Germany is to scale back its plan to penalise ageing coal-fired power plants for excess emissions by almost a quarter following opposition from industry, Reuters reported on Monday, citing an economy ministry document.
The government will now require an additional 16 million tonne cut in CO2 emissions from the sector by 2020, down from the 22 million tonne cut initially proposed, Reuters said.
The government had ordered a review into the plan’s potential efforts after it was condemned by senior figures in the Christian Democrats party, the senior government coalition partner. The revised proposal will still need the approval of other ministries and the Chancellery.
The proposal would from 2017 give fixed emission limits to older plants, forcing them to pay fines in the form of EUAs for any discharges above those limits.
Analysts have said it’s difficult to assess whether utilities will buy EUAs to keep operating or shutter plants completely, but suggested that uncertainty surrounding its implementation could impact their appetite to sell electricity forward, a key source of demand for carbon allowances.
The new proposal raises the amount of CO2 plants older than 20 years will be able to emit before having to buy additional EUAs as penalties, Reuters said.
The remaining 6 million-tonne emission shortfall to Germany’s 2020 target will be met by promoting the use of more combined heat-and-power plants, it added.