Germany's CO2 trading design pressures municipal utilities

The design of Germany's national CO2 emissions trading system (nEHS) is placing significant pressure on municipal energy utilities. According to Dr. Thomas Haller, an energy expert at Simon-Kucher, the current auction design forces these utilities to compete with financial investors for CO2 certificates.

While utilities must secure certificates to meet legal obligations, they face aggressive bidding and high liquidity requirements. This often forces them to rely on the secondary market, where prices can be driven up by speculators. Experts suggest that the proposed BEHG amendment, which aims to stabilize the CO2 price between 55 and 65 euros for 2027, fails to address the core issue. While the amendment may provide a price corridor, it does not guarantee market access or protect utilities from the procurement risks and liquidity pressures caused by competing with well-funded market actors.