In the past, electricity generation costs in Germany’s energy mix depended for the most part on the development of fossil fuel prices. Despite the strongly increasing share of renewable energies in the energy mix, the generation of electricity from fossil fuel power plants, especially brown and bituminous coal power plants, still dominates in Germany today. Alongside fossil fuels as an increasing cost factor, the price of CO2 is also gaining importance as a price factor in the production of electricity from fossil fuel power plants.
The establishment of the European Emission Trading Scheme (EU ETS) in 2005 formed the basis of CO2 emissions pricing, and was oriented on the emission reduction targets of the European Union.
Although the price of CO2-certificates in free trade is shown on several stock exchanges, the CO2 price is still policy driven. The amount of free allocated and traded CO2-certificates is set on a European policy level. Current decisions on temporary limitations of the trade volume have corresponding effects on exchange prices.
This article aims to investigate the impact of CO2-certificate prices on electricity generation costs in the German energy mix. Comparing real CO2 prices to forecasts for 2013 provides findings on the effects that the political decisions of the European Parliament with regard to the limitation of the trade volume of available CO2-certificates have on electricity generation costs in the German energy mix.