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Germany may accelerate coal exit, aviation fuel plans after court ruling

13 May 2021 Cristina Brooks

Germany announced it will further restrict pollution from sources like energy and fuel after a court found its regulations shifted emissions reduction burdens to future generations, violating their rights.

On 29 April, the Constitutional Court in Germany published a decision saying that Germany's government lacks a plan for emissions reductions after 2031, and ordered it to enact related provisions by 31 December 2022.

The court sided with the case made by five youths living on German islands at risk of becoming uninhabitable due to sea level rise, as well as three from heat-stricken family farms. It based its decision on the protection for the civil liberties afforded to future generations under Article 20a of Germany's constitution, the Basic Law.

The petitioners found fault with the emissions levels laid out in Germany's 2019 Federal Climate Act (Bundesklimaschutzgesetz) that sets out sector emissions goals to help meet Germany's Paris Agreement target of 55% emissions cuts between 1990 and 2030. That target is higher than the EU's target of 40% for all member states, but the EU is currently working on raising its target to the 55% level.

After the court released its findings, Germany's government moved "unexpectedly" quickly to update laws, E3G policy advisor Rebekka Popp said in a statement.

On 5 May, Finance Minister Olaf Scholz and Environment Minister Svenja Schulze announced new Federal Climate Act targets of 65% reductions by 2030 and 88% by 2040. The targets are laid out in a draft law that is yet to be approved by the cabinet and parliament.

In the days that followed, Germany's government revealed revisions of the act would advance its climate neutrality deadline from 2050 to 2045.

The act is expected to be ratified in parliament before its summer break, while the measures delivering emissions cuts will be defined in separate legislation after federal elections in September, E3G said. This means the topic of how to cut emissions, and where, is likely to be a campaign issue.

Coal in the crosshairs

Germany's government said in a 12 May statement that the energy and industry sectors generate the highest annual emissions, making it likely coal generators will be targeted by upcoming laws.

The energy sector is "the screw to be tightened the most" under the Ministry of the Environment's new draft law, and emissions could be reduced by a third by 2030, Henning Schaloske, a partner at law firm Clyde & Co Europe, told IHS Markit.

"This, in turn, will push the previously fixed coal phase-out date of 2038 into the background. Some experts are already citing 2030 as the date," he said.

E3G agreed coal power is likely to be targeted. "Germany's current 2038 coal exit date and phase-out pathway will both need tightening. It is [unclear yet] whether the coal exit law will be changed, or whether the impact of an increased CO2 price under the EU's Emissions Trading System will be sufficient," wrote E3G's Popp, who noted a 2030 exit seems "inevitable."

A proposed tightening of the EU Emissions Trading System in response to the EU's new emissions reduction target might lead to a "possible price of €130 per ton of CO2 in 2030," which might be sufficient to shutter the coal plants.

Germany's change of tactics also has implications for a €4.35 billion ($5.25 billion) compensation package for operators of phased-out coal plants. "[The government] already has in place the governance structure and funding tools necessary to support coal regions in their transition away from coal — even if the coal phase-out comes earlier," said Popp.

Aviation, truck fuel likely targeted

After the court decision, Germany's government announced a plan to expand production and use of lower-emissions power-to-liquid (PtL) aviation fuel on 7 May.

This fuel could be made from green hydrogen and waste carbon dioxide according to the plan, which involves German states, its aviation and mineral oil industries, and manufacturers.

Germany already has green hydrogen production on its radar, after its February proposal to update the existing Federal Immission Control Act to encourage refineries to market it.

Fuels such as PtL are not yet produced in marketable quantities in Germany, but the Federal Ministry of Transport and Digital Infrastructure has commissioned research to get them to commercial scale, according to the statement.

Again, the carbon price might be the lever the government uses to achieve its goals. "A central matter in the debate will be the CO2 price, which was introduced nationally at the beginning of the year at [€25/mt], which increases the price of diesel, petrol, and gas," said Schaloske.

The developments are a further boon to Germany's green hydrogen sector. "I was excited about the court decision imposing the targets we were already very happy about, but they're still not enough to protect our future generations. Because of that, we need these increased targets imposed on sectors like mobility, heavy transport, aviation," managing director of H2 at Swiss renewable developer Smartenergy, Christian Pho Duc, said during a panel at the online SolarPower Summit on 11 May.

But the costliness of green hydrogen is an issue that needs resolving. "Now you can make the hydrogen [cost] maybe halfway acceptable, but calculate how to transport it where it's needed, and then it's a problem until we have the pipelines. We need to build the pipelines now or to work on it, so that in 10-15 years, we have them," said Pho Duc.

National commitments under fire

The trend of litigation against governments over weak climate laws that fail to protect their citizens is gaining traction.

This was kicked off by the December 2019 decision by a Dutch court in State of the Netherlands v Urgenda. It found the Dutch government, by not working harder to reduce CO2 emissions, had failed in its obligation to protect residents' "right to life" as the country had ratified the European Convention on Human Rights.

This was followed by a French court's decision finding fault with France for not following its climate laws and carbon budget in Notre Affaire à Tous and Others v. France. The decision could make governments more accountable for failing to live up to their climate targets.

But not all of those bringing cases are successful. The European Court of Justice court reaffirmed a ruling siding against a group of farmers in March.

Citizen petitioners nevertheless seem to be winning the case law battle. "The number of climate change-related claims against governments is likely going to increase, and decisions such as this one in Germany should be closely watched," wrote Schaloske in a blog.

Germany's latest court case may influence active cases. "The decision will have an impact on the proceedings before the European Court of Human Rights, where several climate lawsuits are currently pending, also against Germany," according to a memo by an attorney on the case, Rechtsanwälte Günther Partner Roda Verheyen and her colleague at the firm Ulrich Wollenteit.

In Germany, constitutional protections are being extended. "Article 20a of the Basic Law, with its state objective of protecting the natural foundations of life for future generations, has been given teeth," wrote the attorneys.

Posted 13 May 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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