Germany Notifies EU of Planned EUA Cancellations Linked to Coal Phase-Out 

Germany is making another move in its coal exit plan by officially letting the European Commission know it plans to cancel EUAs tied to 14 coal-fired power plants set to retire in 2024. According to the Federal Ministry for the Environment, this notification “lays the necessary groundwork” for taking back the allowances that were released into the market due to these decommissioned plants. Under Section 10(5) of the Greenhouse Gas Emissions Trading Act, Germany is required to retract these allowances to ensure that the phase-out of coal actually leads to real emission reductions rather than just shifting higher emissions to other sectors. 

This notification doesn’t mean immediate cancellations, though. It’s the start of a multi-step process where they will figure out the exact number of allowances based on future emissions reports, while also accounting for how many have been automatically absorbed by the Market Stability Reserve.  

The German government pointed out, “Without the cancellation, the freed-up credits could be used by other companies to emit more carbon dioxide,” which would undermine the whole goal of the phase-out. This action follows previous cancellations related to Germany’s 2022 coal closures and contributes to efforts aimed at preventing an oversupply of allowances from diluting the EU ETS. 

This announcement is part of a larger picture of Germany’s managed transition away from coal. Just a few days ago, the European Commission green-lighted up to €1.75 billion in compensation for the energy company LEAG to aid its early departure from lignite, calling the measure “appropriate and proportionate.” German officials highlighted that this decision gives crucial support to workers and regions facing structural changes. Altogether, the planned EUA cancellations and this compensation package show how Germany is balancing regulatory responsibilities with economic support as it moves toward its long-term decarbonization goals within the EU framework.