German Industry and Greens at Loggerheads Over Emissions Plan

The tug of war over Germany's controversial plans for an emissions allocation system, unveiled last month, showed no signs of easing this week even after a high-profile meeting between Environment Minister Jürgen Trittin and Economics Minister Wolfgang Clement.

The emissions trading plan is a result of an EU bill passed last year, which makes it mandatory for EU member states to issue "carbon credits," initially cost-free, to companies in the oil refining, energy, smelting, steel, cement, ceramics, glass and paper sectors. The system is a crucial part of the EU's commitment under the Kyoto Protocol to reduce emissions by 8 percent between 2008 and 2012, compared to 1990 levels.

The emissions trading plan will effectively create a Europe-wide market in greenhouse emissions allowances. The allotments include a system of tradable emissions permits that allow companies that voluntarily reduce emissions to sell the difference to others as unused "rights" to pollute. Offenders will also be able to buy extra credits to emit carbon from another company -- the price will be determined by the emissions trading market.

The system is scheduled to take effect in 2005.

Industry skeptical of emissions trading plan

Though the emissions trading plan sounds simple on paper, in practice it is complicated by the various lobby groups vying to influence the system to suit their interests.

Trittin's national allocation plan, which foresees issuing carbon credits to around 2,600 companies and is expected to lead to a 7.5 percent reduction in carbon emissions by 2007, has been criticized by the German Economics Ministry. Spearheaded by Clement, the ministry says it could put Germany at a serious competitive disadvantage compared to other industrial nations.

The companies themselves complain that the plan forces them to eliminate an additional 7.5 percent in emissions on top of climate protection measures they have already volunteered to implement. Many, who have already prematurely slashed their emissions, also accuse Trittin of giving them too little carbon credits.

Unions fear job losses

Martin Wansleben, head of the Association of German Chambers of Industry and Commerce said it was wrong to base the emissions trading plan on the industry's voluntary offer from two years ago. "What the environment minister is doing, is a trick. He's twisting words and saying if you have already promised that then I can count on the fact that it will work," Wansleben told Deutsche Welle. "It's like he's saying 'We will become more Catholic than the Pope, we'll become better than the others -- even if it costs jobs and the economy'."

Trade unions are also warning of disadvantages for their sectors and a loss of jobs if Trittin's plan goes ahead in its present form. Erhard Ott, chairman of the services union Verdi, said the regulation would make coal-fired plants unprofitable and threaten thousands of jobs. On the other hand, electric utilities that burn natural gas will be the most likely winners.

Carbon credits will amount to naught: Greens

Environmental organizations have a radically different take on the issue. "The industry just doesn't get enough. It's absolutely shameless, what they're demanding," said climate expert Regine Günther of the World Wide Fund organization. "They (the industry) want to raise their emissions. That means: each one will get as much as he needs. If that happens, the price of the carbon credits will be zero," she added.

Trittin, a member of the Green party insists that the emissions trading plan will help the industry meet their self-imposed goals of cutting pollutants. "With the emissions trading system we want to help the industry to meet their promises of saving 45 million tons of carbon dioxide by 2012 and help them to actually implement it," the minister said.

Meanwhile time is running out for Germany to submit its list of 2,600 companies and its break-down of carbon credits among them to Brussels by the end of March. Trittin has announced that Germany will stick to the deadline, ensuring further negotiations between the industry leaders and the greens to find a compromise.