German Emissions Trading Authority

Installation operators in the 2021-2030 trading period

The fourth trading period of the European Union emission trading system 1 (EU ETS 1) starts on 01/01/2021 and lasts upto and including 2030. Operators of installations subject to emissions trading may, upon request, receive a free allocation of emission allowances for the periods between 2021-2025 (first allocation period) and 2026-2030 (second allocation period).

Source: © steheap / Fotolia

In Germany, operators of large combustion plants (with a rated thermal input above 20 MW, mostly energy installations) and high energy usage industrial installations participate in European Emissions Trading. Annex 1 of the German Greenhouse Gas Emission Allowance Trading Act (TEHG) lists the activities subject to emissions trading for which operators must surrender emission allowances. The number of surrendered allowances must match the volume of emitted greenhouse gases. Emissions trading also establishes which greenhouse gases are subject to this proviso. The emissions are determined annually based on the methods presented in the specific installation monitoring plan and are compiled in an emissions report and submitted to the German Emissions Trading Authority (DEHSt) at the German Environment Agency by the 31/03/ each year.

07/06/2019

Information for installation operators

Operators in the third trading period will only receive a free allocation of emission allowances on a temporary basis. This is determined based on benchmarks in an EU-wide allocation procedure and allocated based on the 2020 Allocation Ordinance (ZuV 2020). Companies that emit more greenhouse gases than are covered by their allowances must purchase additional emission allowances. Those who emit less emissions can sell excess allowances.

Emission allowances issued as a result of CDM and JI climate protection projects can be included in EU emissions trading. The associated directive (Linking Directive) allows operators participating in EU emissions trading to fulfil part of their climate protection obligations through CDM and JI projects.

The German Environment Agency (UBA) has been appointed as the competent national authority.

16/05/2018

The EU created the basis for EU-wide harmonised allocation rules for the 2021-2030 trading period through the amended Emissions Trading Directive of 14/03/2018 (ETD). The auction will continue to be the fundamental principle for allocation in the future. Other rules, known from the third trading period, remain unchanged:

  • no free allocation for electricity generation (except when waste gases are used)
  • free allocation based on demanding EU-wide uniform benchmarks for emissions from industrial activities
  • sectors deemed to be exposed to risk of carbon leakage (CL) continue to receive a free allocation equal to 100 percent of the amount determined by the implementation of the EU-wide uniform allocation rules (the possible uniform cross-sectoral correction factor and the linear reduction factor also apply here)
  • the maximum amount of free allocation stipulated must not be exceeded; where appropriate, a uniform cross-sectoral correction factor should be applied

However, the amended directive also includes several changes, the main differences being:

3rd trading period4th trading period
8-year trading period10-year trading period
Linear reduction factor: 1.74% per yearLinear reduction factor: 2.2% per year
Allocation is determined at the beginning of the trading periodAllocation occurs over two allocation periods of five years each (2021-2025 and 2026-2030) and is determined at the beginning of each allocation period
Uniform benchmarks apply for the entire trading periodBenchmarks are updated for each allocation period

Free allocation drops from 80% of the calculated allocation in 2013 to 30% in 2020. Exception:

  • There is no reduction for sectors deemed to be exposed to risk of carbon leakage (100% of the calculated allocation is free)

Free allocation drops from 30% of the calculated allocation between 2021 to 2026 to 0% in 2030. Exception:

  • There is no reduction for sectors deemed to be exposed to risk of carbon leakage (100% of the calculated allocation is free)
  • For district heating, it remains at a constant 30% free allocation until 2030

Allocation changes within the trading period:

  • After a physical change due to a ‘significant change in capacity‘, threshold: 10% increase or reduction
  • Irrespective of a physical change, reduction due to a ‘partial closure’, threshold: 50%

Allocation changes within the trading period:

  • Irrespective of a physical change solely due to ‘production changes‘, threshold: 15% reduction or increase

(The details for the adjustment of the allocation are still to be determined by the EU.)

The amount of emission allowances allocated free of charge to industrial installations (non-electricity generators) is limited to the historical emissions share of industrial installations (so-called industrial cap). A uniform cross-sectoral correction factor is applied to ensure compliance with the industrial cap.The amount of auctioned emission allowances is set at 57% of the total amount, but 3% of the total amount can be used as a free allocation buffer to avoid the use of a cross-sectoral correction factor.
The carbon leakage status is determined by carbon cost and/or trade intensity criteria. Changes to the status are possible within the trading period.The carbon leakage status is determined by multiplying the trade intensity with the emissions intensity, divided by the gross added value. There are no intended status changes within the trading period.

07/06/2019

You would like to know more?

Read our annual reports on greenhouse gas emissions from stationary installations and aviation in Germany (VET reports).

VET reports and installation lists

Emissionshandels­pflichtige Anlagen

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