KfW/ZEW CO2 Barometer: German businesses inadequately prepared for reforms in EU emissions trading from 2013

Frankfurt (ots) -

- Many not expected to invest in greenhouse gas emission avoidance
until 15 years from now
- Greenhouse gas emission avoidance an increasingly more important
motive for investments
- High costs of measuring emissions and complex reporting
requirements burden small and medium-sized enterprises

German enterprises are inadequately prepared for the third trading
period of the EU Emissions Trading System (EU ETS) starting in 2013.
This is the result of the KfW/ZEW CO2 Barometer which was published
for the third time today. Up until today, too few German businesses
have taken steps to reduce greenhouse gas emissions. Only 40% of the
surveyed enterprises have so far assessed the expected costs.

"A key finding of the study is that many investments that would
provide considerable emission reductions are not expected in the
short term and even in the medium term. They will come too late for
the energy turnaround", said Dr Norbert Irsch, Chief Economist of KfW
Bankengruppe. "This has to do with the long remaining lifetime of the
plants covered by the Emissions Trading System, which is 15 years on
average." The share of businesses planning investments from 2013 is
rising. Investments in energy efficiency technologies in particular
are on the agenda. "What is encouraging is that carbon reduction is
increasingly becoming the main motive of investments and no longer
represents only a welcome side-effect", said Prof Dr Andreas Löschel
(ZEW), Head of the Environmental and Resource Economics,
Environmental Management department at the Mannheim-based Centre for
European Economic Research (ZEW).

What is driving the increased interest of businesses in reducing
carbon emissions is the fact that a significant drop in the free
allocation of emission allowances from 2013 will create considerable
additional costs for them. At present, only 27% of enterprises have
to purchase additional emissions allocations. From 2013 this share
will rise to 63%, according to the current CO2 Barometer. The
resulting additional costs differ greatly between the individual
enterprises participating in emissions trading. For enterprises with
high carbon emissions the costs will be in the millions. As the
actual allocation quantity will not be determined until sometime in
the second half of 2012, the surveyed enterprises do not have enough
time to prepare. They estimate that it would take them more than 20
months to prepare optimally.

The results of this year's KfW/ZEW CO2 Barometer illustrate that
enterprises have to adjust even better to the challenges of the
EU-ETS. Particularly with a view to efficient carbon management, they
have a lot of catching up to do. The majority of the enterprises
affected by emissions trading (70%), for example, offer their
employees no incentives for identifying carbon reduction potential.
In the opinion of the authors Irsch and Löschel, emissions trading
fails to have a full incentive effect in the majority of the
enterprises.

Another key result of the study is that 61% of enterprises with
several plants offset a surplus or shortfall in emission allowances
for specific plants within the company itself. The emission
allowances therefore do not enter the free trade, which impairs the
efficiency of the emissions trading instrument. The efficiency of
emissions trading can also be impaired when trading activities are
hampered by transaction costs. Thus, according to the KfW/ZEW CO2
Barometer, an enterprise with low emissions must calculate a
surcharge of roughly 4% on the certificate price, particularly for
the emission measurement and the necessary reporting, while an
enterprise with high carbon emissions on average must calculate only
0.5%.

Pressekontakt:
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