Germany

GE-2:Voluntary agreements with German industry

Policy Description

Voluntary agreements with energy intensive industry associations exist since 1996. The latest agreement entered into force in January 2013. While former agreements targeted mainly emission savings, the latest version is setting annual energy intensity reduction targets and pushes the participating companies to the implementation of energy management systems. Industries that comply with the targets set out in the voluntary agreements can apply for rebates on energy taxes.

Description

The first voluntary agreements with industry branches in Germany were negotiated in 1996. In November 2000, a Voluntary Agreement was agreed between 19 German industry associations and the federal government to reduce industry's greenhouse gas emissions (GHG) with most agreed targets due in 2012 and one due in 2015. In 2012 a new agreement has been negotiated, which is running to 2022.

In the agreement from 2000, GHG emission reduction targets were agreed with each industry association, and targets varied according to the scope, choice of gases included and how the targets have been expressed (e.g., specific emissions or absolute target, energy-related emissions or all emissions). Two sectors -the chemical industry and the non-ferrous metal industry- have agreed on a target for specific energy consumption per unit of production.

The total commitment made translated to a reduction in CO2 of 28% in 2005 as compared to 1990 and a reduction in the total of six greenhouse gas emissions referred to in the Kyoto Protocol (CO2, CH4, N2O, SF6, HFC and PFC) of 35% by 2012 as compared to 1990. These reduction targets are valid on the basis of the methods of calculation used by the jointly authorised neutral monitoring agency Rhine-Westphalia Institute for Economic Research (RWI) including the assumptions made in this respect. All targets were set for the year 2012, with the exception of the target for the electricity industry, which is set for 2015. RWI was the party appointed to collect and process all information independently from the industry and is also appointed to monitor target achievements.

In return for this voluntary agreement the German government agreed to abstain from administrative regulations, such as the introduction of mandatory energy audits. Additionally the government ensured that participants were not put at a competitive disadvantage internationally or are placed under possible additional financial burden within the European lawmaking. Given a EU-wide harmonization, the German government also ensured liberal solutions with regards to taxing, taxable objects and base values for energy reduction targets. [1] [2]

As evaluations in 2011 were showing that most industry branches were on track to achieve the targets and some where even outperforming the trajectory [3], a new agreement has been negotiated between the government and the federal industry association BDI and the federal association of the energy and water industry BDEW. The new agreement entered into force in 2013 [4] [5] [6]. Under the new agreement all companies applying for the rebate on energy tax under the “Spitzenausgleich” need to introduce energy management systems or audits until the end of 2015 with certification according to EMAS or DIN EN ISO 50001. SMEs only need to implement regular energy audits according to DIN EN 16247-1 or similar measures such as an annual monitoring according to LEEN (Local Energy Efficiency Networks) or the German model MODEEM (modular energy efficiency model). Additionally, starting from 2015, all branches covered by the voluntary agreement need to prove annual energy intensity reductions as of 2013.

The Voluntary Agreement is a follow-up of the earlier Voluntary Agreement that was agreed in 1996 and one of the instruments to achieve the overall greenhouse gas emission reduction targets as set by the German government. These targets were formulated in the climate and energy package adopted in August 2007. The package consists of 30 concrete individual measures that aim to reduce Germany's greenhouse gas emissions by 40 percent by 2020 compared to 1990. A total of 2.6 billion euro was budgeted in 2008 to support the implementation of measures formulated in the package.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 2013

End Date: 2022

Policy Linkages

Supports EU emissions trading system (EU ETS) Effort Defining
Supported By Rebate on energy and electricity tax for energy intensive companies “Spitzenausgleich” Supporting Measure
Supported By KfW Environmental and Energy Efficiency Programmes (formally ERP) Supporting Measure
Supported By CHP Law (Kraft Wärme Kopplungsgesetz) Supporting Measure
Supported By 30 Pilot Network Project Supporting Measure

Agencies Responsible

Federal Ministry of Economics and Technology (BMWi), Federal Ministry of Finance
Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Bundesverbandes der Deutschen Industrie

Primary Objective: Energy

Objective

Annual reductions in energy intensity starting from 2015

Target Group

Associations for hard coal mining, potassium, sugar, textile, paper, mineral oil, chemicals, glass, ceramic tiles, bricks, cement, lime, iron and steel, non-ferrous metals, electrical and electronical manufacturing and the BDI (Head Association of the German industries).

Driver of energy consumption or emissions affected by policy: Total emissions or specific emissions.

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Nearly 75% of national CO2 emissions by 1990 are included in this agreement.

