Jörn Richstein Profile picture
Jun 6 15 tweets 14 min read Twitter logo Read on Twitter
News🔥 on Germany's double-digit billion€ #CCfD/#KSV program for climate-neutral industry.
The binding call-of-interest starts NOW, deadline in 2 months, a precondition to participate in the 1st tender.
Quick thread with infos & academic background 1/
Carbon contracts-for-difference (#CCfD, in German #Klimaschutzverträge, #KSV) are a policy instrument to guarantee a fixed carbon price to innovative low-carbon industrial projects, for each ton of emission reductions below the conventional benchmark technology. 2/ Image
This is done via a project-specific two-sided contract-for-difference on the EU ETS price and EU BAT benchmarks as baseline (as first proposed in 2017 here: diw.de/documents/publ…, and peer-reviewed in comparison to one-sided CfD/price floor here: sciencedirect.com/science/articl…) 3/
In the German case, next to CO2 price uncertainty, energy-price uncertainties are also hedged by the contract by indexing the contract to price changes so as to limit uncertainties and costs to industry and the public (as proposed here: climatestrategies.org/publication/ca…). 4/
Contracts are awarded in a competitive tender. In principle calls can be open for all industrial activities covered by the EU ETS, such as energy-intensive industries such as steel, cement and bulk chemical production, but also other sectors (e.g. large-scale high-temperature).5/
Only technologies with 60% reductions (compared to the conventional baseline) by end of 3rd year, and 90% reductions by the end of the 15 year contract are eligible. There’s also a minimum size of 10 kt CO2-eq/year. (as measured by the emissions of the conventional baseline) 6/
There's a lot of technical details to write about (how does CO2 & energy-price hedging work in detail; how does the tendering process work;what are the benchmarks, payment ceilings), but for now here the links to the official government information (pending state aid approval) 7/
For now all infos on German #CCfDs can be found here (in German), Funding guideline, Standard contract, Forms to participate in call-of interest, as well as a handbook and Excel-Tool w. examples can be found here:
Updates here:
bmwk.de/klimaschutzver… 8/
Together with numerous colleagues from @FraunhoferISI, @irees (@Friedrichsen_N), @PIK_Climate (@FalkoUeckerdt ) and @oekoinstitut, we @DIW_Berlin (@KarstenNeuhoff) have been have been scientifically accompanying this gov program (@v_schonfeld @BMWK). 9/
Predecessors to CCfDs and similar concepts include: @camjhep & @Dieter_Helm ‘s broader Carbon Contracts: researchgate.net/profile/Camero…,
@HeleendeConinck & Heleen Groenenberg’s CO2 price guarantee: sciencedirect.com/science/articl…
If you know further or I forgot to mention, please comment. 11/
Similar concepts one-sided contract concepts (with non-industry policy goals, but to stabilise CO2 prices via policy commitment) were also proposed by @kneuhoff & Roland Ismer: doi.org/10.3763/cpol.2…, and @GeorgZachmann: bruegel.org/sites/default/…. 12/
Personally, I’m immensely happy this program to support deep emissions reductions in industry is coming, and that together with many others I could do my part, academically, as well as applied, to help realise it. End/
Further addition, @valenvogl's comparison of ccfd with other policies for early clean steel commercialisation: tandfonline.com/doi/full/10.10…
(I forgot and Valentin was to polite to mention it).

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Jörn Richstein

Jörn Richstein Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @JoernRichstein

Feb 24
Viele der Themen in dem lesenswerten Report wurden differenziert beleuchtet; bei Nodalpreisen vs Zonensplit fiel die Diskussion durch @andreasloeschel, @GrimmVeronika, @felixmatthes und Anne Held m.E. leider zu einseitig aus. 1/
Die drei Argumente gegen Nodalpreise im Report greifen m.E. nicht (Referenzen am Ende):
1) Marktmacht: wird in den US bereits effektiv addressiert.
2) Verteilungseffekte: liegen i.d.R. unterhalb der Unterschiede von Netzentgelten, und können (durch FTRs) addressiert werden
3) Ist zu komplex: Nodalpreise funktionieren in mehreren Märkten in den USA. Kopplungslösungen zwischen Nodal-Märkten funktionieren auch - man muss also nicht zwangsläufig alles in einem Algorithmus haben. Insofern bräuchte es da quantitative Analysen was umsetzbar ist!
Read 11 tweets
Feb 9
Kohlekompromiss & Wasserbett-Effekt (@c_endt)
Die Wirkung des Wasserbetts-Effekt sollte man aus zwei Gründen hinterfragen:
- die Marktstabilitätsreserve hat die relativ simple ETS-Cap durch etwas deutlich komplizierteres ersetzt
- Wechselwirkung Politik und EU ETS Cap 1/
Punkt 1: die MSR ist ein Mechanismus welcher "überschüssige" Zertifikate die über einem Gewissen Korridor liegen entfernt. D.h. solange der Korridor nicht erreicht wird, werden also "überschüssige Kohlezertifikate" entfernt. Und das ist aktuell noch der Fall! 2/
Die Wechselwirkungen von Timing der Emissionseinsparungen, ETS, MSR und Erwartungen der Marktteilnehmer sind absolut nicht trivial, und haben eine heiße Debatte ausgelöst, startend hier: nature.com/articles/s4155… (Replik und Matters Arising) 3/
Read 10 tweets
Sep 5, 2022
My interpretation of the proposals is slightly different:
1. IMO especially the DG proposal is limited to RES, nuclear and lignite (specified in text as "inframarginal generators"). Excluding hard coal, oil, hydro & flex
2. Potentially a uniform price cap (for some tech).
Why does it matter, and why would this be potentially better policy:
- hard coal is close to gas, especially considering ramps and unit commitment costs. Plus varying transport costs. Including it risks higher gas usage.
- similar arguments for oil, hydro, flex and others

Uniform cap (for some technologies):
Maintains relative advantage of low-fuel cost technologies that typically need to earn back more of their investments costs via infra-marginal rents

Read 5 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!