National Emissions Trading System - Background Paper - DEHSt
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
National Emissions Trading System Background Paper
Editorial information Publisher German Emissions Trading Authority (DEHSt) at the German Environment Agency City Campus Building 3, Entrance 3A Buchholzweg 8 D-13627 Berlin Phone: +49 (0) 30 89 03-50 50 Fax: +49 (0) 30 89 03-50 10 nationaler-emissionshandel@dehst.de Internet: www.dehst.de/English As of March 2020 English by Nigel Pye, npservices4u@gmail.com Cover image: © tomas – stock.adobe.com
Content
1. Introduction: Why do we need national emissions trading?������������������������������������������������������������������������ 4
2. Fundamentals of the national emissions trading scheme���������������������������������������������������������������������������� 5
2.1. How does emissions trading as such work?�����������������������������������������������������������������������������������5
2.2. How do national and european emissions trading differ?����������������������������������������������������������������5
3. Scope and responsible Parties������������������������������������������������������������������������������������������������������������������� 7
3.1. Which fuels are covered by BEHG?������������������������������������������������������������������������������������������������7
3.2. Which companies are covered by nEHS?����������������������������������������������������������������������������������������7
3.3. What impact on fuel prices can be expected?���������������������������������������������������������������������������������8
3.4. Are there overlaps between national and European emissions trading?�������������������������������������������8
4. nEHS Processes and Mode of Operation����������������������������������������������������������������������������������������������������� 9
4.1. How is the volume target determined for greenhouse gas emissions?���������������������������������������������9
4.2. What price are certificates purchased and sold at?�����������������������������������������������������������������������10
4.3. What are the obligations of the participating companies?������������������������������������������������������������11
4.4. Where can allowances be stored, transferred and surrendered?����������������������������������������������������11
4.5. How are infringements handled?������������������������������������������������������������������������������������������������12
4.6. How will the competitiveness of companies be ensured?��������������������������������������������������������������12
5. Conclusion & Outlook������������������������������������������������������������������������������������������������������������������������������ 13
6.Glossar��������������������������������������������������������������������������������������������������������������������������������������������������� 14
Annex 1 Fuels����������������������������������������������������������������������������������������������������������������������������������������������� 15
Fuels as defined by BEHG������������������������������������������������������������������������������������������������������������������15
Annex 2 Fuels for emission reporting in 2021 and 2022�������������������������������������������������������������������������������� 181 Introduction:
Why do we need national emissions trading?
In view of the major challenge that climate change poses to present and future generations due to greenhouse
gas emissions, Germany has committed itself to ambitious climate protection targets at the European level
under the Paris Convention. These climate protection goals were legally anchored in Germany for the first time
with the Federal Climate Change Act, which came into force on 18/12/2019, in order to limit the rise in the
global average temperature to well below 2 degrees Celsius and, if possible, to 1.5 degrees Celsius compared to
pre-industrial levels. The Federal Republic of Germany also aims to be greenhouse gas neutral by 2050.
To actually achieve this climate protection goal, climate protection measures must be taken. The Federal
Government has done this with the Climate Protection Programme 2030. The CO2 pricing of emissions is a key
climate protection instrument, particularly in the fields of heating and transport, which came into force
with the national emissions trading scheme and the Fuel Emissions Trading Act (BEHG) on 20/12/2019.
Based on the BEHG, a national emissions trading scheme (in German “nationales Emissionshandelssystem”
–hereinafter referred to by the abbreviation nEHS will be introduced in Germany from 2021.
The EU emissions trading scheme (EU ETS) already largely covers emissions from industry and power genera-
tion in Germany: operators have had to surrender an emission allowance for every tonne of CO2 emitted since
2005. This scheme includes emission-intensive installations of both the energy sector and industry. However,
Germany has so far lacked a financial incentive to reduce emissions outside the field covered by the EU ETS.
The nEHS now basically includes all CO2-causing fuels put on the market, especially petrol, diesel, heating oil,
liquified gas, natural gas and coal. However, companies or citizens who use these fuels for heating or driving,
for example, do not have to participate in the nEHS themselves. Only the ‘distributors’ of fuels1 such as gas
suppliers or companies in the mineral oil industry who are obliged to pay energy tax under the Energy Tax Act,
have to do so. If the fuel distributors pass on the costs from the nEHS to their customers, they provide the
desired financial incentive to reduce emissions. It is BEHG’s intention that the pricing of fuel emissions should
result in a cost and make customers change their behaviour and reduce emissions.
The German Emissions Trading Authority (DEHSt) at the German Environment Agency is responsible for the
implementation of the nEHS. DEHSt has been implementing the EU ETS in Germany since 2005. Together with
the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) DEHSt is currently
preparing the implementation of the BEHG in terms of organisation and expertise.
