Germany forced to buy CO2 emissions rights from Bulgaria, Hungary and Czechia

Europe’s largest economy and biggest carbon emitter overshot its carbon quotas by 11 million tons

Yesterday, German authorities announced that the country has exceeded its emissions quotas, especially in the construction and transport sector. Despite the hugely popular 9-euro ticket for public transport from this summer, Germany will have to buy emissions credits from countries that have met their green goals.

By far the biggest emitter in the bloc, the Bundestag will have to buy millions in emissions rights, from countries that have emitted much less. In this case, these are Bulgaria, Hungary and Czechia. These countries will have to use the money to fund the further expansion of their green and sustainable policies.

On the one side, this represents the spirit of the EU Emissions Trading Act, where the polluters would have to pay the more disciplined Member States. However, it also showcases one of the flaws of the scheme – richer countries can just pay their way out of having to reduce carbon emissions.

The problematic industries

The two industries that missed their carbon emissions targets were construction and the transport sector. In the period between 2013 and 2020, Germany emitted 11 million tons of CO2 above the permitted value.

The construction sector, for instance, emitted around 115 tons in 2021 alone and considering that by 2030, that number should go down to 72 million, construction practices themselves need to change. This opinion was voiced by Building Minister Klara Geywitz, who pointed out that buildings in the future will look different.

She stressed that sustainable practices like using wood and geothermal energy would be key to decarbonising the industry. However, Germany is also experiencing a shortage of skilled labour when it comes to construction while trying to increase the number of homes to curb the housing crisis.

As Tagesschau reports, Berlin is aiming for 400,000 new homes annually and the high demand forces companies to use concrete, which requires less expertise.

Who wins from Germany’s emissions?

Three countries seem to be the big earners from Germany’s failure – Bulgaria, The Czech Republic and Hungary. The three will cede some of their emissions rights to Germany because they themselves have emitted significantly less CO2.

The money that they will get as a result will go directly towards more climate protection. According to State Secretary Sven Giegold, the purchase contracts say that Hungary will use them to buy additional electric buses for public transport.

The Czech republic will, in turn, use them to fund energy-efficiency renovations for private homes, while Bulgaria will upgrade schools and other public buildings.