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On this issue, Ottmar Edenhofer, Director of the Potsdam Institute for Climate Impact Research (PIK) and of the Mercator Research Institute on Global Commons and Climate Change (MCC) comments:

"It is good that a timetable to phase out coal in Germany has now been adopted. However, the government unnecessarily ramps up the cost: the high direct payments to power plant operators, compensating for shutdowns, are wrong. They undermine the polluter-pays principle, wherein anyone causing emissions should pay accordingly. Now the person who stops causing emissions is rewarded financially. This is why operators have kept some power plants on the grid longer than is economically feasible – so that they can now collect compensation payments.“

“It would have been better, if German policy had designed the billion-euro coal phase-out project around a market-based core. Structural aids for the coal regions are important because they help to finance new jobs – but when it comes to the phase-out itself, politicians should have relied on the carbon price. Everything would have been much cheaper. We saw last year that the rising prices in emissions trading led to a decline in coal-fired power generation. A minimum price would have displaced coal without having to pay expensive compensation.”

“The way the German coal phase-out is reflected in European emissions trading also remains unsatisfactory. In principle, the government wants to cancel the respective certificates and take them off the market. However, the amount of CO₂ that is effectively saved can only be determined with great uncertainty. Thus, some of the certificates might be used elsewhere, which would counteract the climate effect of the coal phase-out. There is a simple solution to rule out this so-called waterbed effect and at the same time prevent uncoordinated action by national governments with regard to the certificates: a sufficiently high European minimum price in emissions trading.“

For further information please contact the PIK PR Office:
Jonas Viering, Sarah Messina, Marie Luise Kimbel, Thorsten Greb
Phone: +49 331 288 25 07
E-Mail: press@pik-potsdam.de