1 Within the scope of BEHG Section 2 (2) and Section 3 (3)
4 National Emissions Trading System – Background Paper2 Fundamentals of the national emissions trading scheme
2.1 How does emissions trading as such work?
All emissions trading systems have one thing in common: emissions trading is a market-based instrument
designed to protect the climate. The principle is very simple: anyone who wants to pollute the air with green-
house gases needs relevant rights (‘certificates’).
Emissions trading works according to the ‘Cap and Trade’ principle. This means that the greenhouse gas
emissions of all participants are limited to a total volume – the ‘cap’. The cap is a political decision on the
maximum amount of greenhouse gases that all participants are permitted to emit in total. However, there are no
fixed emission targets for the individual participants. A cap that is ambitious in terms of climate policy ensures
that the right to emit greenhouse gases becomes a scarce commodity and that trade on the market creates a
price for the ‘certificates’. This market price results from auctions and trade between the participants. The price
rises if the certificates become scarce because fewer certificates are available overall (because this is the only
way to achieve the climate protection goals). The emissions trading system thus provides a financial incentive
for participants to invest in climate protection measures. If it is cheaper to avoid one tonne of CO2 than to buy a
certificate, it is worthwhile reducing the use of fossil fuels and implementing technical or organisational
measures to save emissions. Market-based emissions trading means that emissions are reduced where it is
economically most advantageous.
2.2 How do national and european emissions trading differ?
National (nEHS) and European Emissions Trading Scheme (EU ETS) have different starting points as to how
greenhouse gas emissions should be reduced. The EU ETS requires reporting and the surrender of emission
allowances where emissions are generated in an installation such as in a power plant or steelworks (called
‘downstream’ emissions trading).
The nEHS, however, is not based on the actual emissions at the installation, but on a much earlier point,
where the fuels are placed on the market and before they reach the installation (‘upstream’ emissions
trading). These emissions, which result from the subsequent burning of the fuels, are attributed to a distri-
butor. The two fundamentally different systems can be explained above all against the background of the
respective sectors involved.
Industrial and energy installations covered by the EU ETS are a small number of players with very high direct
emissions from installations. However, in the sectors covered by the nEHS such as transport and heating, it
would not be practical to include direct emissions. Including the large number of all car drivers or all heating
system owners would be entirely disproportionate.
i Regulatory concepts of emissions trading
Upstream
national Emissions Trading
Obligated parties:
Fuel distributors
Downstream
European Emissions Trading
Obligated parties:
Operators with direct emissions
National Emissions Trading System – Background Paper 5Emissions are limited in both systems to a certain budget or cap. nEHS does this by taking into account the EU
targets for those sectors not covered by the EU ETS (see Chapter 4.1).
As in the EU ETS, the nEHS also sets a budget for emission allowances. Just as in the EU ETS, nEHS participants
are obliged to report emissions annually, purchase the relevant number of certificates and surrender them to
DEHSt. However, the subsequent regulatory concept is different: while direct emissions from participating
installations are determined in the EU ETS, emissions in the nEHS are determined indirectly via fuel quantities
put on the market. In contrast to the EU ETS, there is no free allocation of allowances to participants in the
nEHS.
In EU ETS, the price of allowances is created freely on the market via supply and demand in inter-company
trading and regular auctions. The nEHS price, too, is in principle to be created on the market – from 2026 at the
latest. However, the allowances will be sold at legally fixed prices in the nEHS in a fixed price phase (2021 to
2025) to allow participants to adapt to the system step by step.2 The nEHS will gradually approach free pricing
in this introductory phase (2021 to 2026) (see Chapter 4.2) and, from 2026 onwards, the allowances will no
longer be sold but auctioned.
i
Learn more about the modes of operation under:
www.dehst.de/English
2 Previously applicable fixed prices as per BEHG (2021: €10 to 2025: €35) should be increased by a law amendment. The Mediation Committee between the
Bundestag (Federal Parliament) and Bundesrat (Federal Council) agreed on the price level increase in December 2019.
6 National Emissions Trading System – Background Paper3 Scope and responsible Parties
3.1 Which fuels are covered by BEHG?
All fuels whose combustion can cause CO2 emissions, especially petrol, diesel, fuel oil, natural gas, liquefied
gas and coal, are included in the nEHS (cf. Annex 1 of BEHG). Biomass also falls within the scope of the Act.
However, there should be no obligation to surrender certificates for emissions from biogenic fuels that meet the
sustainability criteria.
There will be some relief in 2021 and 2022:
reporting obligations will be limited to the main fuels such as petrol, diesel, fuel oils, natural gas and liquefied
gases for 2021 and 2022 (cf. Annex 2 of BEHG).
The Annex to this document gives a detailed breakdown of fuel names.
