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Expensive emissions:
The Schkopau power plant in Saxony-Anhalt, owned by the energy company Uniper, converts up to five million tons of lignite into electricity every year
Photo: Martin Schutt/ dpa
Not only the future markets for gas and electricity are going crazy.
The European CO2 price is also extremely volatile and recently exploded.
After falling to a four-month low of EUR 76 per tonne of CO2 at the end of July, it shot up to a new all-time high of almost EUR 99 in mid-August.
Most recently, the right to release one tonne of CO2 cost a little less in the European trading system ETS at 89 euros.
But observers expect that the price could soon break through the 100 euro mark.
With fatal consequences: Those who cause emissions – these are power generators, energy-intensive industries and airlines – would then have to pay around twice as much as they did last year.
In addition to the increased energy prices, the CO2 prices are developing into a further risk factor for the German economy.
As is well known, the European Union introduced the instrument of CO2 certificates in order to curb emissions of climate-damaging greenhouse gases.
The rough logic: Anyone who causes emissions must obtain permission for the corresponding amount - in the form of certificates.
And since the total amount in European emissions trading is limited, the price increases as demand increases – and with it the incentive to reduce emissions more.
Those who avoid emissions can sell excess certificates and are rewarded.
The current price explosion is a consequence of the chaos on the energy markets.
Due to the reduced gas supplies from Russia and the failed nuclear power plants in France, there is a shortage.
According to Florian Rothenburg
, an expert on EU energy and carbon markets at the analysis company ICIS, in order to supply the missing energy,
coal-fired power generation and thus emissions in the electricity sector would increase.
The consequence of the coal comeback is a higher demand for CO2 certificates - and thus an increased price.
The whole thing will be reinforced by the continued operation of old coal-fired power plants, which will remain on the grid longer due to the energy crisis in Germany, according to Rothenburg.
Another price-driving factor is the steadily decreasing supply of certificates.
At auctions where the certificates are traded on the spot market, the supply is falling due to long-planned cuts in the so-called market stability reserve.
The EU is taking certificates out of the market in a targeted manner in order to reduce the historical surplus that accumulated in companies' accounts during the times of cheap emission rights, such as the global economic crisis of 2008.
However, the price increase provoked by this is calculated: it is intended to encourage companies to invest in climate protection measures.
This is how the EU wants to help achieve its climate goals.
Concerns about the production stop
So far, the increase in the price of EU emission allowances has gone almost unnoticed.
It could continue at a rapid pace due to the coal comeback and the switch to other energy sources with high emissions in Germany - and have a noticeable impact on the economy.
After all, significantly more certificates are required today for the same amount of electricity, which are no longer available to other companies.
They must therefore reduce their emissions: by producing in a more climate-friendly manner or – more likely in the short term – by ceasing production.
In the end, the price will decide who will be affected.
An additional incentive to stop the factories: Given the high prices, selling your own allowances could be more lucrative than continuing production.
"Selling certificates is a way for companies to improve their liquidity in the short term," says Rothenburg.
That would have a dampening effect on the price.
How big the economic effect of the CO2 price explosion is is not entirely clear.
From Rothenburg's point of view, the dramatic development of electricity and gas prices is much more important;
Fertilizer and aluminum producers such as Yara or SKW have already stopped or reduced production in some cases.
Rothenburg argues that energy-intensive industrial companies hardly have to pay for CO2 certificates at the moment because they are allocated most of them free of charge.
Others are currently most affected: "The biggest buyers at certificate auctions are power generators and oil refineries, since they receive no or significantly fewer free allocations than other sectors," says Rothenburg.
Other experts warn against it.
Even if the energy-intensive sectors do not currently have to pay the high CO2 certificate costs themselves, the indirect emission costs definitely have an impact on the companies.
Finally, the CO2 price surcharge is due for the electricity that they purchase externally.
This in turn jeopardizes industrial production.
"A recession in Germany is becoming more and more likely," says
Achim Wambach
, economist and President of the Leibniz Center for European Economic Research (ZEW), when asked by manager magazin.
"The energy prices for gas and electricity have risen massively and are an extreme burden for companies. The expenses for the certificates are added to this."
Given these risks, there is speculation as to whether the European Union will continue to pursue its climate targets in this way.
Politicians could also release additional CO2 certificates - to relax - if the price continues to rise so rapidly.
Wambach doesn't think that's a good idea.
"The need of the hour is saving energy - from gas and electricity. The release of additional certificates would lead to a higher demand for energy and is therefore not recommended."
It makes more sense from the economist's point of view: support for companies based on the previous year's consumption, so that the incentives to save energy are maintained.