With the entry into force of the Fuel Emissions Trading Act and the associated introduction of a price for CO2, the state is making fossil fuels more expensive. At SWG, this affects the prices for natural gas and district heating. Electricity prices remain stable.
In order to drive forward climate protection and achieve the associated ambitious savings targets, the Bundestag has passed the Fuel Emissions Trading Act (BEHG). It also puts a price on CO2 for end customers: from 1 January 2021, every tonne emitted will cost 25 euros.
This government surcharge will make fossil fuels - i.e. petrol, diesel, heating oil, liquid gas and natural gas - more expensive. In fact, the BEHG expressly stipulates that so-called distributors - i.e. traders such as Stadtwerke Gießen (SWG) - must include the surcharge in the final prices and pay it to the state. The declared aim is to gradually make fossil fuels less attractive for end customers and at the same time incentivise them to switch more to renewables.
The CO2 price is therefore a political control instrument. In order to increase its impact, future increases have already been set: it will rise by five euros per year until 2023, to 45 euros per tonne in 2024 and 55 euros per tonne in 2025. From 2026, the surcharge is to increase further, but then within a corridor of between €55 and €65 per tonne and depending on actual emissions. Auctions are planned in which the market will determine the price.
"As a regional energy service provider, we see it as one of our key tasks to help our customers mitigate the effects of the foreseeable price increases," explains Ina Weller, SWG company spokesperson and Head of Marketing & Sales. This is precisely the purpose of the company's energy advice service at the SWG customer centre on Marktplatz. Although the centre is closed to the public due to the current coronavirus situation, the experts are happy to pass on their expertise. "Give them a call or send them an email and they will be happy to help you reduce your individual energy consumption," promises Ina Weller.
Price increase mitigated
By levying the CO2 surcharge, the state is deliberately making natural gas and district heating, among other things, more expensive. "We also have to factor the new, politically determined component into our natural gas and district heating prices," explains Jens Schmidt, Commercial Director of SWG. For natural gas, this means a net increase of 0.455 cents per kilowatt hour. However, there is another factor in SWG's calculation: Thanks to a sophisticated procurement strategy, SWG was able to buy fuel comparatively cheaply. "This puts us in a position where we only have to raise our end prices by around 0.3 cents per kilowatt hour," says Jens Schmidt happily. He adds: "Without the new item for CO2, we would have lowered our gas prices noticeably." For an average household with a consumption of around 27,350 kilowatt hours per year, this means additional monthly costs of around 6.83 euros.
Although district heating in Giessen is already largely generated from renewable sources, SWG still has to use natural gas to produce it. As a result, the CO2 surcharge is noticeable here. "We have no choice but to adjust our prices in this sector too," points out Matthias Funk, Technical Director of SWG.
Electricity prices remain stable
To a certain extent, the electricity price is also affected by the BEHG. This is because the legislator has decided to reduce the EEG surcharge to compensate for the burden. For 2021, it is 6.5 cents per kilowatt hour and therefore 0.256 cents lower than the previous year. Without the subsidies from the economic stimulus package and the relief from the revenue from the CO2 surcharge, the surcharge would have climbed to over 9 cents per kilowatt hour. However, the cap is not enough to reduce prices. This is because the surcharge in accordance with Section 19 NEV, the surcharge for interruptible loads and the KWKG surcharge increased in parallel. "All in all, we are happy to be able to keep electricity prices stable," summarises Jens Schmidt.
CO2-neutral energy from 2021
Another piece of good news: from 2021, SWG will offset all the CO2 emissions it causes - whether through the natural gas it supplies or through the production of district heating and electricity. "Every kilowatt hour of energy that we sell to private and commercial customers will be CO2-neutral from January," says Matthias Funk. "So every one of our customers is making a contribution to improving our planet's climate with every kilowatt hour they buy from us," adds Jens Schmidt. This is because SWG offsets the emissions by purchasing Verified Emission Reduction certificates from Germany's top provider in this segment - First Climate AG, based in Bad Vilbel.
The now established process is internationally recognised and works like this: SWG acquire emission certificates of the Verified Carbon Standard. These certificates are sold by operators who save CO2 with their projects - for example with wind power, hydropower or photovoltaic plants - but also with large-scale reforestation. The key point is that all of these endeavours only exist because the income from certificate trading guarantees their economic operation or makes their creation possible in the first place. This is why practically all projects for which such certificates are issued are located outside Europe. In other words, in countries where much cheaper coal-fired power plants would be built without this financial support. This important detail is crucial for the positive effect on the climate. Thanks to voluntary offsetting, more and more clean power plants can replace real polluters.
A central register, in which the certificates are recorded, ensures correct accounting. Whenever a company like SWG buys a certificate, it is cancelled so that it cannot be traded a second time. This process is public and therefore transparent and traceable.
"We decided to buy certificates from a hydropower plant in India," explains Jens Schmidt. They cover around 130,000 tonnes of CO2 per year, the amount that will continue to be produced in Giessen for the foreseeable future due to the combustion of natural gas - with a downward trend. The fact that this reduction takes place thousands of kilometres away is irrelevant for the climate. The only thing that counts here is the overall reduction in carbon dioxide emissions. The costs resulting from the CO2 compensation are borne by SWG. "Nothing changes for our customers," assures Jens Schmidt.
New offer
In addition to its voluntary commitment, SWG is expanding its range to include a purely green electricity tariff. "Anyone who wants to make a personal commitment to even more climate protection will be able to purchase electricity from 100 per cent hydropower from December," reveals Jens Schmidt. However, because the electrical energy cannot be physically transported from the chosen provider to Central Hesse, SWG also uses certificates for this: strictly controlled guarantees of origin ensure that the producer can only market as genuine green electricity the exact amount of electricity that is actually generated.
This form of electricity trading also has a positive effect on climate protection due to the exact balancing. "Of course, many hydropower plants have been connected to the grid for decades, so they have been contributing to the electricity supply for a long time. But the more people demand exactly the electricity they produce, the scarcer the supply on the market becomes. As a result, additional renewable generation capacity is needed. And this ensures that green electricity gradually pushes electricity from conventional sources out of the market," Jens Schmidt explains the connection. The basic principle is therefore similar to that used for CO2 offsetting. "In terms of price, the new product will be even lower than our basic supply despite the better quality of origin," announces Jens Schmidt and continues, "We are deliberately setting an example for favourable access to ecological sustainability for our electricity customers. However, so that we can plan better for this, this product will only be available for a one-year term."
Soon also directly in the region
In addition to CO2 offsetting and the new green electricity tariff, SWG is also planning a very specific climate commitment in the region. The idea for this came about during a discussion with the experts from First Climate. They usually recommend their customers to donate to Bergwaldprojekt e. V.. The environmentalists, who have been active for many years, are currently driving almost 60 projects throughout Germany. They are concerned with the preservation and maintenance of forests and cultural landscapes. A key part of their concept is to sensitise people to the importance of forests and their dependence on them.
"To begin with, SWG is donating 1,500 euros to ongoing projects in the Kellerwald, Knüll and Hessian Rhön," explains Matthias Funk. But this is only the beginning of a longer, much closer co-operation. In fact, SWG and the experts from Bergwaldprojekt e. V. want to sound out where reforestation with more heat-resistant tree species, renaturalisation or similar measures are particularly necessary in the region. Matthias Funk announces: "I am sure that together we will find a suitable and sustainable project, launch it and support it over a long period of time."