3.2 Which companies are covered by nEHS?
The obligations of BEHG apply to those companies that place fuels on the market.
These ‘distributors’ are normally fuel wholesalers, fuel producers with wholesale distribution and businesses
that import fuels into Germany in the sense of energy tax. The businesses can be natural or legal persons or
entities or partnerships.
The placement of products on the market under BEHG is, in principle, linked to the same acts that are legally
identified by the Energy Tax Act with regard to certain fuels for the accrual of energy tax. For example the
removal of fuels from a tax warehouse (e.g. in the case of petrol) or the supply of end users (e.g. in the case of
natural gas). In the case of fuels for which both the obligation to pay energy tax and the obligation to report
emissions under BEHG apply, the same companies are responsible for fulfilling both these obligations.
Energy tax and BEHG obligations will not be interlaced for coal, which will only be included in the nEHS
reporting from 2023 onwards. Even then, in some cases coal will be included in BEHG although an energy tax
obligation will not arise due to certain tax exemptions under the Energy Tax Act (Section 2 (2) sentence 2 of
BEHG). This means that products may be placed on the market in the sense of BEHG even though tax exemp-
tions apply to the use of coal as a fuel or heating material for power generation (Section 37(2) number 3 of the
Energy Tax Act) or as heating material for certain processes and procedures (Section 37(2) number 4 of the
Energy Tax Act).
National Emissions Trading System – Background Paper 73.3 What impact on fuel prices can be expected?
The introduction of nEHS has established a price for CO2 emissions in Germany outside the sectors covered by
the EU ETS for the first time. The price will not be paid by those using the fuel and causing CO2 emissions, but
by the fuel suppliers. However, it is assumed that the distributors will pass on the price of emission allowances
to their customers so that the users of the fuels will pay the price for their CO2 emissions at the end of the supply
chain.
The gradual increase in CO2 price (cf. Table 1) increases the incentive to reduce or eliminate the burning of fossil
fuels so that less fuel will be placed on the market over time – simply because it will become more expensive.
This effect is likely to become more pronounced as soon as the allowances are auctioned and the price is freely
generated on the market.
Table 1: Gradual increase in prices for selected fuels by BEHG in euro cents3
Unit 2021 2022 2023 2024 2025
Natural gas kWh 0.5 cents 0.5 cents 0.6 cents 0.8 cents 1.0 cents
Premium petrol l 6 cents 7 cents 8 cents 11 cents 13 cents
Diesel l 7 cents 8 cents 10 cents 12 cents 15 cents
Light fuel oil l 7 cents 8 cents 10 cents 12 cents 15 cents
3.4 Are there overlaps between national and European emissions trading?
Yes – overlaps between national and European emissions trading cannot be excluded because of different
regulatory approaches (cf. ‘Upstream’ and ‘Downstream’ approach in Chapter 2.2).
If a fuel within the scope of BEHG is delivered to and used in an installation subject to EU ETS, emissions from
this fuel are covered by both systems. Operators of EU ETS installations could therefore theoretically be charged
both with the CO2 costs allocated to the fuel price under nEHS and with the costs for emission allowances within
the EU ETS. In order to prevent this, two avoidance mechanisms have been introduced in BEHG: distributors can
lessen their surrender obligation by the fuel volumes delivered to and used in EU ETS installations. This elimi-
nates the CO2 costs for fuel volumes they supply to EU ETS installations. Alternatively, the operator of an EU ETS
installation can apply for compensation for the additional pricing within nEHS at DEHSt. The specific form of
these mechanisms will be regulated by ordinances according to Section 7(5) and Section 11(2) of BEHG.
3 DEHSt calculation based on fixed prices according to the first amendment of BEHG, excluding VAT and other incidentals.
8 National Emissions Trading System – Background Paper4 nEHS Processes and Mode of Operation
4.1 How is the volume target determined for greenhouse gas emissions?
The volume target (or ‘cap’) for fuel emissions covered by nEHS is made up of a base volume and an increase
volume (annual emissions volume, cf. Section 4 BEHG) determined annually:
▸▸ Base volume
The basis for determining the base volume is Germany's reduction obligations under the EU Climate Protec-
tion Regulation. The reduction obligations relate to CO2 emissions outside the EU ETS and are determined by
the EU Commission for each calendar year.
For the base volume, the share of fuel emissions covered by nEHS in total German emissions outside the EU
ETS is calculated as a first step. The years 2016 to 2018 are used as reference years to determine this share
for the first Trading Period (2021 to 2030). The resulting volume of emissions covered by nEHS is set in
relation to the emission allocations to which Germany is entitled under the EU Climate Protection Regulation
for the year in question. The calculation provides the base volume of annual allowances allocated to the
nEHS.
