Federal Environment Minister Carsten Schneider (SPD) emphasized the importance of the European Emissions Trading System (ETS) as the cornerstone of climate policy during a meeting of EU environmental ministers in Dublin, while ongoing negotiations regarding a major reform of the EU’s emissions trading scheme are underway. Schneider defended the ETS, stating that while the system must provide a reliable framework for investment, it also needs to account for the varied situations of different industries, warning that companies that have already begun transitioning must not be disadvantaged. He firmly asserted that climate protection and industrial competitiveness are not contradictory; rather, successful decarbonization strengthens Europe’s industrial future.
The EU Commission proposes a substantial overhaul of the emissions trading system for energy and industry (ETS-1). This reform is designed to allow for significantly higher greenhouse gas emissions across these sectors, meaning that CO2 emissions could be approximately 30 percent higher by 2040 compared to forecasts based on maintaining the current CO2 reduction path.
Currently, affected companies must purchase certificates for every tonne of CO2 equivalent emitted-primarily from burning coal, oil, and gas-and the total volume of these certificates decreases annually, creating a fixed ceiling on CO2 emissions for the energy and industrial sectors. Under the new proposal, the Commission aims to slow the annual reduction of available certificates considerably. The current reduction rate of 4.3 percent is planned to drop to 4.4 percent in 2028, and subsequently slow further to 3.7 percent in 2031 and 1.7 percent by 2036.
Furthermore, the proposal addresses the allocation of free CO2 certificates, which have been partially reduced as part of the “Fit for 55” EU climate package aimed at steering the continent toward a manageable two-degree Celsius warming path. The Commission’s new idea is to continue providing free certificates to companies beyond 2030, provided that the funds are committed to reinvestment in decarbonization efforts.
The emissions trade reform will be complemented by other measures, including a focus on reducing fossil fuel emissions, creating an action plan for electrification, and introducing legislation aimed at “future-proof electricity bills.” The EU Commission’s proposal sets an electrification goal of 46 percent by 2040. To support this, electricity taxes are expected to become lower than gas taxes in the future, and grid fees must be redesigned for greater efficiency to optimize the energy system. Additionally, the use of smart meters is slated for a significant increase.
Minister Schneider specifically praised the electrification plan, noting that further electrification of transport, buildings, and industry is a critical lever for a competitive and climate-neutral European economy. He suggested that the proposed European Electrification Action Plan could provide a solid foundation by integrating the expansion of power grids, ensuring access to affordable and sufficient renewable energy, and facilitating investments in electrical technologies.
Finally, Schneider stressed the fundamental importance of climate protection, referencing the extreme heatwaves experienced that summer. He stated that the core goal of climate protection is protecting people. When cities overheat for days, reducing nighttime cooling, it poses a serious health risk to the elderly, children, the sick, and workers. Therefore, he emphasized the urgent need for Europe to deliberate on effective climate protection and better preparation against global warming’s consequences, aiming to make cities, infrastructure, and nature more resilient while consistently lowering emissions.
