400 YEARBOOK OF INTERNATIONAL ENVIRONMENTAL LAW 8. Western Europe B. Germany (1) Climate Change (A) Domestic Legal Developments In February, the federal Cabinet adopted a draft amendment to the Greenhouse Downloaded from https://academic.oup.com/yielaw/article/22/1/400/1659423 by guest on 01 October 2021 Gas Emissions Trading Act (TEHG). The amendment to the TEHG transposes comprehensive amendments to the European Community’s (EC) Directive 2003/87 Establishing a Scheme for Greenhouse Gas Emission Allowances Trading within the Community into German law. The amended TEHG serves the purpose of incorporating the rules of EU emissions trading into the German legal system and regulating the enforcement of the act. The harmonization of EU emissions trading from 2013 reduces the need for national rules. The competences of the federal and La¨nder governments regarding the enforcement are defined more clearly than before. For example, with respect to future emis- sions, monitoring will be a responsibility of the German Emissions Trading Authority (DEHSt) at the Federal Environment Agency. This nationwide uni- form monitoring of reporting ensures that with regard to emissions trading the same conditions for competition will apply to all companies in Germany. The amended TEHG revises emissions trading law in Germany for the coming trading period. From 2012, more than 2,000 installations and 200 airlines will participate in emissions trading. Pursuant to European law, emissions trading will include aviation from 2012 and other emission-intensive industrial sectors from 2013. Total emissions for all installations subject to emissions trading will be reduced by 1.74 percent every year from 2013. Emissions trading will thus make the largest contribution to reducing greenhouse gas emissions in Europe between 2013 and 2020. The fact that emission budgets were stipulated for the long term creates a reliable framework for emissions trading and enhances investment security. From 2013, emissions trading will be harmonized to a greater extent through- out Europe. This mandate applies in particular to the rules governing free allo- cation of allowances and auctioning. So far, the twenty-seven member states have laid down their own rules for free allocation. From 2013, all member states have to apply uniform EC rules. For most installations, the amount of allowances allocated is based on ambitious benchmarks. From 2013, there will be no more free allowances for electricity generation. Power plant operators will have to pay for the emission allowances they need. From 2013, about five times as many emission allowances will be auctioned in Germany compared to the current trading period (2008-12). More than 90 percent of the revenues from auctioning will be used for national and international climate protection and measures implementing the energy concept. COUNTRY / REGION REPORTS 401 The German minister of the environment, Norbert Ro¨ttgen, stated in a press release on 16 February that ‘from 2013 the EC rules on allocation will eliminate the previous distortion of competition. If there are uniform allocation rules, the most efficient companies will be at an advantage in future. For German industry this is an opportunity and a challenge to remain at the spearhead of efficient technologies.’ On 24 August, the federal Cabinet adopted the regulation governing the allocation of allowances for greenhouse gas emissions in the 2013-20 trading period (Allocation Ordinance no. ZuV 2020). This legal basis Downloaded from https://academic.oup.com/yielaw/article/22/1/400/1659423 by guest on 01 October 2021 makes it possible for the federal government to allocate emission allowances free of charge to almost 2,000 facilities that will take part in emissions trading in Germany in the trading period between 2013 and 2020. In addition, it identifies the data required for the allocation process pursuant to section 9 of the TEHG and further elaborates the requirements under sections 8, 24, and 27 of the TEHG. The allocation ordinance fully transposes EC provisions into German law. In the first eight years of EC emissions trading, the member states had some leeway in establishing their own rules for the free allocation of emission allow- ances. Germany, for example, had a separate allocation law governing the rules for allocation. After 2013, there will be a noticeable harmonization in emissions trading across Europe. This also extends to the allocation rules adopted under EC Commission Decision 2011/278 of 27 April 2011. The number of free allocations will be much lower after 2013 compared to the two previous trading periods. This decrease can be attributed to the intended and targeted restriction of available allowances and to the fact that the entire electricity sector is excluded from the free allocation of allowances. In the past, the full monetary value of the certificates allocated to the electricity sector for free was passed on to the clients and added to their electricity bills as extra costs. In the future, it will no longer be possible to reap ‘profits’ of