▸▸ Increase volume
Overlaps of the two systems cannot be excluded because of the different structures of nEHS and EU ETS
(upstream, downstream). This means that EU ETS imposes a surrender obligation and a price system on the
fuels used in EU ETS installations and the CO2 emissions they cause, although the fuels used in the EU ETS
installations have already been priced in nEHS. Since these emissions, which are double accounted in nEHS
and EU ETS, have not been taken into account in the calculation of the base volume, the correct amount of
additional certificates will be provided within nEHS.
The total annual volume of fuel emissions thus specified shall, in principle, determine the number of allo-
wances to be issued by the competent authority. The volume sold (cf. Chapter 4.2) first follows the actual
demand by the participants in nEHS and is therefore not limited as such. This volume sold may therefore
initially exceed the set volume target. If the available national budget under the EU Climate Protection Regula-
tion is exceeded, Germany however, must fully offset the deficit either by achieving additional emission reduc-
tions in national sectors not covered by nEHS or by purchasing emission allocations from other EU Member
States. This limitation of compensation options ensures that any surplus volumes are only ever compensated
within the limited total emission volumes of the EU Climate Protection Regulation. For this reason, the overall
nEHS system is designed from the outset to have an overall limited emissions budget.
National Emissions Trading System – Background Paper 94.2 What price are certificates purchased and sold at?
An introductory phase is planned to allow nEHS to get up and running and enable participants to adapt to the
new system in which certificates are initially sold at fixed prices (from 2021 to 2025). The subsequent auction
phase will start with a one-year transition period (2026) and a price corridor to be followed by uncontrolled
pricing on the market.
▸▸ In the fixed-price phase (2021–2025)
DEHSt or a body commissioned by DEHSt will sell the certificates under BEHG at a fixed price in the 2021 –
2025 period. The fixed price per emission certificate will be:
▸ 2021: €25.00
▸ 2022: €30.00
▸ 2023: €35.00
▸ 2024: €45.00
▸ 2025: €55.00.4
The respective certificates will be allocated to the actual calendar year that is displayed on the certificate. In the
fixed-price phase, they are only valid for covering fuel emissions in this specific calendar year and the previous
year. Certificates therefore cannot be purchased at a lower price in one year and used for emissions in future
years (certificate ‘banking’).
The price in principle only applies to sales in the respective calendar year. In addition, up to ten percent of
emission certificates purchased from a distributor in one year between 2021 to 2025 can still be purchased
until 28 February of the following year at the previous year’s fixed price. Participants thus have two months in
which they can determine their demand more precisely and purchase them at the previous year's price. If
certificates purchased by the end of February in this way do not fulfill the surrender obligation (cf. Chapter 4.3),
then certificates must be purchased at a higher price or bought on the secondary market.
▸▸ In the auction phase
Auctioning emission certificates will start in 2026. Auctions will run within a price corridor with a minimum
price of €55 and a maximum price of €65 per emission certificate for 2026. Starting in 2027, the price will
be freely created on the market, unless a decision is made in 2025 to carry on with the price corridor for
2027. The certificates are generally valid for each year of the trading period within the auction phase.
Details of the purchase procedures will be laid down in an ordinance (Section 10 BEHG).
2021–2026 2026
€55–65
price trend
2025
2024 €55
2023 €45
2022
2021 €35
€25
€30
€
4 Previously applicable fixed prices as per BEHG (2021: €10 to 2025: €35) should be increased by a law amendment.
The Mediation Committee between the Bundestag (Federal Parliament) and Bundesrat (Federal Council) agreed on the price level increase in
December 2019.
10 National Emissions Trading System – Background Paper4.3 What are the obligations of the participating companies?
Distributors in principle have three main obligations laid down in the law:
1. A monitoring plan must be drawn up and submitted to DEHSt for each trading period (Section 6 BEHG).
2. Distributors must prepare an emissions report based on their monitoring plan, which reports on the fuels
placed on the market and the resulting emission volumes of the previous year (Section 7 BEHG) by the
31st of July each year. To determine the emissions from a particular fuel placed on the market, the fuel
volume is multiplied by the corresponding calculation factors (including emission factor, calorific value,
biogenic fraction, etc.). The data in the emissions report must be verified by an approved verifier.
3. Finally, distributors are obliged to surrender allowances corresponding to the volume of fuel emissions they
have reported (Section 8 BEHG) by the 30th of September each year. This means that for every tonne of CO2
emitted, an emission allowance that entitles the holder to emit this tonne of CO2 must be surrendered.
The distributor must acquire the certificates required for surrender in good time. An electronic national emis-
sions trading registry will be set up for the surrender of allowances in which each distributor must hold an
account. The account serves to record the purchase of allowances, to surrender emission allowances and, if
necessary, trade in them (cf. Chapter 4.4).