Quantitative Target? yes

Target: Starting from 2015, all branches under the voluntary agreement need to comply with the following reduction targets for the years 2015 to 2022: Year of application: 2015: -1.3% mean energy intensity achieved in 2013 Year of application: 2016: -2.6% mean energy intensity achieved in 2014 Year of application: 2017: -3.9% mean energy intensity achieved in 2015 Year of application: 2018: -5.25% mean energy intensity achieved in 2016 These reduction targets are measured against the mean energy intensity of the participating industry branches between 2007 and 2012. The agreement specifies that a general evaluation shall be done in 2017 that shall help set the missing targets for the years 2019-2022

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Enforcement By

Organisation Type Organisation Name
Third Party

Sanctions: N/a. In return for this voluntary agreement the German government agreed to abstain from administrative regulations, such as the mandatory introduction of energy audits. Starting from 2015, if agreed targets are not achieved by an industry sub-sector, energy tax rebates are not granted.

Requirements on the Target Group

  • Introduction of energy management systems by 2015
  • Achieve annual energy intensity reductions

Support by Government

  • Agreement to abstain from administrative regulations, such as the introduction of mandatory energy audits.
  • Agreement to grant tax rebates on energy taxes (Spitzenausgleich), see supporting measures GE-3

Implementation Toolbox

Agreed calculation method based on data available from public statistics.

Complexity of Implementation

Government

­Cause of complexity for government: The government needs to agree on target setting and needs to monitor energy intensity reductions claimed by the sectors and companies. For the latter it can rely on existing public statistics. Furthermore the government needs to monitor possible competitive disadvantages in regards to international competition and mitigate policy impacts accordingly.

Target Group

­Cause of complexity for target group: Companies/sector needto introduce energy management systems, but the requirements are adapted to the size of the company. No additional reporting is necessary..

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions ­- The overall objective of a reduction of 35% of emissions compared to 1990 emissions was achieved in 2010, while set for 2012. [1] ­- The calculated average degree of target achievement was 113.7% in 2010. [3] ­- In 2010, 18 of the 22 emission reduction targets for 2012 were achieved, some targets have been exceeded considerably. Four sectors did not yet achieve their target: the brick industry (which achieved 45% of the target set), iron and steel (59%), Lime (90%) and the ceramic tile industry (61%). [3] ­- Total reductions by 2010 were estimated to be 595 million tons or a decrease of 24.8% compared to 1990. There are large variations between sectors. The sectors with the largest percentage reductions in emissions compared to 1990 include the coal mining (-82.6%), the potash industry (-79.2%) and the textile industry (-67.2%). The highest total CO2 savings were achieved by the gas industry, 46.8 million tons. Achievements were made by substitution of coal, oil and electricity installations for heating and water heating, modernization of existing gas heaters, promotion of cogeneration, modernization of existing buildings and the use of natural gas in new buildings in the built environment. [3] ­The monitoring report mentions that significant structural changes have been achieved with respect to decoupling of production and CO2 emissions, even the sectors that have not achieved their targets.
Estimated costs/benefits for industry not reported
Estimated cost for government not reported

References & Footnotes

References

[1] Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Erklärung der Deutschen Wirtschaft zur Klimavorsorge, dated September 2011. http://www.bmu.de/wirtschaft_und_umwelt/selbstverpflichtungen/doc/47777.php (accessed 15/2/2012).

[2] Mure database, description of policy GER18: Voluntary agreement with German industry II, Last update: 22 November 2011, http://www.isisrome.com/data/mure_pdf/industry/GER18.PDF (accessed 15/2/2012)

[3] Die Klimavorsorgeverpflichtung der deutschen Wirtschaft – Monitoringbericht 2010, Verifikation der Vereinbarung zwischen der Regierung der Bundesrepublik Deutschland und der deutschen Wirtschaft zur Klimavorsorge Bericht – September 2011, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Essen, 2011. http://www.rwi-essen.de/media/content/pages/publikationen/rwi-projektberichte/PB_CO2-Monitoring-2010.pdf (accessed 15/2/2013)

[4] Vereinbarung zwischen der Regierung der BRD und der deutschen Wirtschaft zur Steigerung der Energieeffizienz, dated 01.08.2012: http://www.bundesfinanzministerium.de/Content/DE/Publikationen/Aktuelle_Gesetze/Gesetzentwuerfe_Arbeitsfassungen/2012-08-01-stromsteuer-anlage-vereinbarung.pdf?__blob=publicationFile&v=2 (accessed 15/2/2013)

[5] EnergiesteuerGesetz, from 15.07.2006 including changes until 05.12.2012, http://www.gesetze-im-internet.de/bundesrecht/energiestg/gesamt.pdf, accessed on 15/2/2013

[6] Stromsteuergesetz, from 24.03.1999 including changes until 05.12.2012, http://www.gesetze-im-internet.de/bundesrecht/stromstg/gesamt.pdf, accessed on 15/2/2013