Germany to cut free EU carbon permits by 56% starting next year

Germany, which plans to sell more European Union carbon allowances starting next year, will give 56 percent fewer away, according to figures from the federal environment agency Umweltbundesamt.

The nation will hand out about 1.4 billion metric tons of the permits to 1,814 factories, including plants operated by Volkswagen AG and BASF SE, in the eight years through 2020, according to the data published today. That’s 175 million tons a year on average and compares with 401 million tons of free allowances granted last year, according to data compiled by Bloomberg.

The decision on allowances to the individual plants is “preliminary,” as they have to be verified by the European Commission in Brussels, regulator of the carbon market, the agency said today in an e-mailed statement.

EU nations have granted about 97 percent of carbon allowances for free in the five years through this year, easing emitters into the program, according to data from the U.K. Department of Energy and Climate Change. Western European power stations must buy all allowances starting in 2013.

Factories in industries that have successfully argued they may be hurt by carbon trading because of price competition in international markets for products will continue to get at least a portion of allowances at no charge after this year, according to the system’s rules.

The bloc’s carbon market is the world’s biggest greenhouse gas cap-and-trade program by traded volume.