The aforementioned basic obligations, which have been introduced in the EU ETS at European level since 2005
and have proved themselves over a long time, give rise to special tasks for fossil fuel distributors, verifiers and
the DEHSt. These recurring tasks create a regular cycle called the Compliance Cycle.
The detailed regulations for monitoring and reporting emissions from fuels will be laid down in an ordinance.
Relief in 2021 and 2022:
In the first two years of the nEHS, the reporting obligation applies only to the following fuels: petrol, diesel, fuel
oil, natural gas and liquified gases.
BEHG provides a simplified method for monitoring and reporting in these first two years in order to ensure a
rapid introduction and efficient implementation for the distributors and DEHSt. For example, a monitoring plan
can be dispensed with and the determination of emissions can be based solely on standard values in 2021 and
2022. Verification of emission reports can also be simplified e.g. by limiting verification to a few issues.
The details will be specified in ordinances. Control will be exerted with regard to emissions reporting where
emissions from fuels that have already been reported under the EU ETS have to be subtracted because they were
delivered directly to EU ETS installation companies and used in an EU ETS installation (Section 7(5) BEHG).
4.4 Where can allowances be stored, transferred and surrendered?
Since allowances exist only in electronic form, they are stored exclusively in an electronic database, the nati-
onal emissions trading tegistry (Registry). This Registry is managed by DEHSt for nEHS in accordance with
Section 12 BEHG. The Registry contains accounts in which allowances can be stored similar to an online
banking system. However, these accounts not only serve to keep a record of ownership of the allowances, but
also to transfer allowances between accounts. In addition to allowances and accounts, the Registry also records
fuel emissions attributable to distributors.
National Emissions Trading System – Background Paper 11Alongside storing and transferring emission allowances, the accounts can also fulfil the obligation of surrend-
ering allowances (cf. Chapter 4.3). By the 30th of September each year, companies must surrender allowances
from their accounts for the amount of fuel emissions reported in the previous year. For this reason, every
distributor needs an account which can be opened upon application to DEHSt. In order to store and trade
allowances, not only can distributors apply for a registry account with DEHSt, but also people who do not place
fuels on the market can apply.
The detailed rules for managing the registry and opening and maintaining registry accounts will be laid down
in an ordinance.
4.5 How are infringements handled?
The annual surrender of emission certificates by the 30th of September is a key responsibility for distributors in
nEHS. Surrender covers the volume of CO2 emitted from fuels placed on the market in the previous calendar year.
The law provides for various sanctions (Sections 20 – 22 BEHG) if distributors do not or are late in fulfilling this
surrender obligation or their reporting obligation.
If a distributor fails to meet their obligation to surrender certificates or fails to do so to the proper extent, DEHSt
imposes a fine for each tonne of CO2 for which no certificate has been surrendered (Section 21 BEHG). This
amounts to twice the certificate price for the year in question for the fixed-price phase 2021 to 2025.
If, for example, a distributor failed to surrender certificates for 500 tonnes of CO2 in the reporting year 2021, the
fine will amount to €25,000 (500 x 2 x €25). The distributor, however, still remains obliged to retroactively
surrender the shortfall of allowances in the national emissions trading registry and thus cover the emissions
caused in full.
After the fixed-price phase, i.e. in the auctioning phase, the fine is €100 for each tonne of CO2 for which no
certificate has been surrendered. This fine increases annually by the increase in the European Consumer Price
Index.
If a distributor has not submitted an emissions report for the previous reporting year by the 31st of July in a year,
its account in the national emissions trading registry shall be frozen. In this case, the obligation to surrender
allowances can still be fulfilled, but the person responsible can no longer dispose of or trade in the emission
allowances in the account. The freeze on the account will only be lifted once a proper emissions report has been
submitted to DEHSt or the emissions have been estimated by DEHSt.
Furthermore, the BEHG provides for a number of provisions for fines: violations of the obligations (for example,
incorrect reporting) can be punished with fines of up to €500,000.
4.6 How will the competitiveness of companies be ensured?
BEHG envisages measures to ensure competitiveness at European and international level of companies affected
by the additional fuel costs due to BEHG (Section 11(3) BEHG). These measures are aimed at preventing ‘carbon
leakage’ i.e. relocation of companies and their emissions abroad. For this purpose, it is envisaged that financial
support to climate-friendly investments of companies will be provided. Affected companies can apply for
compensation at DEHSt when financial support to climate-friendly investments cannot prevent carbon leakage
and maintain an EU-wide and international competitiveness. An ordinance will specify those measures where
the regulations will apply to the period from 2021 onwards.
In addition, a minimum level of protection is ensured against disproportionate indirect burdens that could arise
in atypical and individual cases due to the introduction of nEHS. Companies affected are those that have a high
additional cost due to the introduction of BEHG and have no possibility of passing this cost on to their custo-
mers. Distributors are excluded from this regulation.
