Excess emissions allowances resulting from Germany’s coal phase-out will be cancelled from the EU’s emissions trading system ETS if they are not absorbed by the mechanism’s so-called market stability reserve, environment ministry state secretary Jochen Flasbarth told journalists at the UN climate summit COP25 in Madrid. “The allowances will be cancelled to avoid a waterbed effect” by which allowances would be used by companies in another EU member state and remain ineffective in terms of emissions reduction, Flasbarth said, according to Clean Energy Wire and Carbon Pulse.

The state secretary said he is confident that a law required for the coal exit could be adopted by Germany’s government cabinet before the end of the year, likely by 18 December. “We are in the middle of very intense negotiations and we will make it,” Flasbarth said, adding that the involved ministries for economy (BMWi), finance (BMF) and environment (BMU) had “basically agreed on all questions” but that an agreement with the coal companies for a phase-out schedule for lignite (brown coal) plants was still outstanding. A spokesperson told British Carbon Pulse that the government wants the EUA cancellations to begin “as soon as possible”.