Germany's institute for economy questions CO2 trade benefits

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Introduction of a cap-and-trade market for control of CO2 emissions will not on its own stimulate the levels of renewable energy development taking place under Germany's renewable energy law, says the German Institute for the Economy in Berlin. The institute's research refutes a claim by the German economy ministry that caps on C02 emissions would alone stimulate a renewable energy market. According to the ministry, while the renewable energy law "had contributed at great cost to reducing CO2 emissions, its overall effect on reducing CO2 output would be zero after implementation of the CO2 emissions certificates market. The law would turn into an ecologically useless but economically expensive instrument and should logically be abolished." The Berlin institute says renewable energies are making a much larger contribution to CO2 reduction than emissions trading. Renewable power plant generated 37.1 TWh of electricity in 2004, equivalent to saving 30 million tonnes of CO2 a year. In comparison, Germany's national CO2 allowance program for 2007 requires an annual saving of just two million tonnes per year by 2007, to bring down total CO2 emissions to 503 million tons each year, compared with 505 million tonnes annually in the baseline years of 2000-2002. Even if tougher emission caps are applied, it is no reason to stop specific support of renewables, says the institute, as long as their contribution to C02 reduction is deducted before setting new caps.

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