Relevant specifications will also be made in an ordinance.
12 National Emissions Trading System – Background Paper5 Conclusion & Outlook
The new national emissions trading scheme and the Fuel Emissions Trading Act is the overture to national
emissions trading and thus a CO2 pricing for the fields outside the EU ETS.
Although the fuel distributors participate in national emissions trading, the CO2 cost is passed on to the end
users. The nEHS will therefore also be felt by citizens and businesses thus the goal of CO2 pricing will be
achieved by providing concrete incentives to save CO2. The fixed-price phase provides citizens and companies
with a reliable price path and thus the greatest possible planning security.
The introduction of nEHS poses an organisational challenge to all players. First of all, the rules of the BEHG for
the further structural development of national emissions trading must be implemented; corresponding ordi-
nances are currently being drafted.
The German Emissions Trading Authority at the German Environment Agency will provide further information
on their website as soon as the organisational and technical preparations have progressed further.
i
DEHSt provides details about the implementation on their website,
as soon as the key preparations have been completed:
www.dehst.de/National-emissions-trading
National Emissions Trading System – Background Paper 136 Glossar
The fixed emission cap or emission target for a certain period in an emissions trading
Cap
system.
Shifting production and the associated CO2 emissions to countries that have less or
Carbon Leakage (CL)
no stringent climate protection requirements.
German Emissions German Emissions Trading Authority (DEHSt) at the German Environment Agency is the
Trading Authority (DEHSt) competent national authority for European and national emissions trading.
Certificates are trading units within an emissions trading system. One certificate
Emission allowance/ corresponds to one tonne of CO2.
certificate For better differentiation, the EU ETS speaks of emission allowances and the nEHS of
certificates.
The European Union Emissions Trading System is one of the ‘Kyoto mechanisms’.
European Union Emissions
Emissions trading was introduced in the European Union in January 2005. The Kyoto
Trading System (EU ETS)
Protocol also allows international trading in greenhouse gases.
Climate protection refers to measures that counteract global warming caused by anth-
Climate protection
ropogenic emissions of greenhouse gases into the atmosphere.
The (Combined) Product Nomenclature is the EU-wide uniform customs law descrip-
Combined Nomenclature tion of products. It is used to uniquely assign products to specific merchandise
categories.
National act regulating the introduction of the European Union Emissions Trading
Greenhouse Gas Emission System in Germany from 01/01/2005.
Allowance Trading Act (TEHG) It serves the national implementation of the EU Directive on the European Emissions
Trading System.
14 National Emissions Trading System – Background PaperAnnex 1 Fuels
Fuels as defined by BEHG
Products of headings 1507 to 1518 of the Combined Nomenclature,
1. which are intended to be used as fuels or heating materials
1507 Soya-bean oil and its fractions, whether or not refined, but not chemically modified
1508 Groundnut oil and its fractions, whether or not refined, but not chemically modified
Olive oil and its fractions, obtained from the fruit of the olive tree solely by mechanical or physical
1509
means without impairing the oil, whether or not refined, but not chemically modified
1510 Other olive oils
1511 Palm oil and its fractions, whether or not refined, but not chemically modified
Sunflower-seed, safflower or cotton-seed oil and fractions thereof, whether or not refined, but not
1512
chemically modified
Coconut (copra), palm kernel or babassu oil and fractions thereof, whether or not refined, but not
1513
chemically modified
1514 Rape, colza or mustard oil and fractions thereof, whether or not refined, but not chemically modified
Vegetable fats and fatty vegetable oils (including jojoba oil) and their fractions, whether or not
refined, but not chemically modified (excl. soya-bean oil, groundnut oil, olive oil, palm oil, sunflo-
1515
wer-seed oil, safflower, cotton-seed oil, coconut (copra) oil, palm kernel oil, babassu oil, rape and
colza oil and mustard oil)
Animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified,
1516
re-esterified or elaidinised, whether or not refined but not further prepared
Margarine and other edible mixtures and preparations of animal or vegetable fats or oils and of edib-
le fractions of different fats or oils (excl. fats and oils and their fractions, partly or wholly hydrogena-
1517
ted, inter-esterified, re-esterified or elaidinised, whether or not refined but not further prepared, and
mixtures of olive oils and their fractions)
1518 Other vegetable oils
National Emissions Trading System – Background Paper 152. Products of headings 2701, 2702 and 2704 to 2715 of the Combined Nomenclature
2701 Hard coal; hard coal briquettes and similar solid fuels manufactured from hard coal
