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Killing Jobs to Save the Climate
Karsten Stumm
Spiegel
Saturday, July 19, 2008
The price of European emission permits is rising so rapidly that German companies are threatening to leave the country. Thousands of jobs could be lost. And the environment may, in the end, be no better off.
They sat silently through two lectures, but then they couldn’t control their anger any longer. The civil servants from the Environment Ministry, the Environment Agency and the German Emissions Trading Authority made it sound easy for industry to take up carbon trading. It was just too much for the managers to tolerate.
“If that’s the shape the trading will take, we will simply move our cement operation to Ukraine,” a cement factory manager shouted into the lecture hall. “Then there won’t be any trading here, nothing will be produced here anymore — the lights will simply go out here.”
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The businessmen’s anger surprised the emissions-allowance trading experts. They had invited industry representatives to a relaxed forum at the Environment Ministry’s office in Bonn. They wanted to present international developments in the carbon trading market. However, the mood in the German business world has soured — managers no longer have the stomach for academic lectures. The reason is that emissions allowances are already burdening some companies that require a lot of energy for production purposes.
In the last 12 months alone, the price for the right to pump a ton of carbon into the atmosphere has shot up from €23 ($36.5) to nearly €30 ($47.6), according to the European Energy Exchange in Leipzig. This hike of around 30 percent has a direct effect on the electricity production of power companies.
According to calculations by Point Carbon — a Norwegian company that specializes in analyzing global power, gas and carbon markets — this price hike would drive up the marginal cost of energy from an old brown coal power plant by the entire price of carbon. For modern natural gas power plants, it would increase prices by a third. Energy company RWE, which is based in the German city of Essen, reckons it alone will have to pay €9 billion ($14.2 billion) for its own electricity production, which it, of course, will pass on in higher electricity prices. So carbon trading will have a direct impact on which countries firms chose to locate in.
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