Germany’s oil-fired electricity generation has reached its highest level since at least 2017, while gas-powered generation also hit a two-year high. This surge comes as European utilities brace for lower wind energy output. On Wednesday, German day-ahead power prices surged to €222.18 per megawatt-hour, the highest in a month, according to Epex Spot SE. Over the past two years, this price has surpassed €200 in less than 10 days.
Despite the increase in oil and gas demand, Germany continues to promote its green energy goals. In November, the German government approved reforms that will prevent oil companies from using excess emissions reduction credits to meet targets in the next two years. This change is aimed at boosting Germany’s biofuel industry, which has struggled due to falling carbon prices. In the past, oil companies have met emissions targets by selling excess biodiesel, exceeding their goals by 34% in 2022. However, these reforms will halt the use of past credits until 2027.
In September, Germany’s Environment Agency rejected carbon credits for 215,000 tons of CO2 emissions from oil companies, citing fraud concerns related to climate projects in China.
To meet emissions targets, companies typically rely on plant-based biofuels or “upstream emission reduction” (UER) projects. However, concerns have grown over the validity of some of these projects, with doubts raised about their standards and even their existence.
As governments worldwide continue their push for greener energy, the shift is facing challenges. The global economy, still recovering from the pandemic, is grappling with soaring food prices. Many energy companies plan to expand their biofuel capacity by 2030, using crops like corn and soybean oil as major feedstocks. But this is driving up prices for various commodities, including palm oil, canola oil, and soybean oil. The rising demand for renewable biodiesel fuels is directly contributing to the inflation of commodity prices.
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