2702 Lignite, whether or not agglomerated (excl. gagate [jet])
2704 Coke and semi-coke from coal
Coal gas, water gas, producer gas and similar gases
2705 00 00
(excl. natural gas and other gaseous hydrocarbons)
Tar distilled from hard coal, from lignite or from peat, and other mineral tars, whether or not dehyd-
2706 00 00
rated or partially distilled, incl. reconstituted tars
Oils and other products from the distillation of high temperature coal tar; similar products in which
2707
the weight of the aromatic constituents exceeds that of the non-aromatic constituents
2708 Pitch and pitch coke, obtained from coal tar or from other mineral tars
2709 Petroleum oils and oils obtained from bituminous minerals, crude
Petroleum oils and oils obtained from bituminous minerals (other than crudes); preparations not
elsewhere specified or included, containing 70% or more by weight of petroleum oils or of oils ob-
2710
tained from bituminous minerals, these oils being the basic constituents of the preparations; waste
oils containing mainly petroleum oils and oils obtained from bituminous minerals
2711 Natural gas and other gaseous hydrocarbons
Petroleum jelly; paraffin wax, microcrystalline petroleum wax, paraffin waste ‘slack wax’, ozokerite,
2712 lignite wax, peat wax, other mineral waxes and similar products obtained by synthesis or by other
processes, whether or not coloured
Petroleum coke, petroleum bitumen and other residues of petroleum oil or of oil obtained from bitu-
2713
minous minerals not elsewhere specified or included
2714 Bitumen and asphalt, natural; bituminous or oil-shale and tar sands; asphaltites and asphaltic rocks
Bituminous mastics, cut-backs and other bituminous mixtures based on natural asphalt, on natural
2715 00 00
bitumen, on petroleum bitumen, on mineral tar or on mineral tar pitch
3. Products of headings 2901 and 2902 of the Combined Nomenclature
2901 Acyclic hydrocarbons
2902 Cyclic hydrocarbons
Products of subheading 2905 11 00 of the Combined Nomenclature, which are not
4. of synthetic origin and which are intended to be used as fuels or heating materials
2905 11 00 Methanol (methyl alcohol)
5. Products of headings 3403, 3811 and 3817 of the Combined Nomenclature
Lubricating preparations (incl. cutting-oil preparations, bolt or nut release preparations, anti-rust or
anti-corrosion preparations and mould-release preparations, based on lubricants) and preparations
3403 of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials,
but excl. preparations containing, as basic constituents, 70% or more by weight of petroleum oil or
of oils obtained from bituminous minerals
Anti-knock preparations, oxidation inhibitors, gum inhibitors, viscosity improvers, anti-corrosive
3811 preparations and other prepared additives for mineral oils (incl. fuels) or for other liquids used for
the same purposes as mineral oils
3817 Alkyl benzenes
16 National Emissions Trading System – Background Paper6. Products of subheadings
a. 3824 99 86, 3824 99 93
Mixtures predominantly composed of dimethyl methylphosphonate, oxirane and diphosphorus
3824 99 86
pentoxide
Chemical products or preparations, predominantly composed of organic compounds, not elsewhere
3824 99 93
specified or included (excl. in liquid form at 20°C)
b. 3824 99 92 and 3824 99 96 (excluding prepared anti-rust preparations composed of amines as active ingredients and
composite inorganic solvents and thinners for varnishes and similar products)
Chemical products or preparations, predominantly composed of organic compounds, not elsewhere
3824 99 92
specified or included (in liquid form at 20°C)
Chemical products and preparations of the chemical or allied industries, incl. mixtures of natural
3824 99 96
products, not predominantly composed of organic compounds, not elsewhere specified or included
c. 3826 00 10 and 3826 00 90 of the Combined Nomenclature, which are intended to be used as fuels or heating
materials
3826 00 10 Fatty-acid mono-alkyl esters, containing 96.5% or more esters by weight (FAMAE)
Biodiesel and mixtures thereof, not containing or containing less than 70% by weight of petroleum
3826 00 90 oils or oils obtained from bituminous minerals (excl. fatty-acid mono-alkyl esters, containing 96.5%
or more esters by weight (FAMAE))
The following are also considered to be fuels within the scope of this Act (with the exception of peat and products falling
within headings 4401 and 4402 of the Combined Nomenclature):
Fuelwood, in logs, in billets, in twigs, in faggots or in similar forms; wood in chips or particles; saw
4401 dust and wood waste and scrap, whether or not agglomerated in pellets, briquettes, logs or similar
forms
Wood charcoal (incl. shell or nut charcoal), whether or not agglomerated (excl. charcoal for medici-
4402
nal purposes, charcoal mixed with incense, activated charcoal and charcoal in the form of crayons)
Products other than those referred to in Section 1 which are intended for use, offered for sale or used as fuels or
1.
as additives or as extenders of fuels,
Products other than those referred to in Section 1, obtained wholly or partly from hydrocarbons intended for use,
2.
