At a summit of European Union leaders in Sibiu, Romania, this week, German Chancellor Angela Merkel has floated the idea of forming a coalition of willing countries to introduce CO₂ pricing for sectors not covered by the EU Emissions Trading System (ETS).
She told journalists at a press conference that she had backing from other EU countries for the idea “that we need to reconsider how to find common methodologies to regulate the pricing of CO₂ in the areas not covered by emissions trade – buildings, transport and agriculture – as uniformly as possible, at least with a coalition of the willing.”
The chancellor said she is not aiming for a common European solution, because that would take too long. Merkel named the Netherlands as a possible ally, saying the country was currently debating CO₂ pricing.
Germany is increasingly under pressure to find ways to reach European climate targets, especially in buildings and transport, where emissions are stagnating. While the energy sector and big industrial plants are covered by the ETS, other sectors fall under the EU Efforts Sharing scheme. Here, Germany must reduce emissions by 38 percent by 2030, compared to 2005, and could end up having to pay billions of euros from its state budget to buy emissions rights from other countries if it does not manage to significantly lower its greenhouse gas emissions.
To avert such payments and bring the country back on track for 2030, Merkel has set up the so-called climate cabinet, a round of ministers with key responsibilities related to climate issues, which plans to introduce necessary legislation by the end of 2019. The cabinet will also look into CO₂ pricing as a possible instrument, starting with a meeting on 17 July. Merkel’s conservative CDU/CSU alliance is struggling to find a joint position on the issue and has debated various concepts, from introducing a CO₂ tax to expanding the ETS to transport and buildings.
