EnBW files objection with the European Commission against German emission trading laws

Karlsruhe. EnBW Energie Baden-Württemberg AG has filed a formal complaint with the Directorate-General for Competition and the Directorate-General for the Environment of the European Commission against the German "law concerning the national allocation plan for greenhouse gas emission rights in the allocation period from 2005 to 2007" and the "national allocation plan of the Federal Republic of Germany for the period from 2005 to 2007". In its objection, EnBW requests the rejection of the German law by the European Commission as well as the institution of formal subsidy proceedings against Germany. EnBW claims that the German allocation law is not in compliance with the uniform implementation of the European directive and that it favours national competitors of EnBW in direct violation of the European regulations.

EnBW believes that the transfer provision that has been included in the German legislation puts it at a particular disadvantage. According to this regulation, a company that replaces an old high-emission power station with a new lower-emission power station can transfer the annual certificates for the old station to the new station for a period of four years and can sell the resulting surplus certificates at a profit: based on a certificate price of 10 Euro, this transfer regulation generates a cumulative benefit of up to 220 million euros compared to competitors for companies who build a new power station. Independent experts estimate the competitive disadvantage for EnBW due to the planned legislation as being in the order of 1 billion euros for the period from 2005 to 2020.

EnBW also sees itself at a disadvantage due to a further aspect of the legislation. The company has to shut down its nuclear power station in Obrigheim in 2005 in line with the agreement on the exit from nuclear energy generation and offset the resulting production loss in coming years with the help of existing conventional power stations. The resulting additional emissions correspond to the equivalent of around 2.2 million certificates a year. However, the German allocation regulations make no provision for adequate special allocations due to the company's exit from nuclear energy, and this means that EnBW lacks an annual 1.7 million certificates for the period from 2005 to 2007 and an annual 2.2 million certificates from 2008 onwards.

EnBW's objection is based on the fact that, in addition to causing competitive distortion, the existing regulations also fail to achieve the intended ecological effects. "The transfer regulations do not result primarily in reduced emission levels but lead to "profit-taking". It is grotesque that a company like EnBW, which has been and will continue to be highly efficient in the area of emission reduction compared to its competitors, has to purchase certificates while less efficient companies will be able to sell certificates. Although we have always acted in an exemplary fashion in the past in terms of environmental protection measures and intend to continue to do so, we – a highly efficient operator when it comes to emissions – are still being put at a serious disadvantage compared to individual competitors. The consequence of the German allocation regulations will be that the biggest CO2 polluter may profit most of all. This is absurd and cannot be desirable from either an ecological or an economic point of view", says Prof. Dr. Utz Claassen, CEO of EnBW.

EnBW is confident that the objection filed with the Directorate-General for Competition in Brussels will be successful. The German legislative would then be forced to restructure the process for the allocation of certificates and make it fairer from a competitive point of view.