the advantages and interests of car manufacturers, insurances and data processors.
Overall reduction of allowances under the EU ETSBy further reducing the number of cost-free emissions allowances for industrial operators the EU ETS does not only increase the CO2 prices, but also stimulates technical progress, use of lower-emission fuels and efficiency of operations.
Inclusion of further sectors into the EU ETSShipping traffic is the next big sector to be integrated into the EU ETS. Obligations to monitor, report and verify CO2 emissions from large ships using EU ports have already been enacted, but further measures will follow. It remains to be seen whether car traffic and domestic heating will also become part of the EU ETS in the years to come.