this kind. As of 2013, most facilities will receive allocations based on product-related emission levels. These so-called ‘product benchmarks’ have been fixed for the whole of Europe and are based on the 10 percent most-efficient European facil- ities. As a consequence, inefficient plants will have to buy an increased number of emission allowances in the future. Facilities from sectors threatened by a carbon leakage risk—that is, where production may be relocated to other countries, will receive an unrestricted amount of allowances, whereas allocations to other facil- ities will be gradually reduced by 30 percent between 2013 and 2020. (B) International Legal Developments and Germany’s Response On 26 April, a group of the largest greenhouse gas emitters discussed specific climate protection measures in Brussels. At the climate forum in Brussels, representatives of the seventeen largest economies worldwide, which are respon- sible for about 80 percent of total greenhouse gas emissions, participated in the Major Economies Forum. The meeting in Brussels was the first since the Cancun 402 YEARBOOK OF INTERNATIONAL ENVIRONMENTAL LAW climate summit in December 2010. The goal of the meeting was to fine-tune the Cancun Agreements and to assess political framework conditions for success at the forthcoming climate conference in Durban, South Africa. In July, the Petersberg Climate Dialogue II was held in Berlin to prepare for the UN climate summit that took place in Durban, South Africa, at the end of 2011. Federal Minister of the Environment Ro¨ttgen noted: ‘Last year on the Petersberg near Bonn we set the course for the outcome of the United Nations Climate Change Conference in Cancun. We want to build on this tradition. This Downloaded from https://academic.oup.com/yielaw/article/22/1/400/1659423 by guest on 01 October 2021 year, too, we want to use this informal ministerial meeting to mark out at pol- itical level an ambitious yet realistic framework for the upcoming UN Climate Change Conference in Durban.’ Germany and the EC advocated legally binding reduction targets as described in the Kyoto Protocol. A binding legal framework provides transparency, en- sures that countries and private players have a predictable planning base, and generates confidence that commitments will actually be kept. However, those states that made reduction commitments under the Kyoto Protocol will not be able to stop climate change on their own. These countries account for less than one-third of global emissions, and their share continues to fall. Therefore, Germany and the EC are calling on the United States to make comparable commitments and for the major newly industrialized countries to set themselves appropriate and binding targets. The 2011 Petersberg Climate Dialogue II focused on linking implementation and negotiation. Germany shared the chair of the Petersberg Climate Dialogue with the president of the next climate change conference in South Africa. In December, the Climate Change Conference in Durban (COP-17) paved the way for a comprehensive climate agreement between all countries following long and tough negotiations. Minister of the Environment Ro¨ttgen welcomed the ‘Durban package’ as a ‘major, groundbreaking success for global climate protection.’ He particularly stressed the importance of the decision to start im- mediately with the preparation of an international climate agreement that is to be legally binding for all countries. On this basis, it was possible for the COP to agree on a second commitment period for the Kyoto Protocol to follow on from the first commitment period, which expires at the end of 2012. Furthermore, there is to be a work plan for greater mitigation in order to enhance the mitigation measures of countries until the conclusion of a legally binding agreement. Additionally, the operationalization of the Green Climate Fund for financing climate protection and adaptation measures in developing countries was adopted in Durban. The Durban package also includes the estab- lishment of structures for an Adaptation Committee and a Climate Technology Centre and Network. Minster of the Environment Ro¨ttgen commented: ‘The Durban Package marks a qualitative leap forward. We have now laid the foundations and achieved the momentum for the first international climate agreement to apply to all countries. COUNTRY / REGION REPORTS 403 With a strong alliance between the EU, the least developed countries and the small island states, which are most vulnerable to the impacts of climate change, it has been possible to put together a package of measures that will require commitment from all parties in the long term, above all from the biggest emit- ters. We will continue this alliance beyond the conference.’ (C) International Climate Co-operation Downloaded from https://academic.oup.com/yielaw/article/22/1/400/1659423 by guest on 01 October 2021 In 2011, Germany’s Federal Ministry for the Environment approved funding for a unique project that will develop insurance solutions in Caribbean states par- ticularly vulnerable to climate change.