EU Carbon Trading Debate Heats Up as Germany's Greens Defend Climate Policy
A debate over the EU's carbon trading system has intensified after Chancellor Friedrich Merz proposed reforms or delays to the scheme. Franziska Brantner, co-leader of Germany's Green Party, firmly rejected the idea, arguing that the current system remains vital for climate change protection. The discussion comes as the EU tightens rules on emissions allowances, with annual reductions now set at 4.4%.
The EU's two emissions trading systems—EU ETS-1 and EU ETS-2—limit CO₂ output by capping the number of allowances available. These allowances are being phased out entirely by 2039, with a 4.4% annual cut already in place. While some companies still receive free allocations, this practice is being sharply reduced from this year onward.
Revenue from carbon trading in Germany funds the Climate and Transformation Fund, which supports renewable energy, electric mobility, building efficiency, hydrogen projects, and cleaner industrial processes. Brantner stressed that the system must stay predictable and reward businesses taking climate change action.
She also dismissed calls to revive outdated economic models, insisting that future prosperity depends on sustainable innovation. To ease the transition, she proposed lowering electricity taxes, stabilising labour costs, and boosting investment in green technologies. Her stance aligns with the EU's broader goal: cutting emissions while preserving economic growth.
Despite ongoing discussions, no documented impacts on Germany's green investment plans have emerged since 2023, as no relevant data or reports are available.
The EU's emissions trading system remains a cornerstone of climate change policy, with stricter rules now in force. Brantner's rejection of reforms signals continued support for the current approach, which ties carbon pricing to green funding. The focus stays on balancing economic stability with environmental targets, though concrete effects on German investments remain unconfirmed.
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