offered for sale or used as heating materials (e.g. municipal waste)
National Emissions Trading System – Background Paper 17Annex 2 Fuels for emission reporting in 2021 and 2022
1. Petrol of subheadings 2710 12 41, 2710 12 45 and 2710 12 49 and of subheadings 2710 12 31
Motor spirit with a lead content not exceeding 0.013 g per litre, with a research octane number
2710 12 41
(RON) of less than 95 (excl. containing biodiesel)
Motor spirit with a lead content not exceeding 0.013 g per litre, with a research octane number
2710 12 45
(RON) of 95 or more but less than 98 (excl, containing biodiesel)
Motor spirit with a lead content not exceeding 0.013 g per litre, with a research octane number
2710 12 49
(RON) of 98 or more (excl. containing with biodiesel)
2710 12 31 Aviation spirit
Motor spirit with a lead content exceeding 0.013 g per litre (excl. containing biodiesel and aviation
2710 12 50
spirit)
2. Medium heavy oils of subheading 2710 19 25 of the Combined Nomenclaturer
2710 19 25 ‘Kerosene’ (excluding jet fuel)
Gas oils of subheadings 2710 19 43 to 2710 19 48 and of subheadings 2710 20 11 to 2710 20 19 of
3. the Combined Nomenclature
Gas oil obtained from petroleum oil or bituminous minerals, with a sulphur content not exceeding
2710 19 43
0.001% by weight (excl. containing biodiesel and for chemical transformation)
Gas oil obtained from petroleum oil or bituminous minerals, with a sulphur content exceeding
2710 19 46 0.001% but not exceeding 0.002% by weight (excl. containing biodiesel and for chemical
transformation)
Gas oil obtained from petroleum oil or bituminous minerals, with a sulphur content exceeding
2710 19 47 0.002% but not exceeding 0.1% by weight (excl. containing biodiesel and for chemical
transformation)
Gas oil obtained from petroleum oil or bituminous minerals, with a sulphur content exceeding 0.1%
2710 19 48
by weight (excl. containing biodiesel and for chemical transformation)
Gas oil containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
2710 20 11
content not exceeding 0.001% by weight, containing biodiesel
Gas oil containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
2710 20 15
content exceeding 0.001% but not exceeding 0.002% by weight, containing biodiesel
Gas oil containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
2710 20 17
content exceeding 0.002% but not exceeding 0.1% by weight, containing biodiesel
2710 20 19 Gas oil containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
content exceeding 0.1% by weight, containing biodiesel
18 National Emissions Trading System – Background PaperFuel oils of subheadings 2710 19 62 to 2710 19 68 and of subheadings 2710 20 31 to
4. 2710 20 39 of the Combined Nomenclature
Fuel oils obtained from petroleum oil or bituminous minerals, with a sulphur content not exceeding
2710 19 62
0.1% by weight (excl. containing biodiesel and for chemical transformation)
Fuel oils obtained from petroleum oil or bituminous minerals, with a sulphur content exceeding 0.1
2710 19 64
but not exceeding 1% by weight (excl. containing biodiesel and for chemical transformation)
Fuel oils obtained from petroleum oil or bituminous minerals, with a sulphur content exceeding 1%
2710 19 68
by weight (excl. containing biodiesel and for chemical transformation)
Fuel oils containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
2710 20 31
content not exceeding 0.1% by weight, containing biodiesel
Fuel oils containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
2710 20 35
content exceeding 0.1 but not exceeding 1% by weight, containingbiodiesel
Fuel oils containing petroleum oil or bituminous minerals of 70% or more by weight, with a sulphur
2710 20 39
content exceeding 1% by weight, containingbiodiesel
Natural gas: products of subheadings 2711 11 (liquified natural gas) and 2711 21 of the Combined
5. Nomenclature and gaseous energy products collected during coal mining, without gaseous biofuels
and bio heating materials
2711 11 Natural gas, liquified
2711 21 Natural gas in gaseous state
6. Liquified gases: products of subheadings 2711 12 to 2711 19 of the Combined Nomenclature
2711 12 Propane, liquified
2711 13 Butane, liquified (excl. containing a purity of 95% or more of n-butane or isobutane)
Ethylene, propylene, butylene and butadiene, liquified (excl. ethylene with a purity of 95% or more
2711 14 00
and propylene, butylene and butadiene with a purity of 90% or more
Hydrocarbons, gaseous, liquified, not elsewhere specified or included (excl. natural gas, propane,
2711 19
butane, ethylene, propylene, butylene and butadiene)
National Emissions Trading System – Background Paper 19German Emissions Trading Authority (DEHSt) at the German Environment Agency
City Campus
Building 3, Entrance 3A
Buchholzweg 8
D-13627 Berlin
www.dehst.de/English | emissionstrading@dehst.deYou can also read
