Germany to Cancel EU Carbon Allowances for 14 Coal Plant Closures in 2024

Germany’s coal exit is guided by its Greenhouse Gas Emissions Trading Act, which requires the country to withdraw allowances tied to any retired installation covered by the EU Emissions Trading System (EU ETS). Without this step, the freed‑up credits could be used by other firms to emit more CO₂, undermining the climate goal of the coal phase‑out. The European Commission received Germany’s notification in November 2023 and published details this week. Similar cancellations followed the 2022 and 2023 plant closures, establishing a pattern of Berlin protecting the EU carbon market’s integrity.

- Germany plans to cancel the EU ETS allowances associated with 14 power plants scheduled to close in 2024. - Under Section 10(5) of the national emissions trading law, the cancellation is mandatory so that shutting down coal capacity translates into actual emission reductions. - By May 31 Germany must report to the Commission the precise volume of allowances to be cancelled for the period September 1–December 31. The figure is derived from the plants’ verified emissions for those months, with any allowances already soaked up by the EU ETS’s Market Stability Reserve subtracted from the total.

The cancellation prevents a surplus of tradable permits that could otherwise lower the carbon price and encourage higher emissions elsewhere. By aligning the allowance withdrawal with the plant closures, Germany reinforces the environmental integrity of the EU carbon market as it continues its managed coal exit. Analysts will watch the May 31 report for the exact allowance volume and any subsequent shift in EU ETS prices.