Understanding the Electricity Mix and Its Impact on the GHG Premium

THG Knowledge

Published: April 30, 2024 | Last update: May 22, 2024

Understanding the Electricity Mix and Its Impact on the GHG Premium

Understanding the Electricity Mix and Its Impact on the GHG Premium 

The GHG premium and its payout amount are influenced by many factors. An important one is the German electricity mix. But what is it and how does it affect the calculation of the GHG premium? 

What is the Electricity Mix? 

The electricity mix details the origin and proportion of energy sources used to generate the electricity consumed in Germany. It encompasses both fossil fuels—like coal, natural gas, and nuclear energy—and renewable sources such as wind power and photovoltaics. Remarkably, in 2023, over half (52.6%) of Germany’s electricity stemmed from renewable sources, showcasing a pivotal shift towards sustainable energy. 

Source: Translated in English from der-strommix-in-deutschland-im-jahn-2023

Why is the Electricity Mix Crucial for the GHG Premium? 

The composition of the electricity mix is instrumental in determining the energy generation reference value, which is annually assessed and published by the Federal Environment Agency. This value quantifies the cleanliness of the electricity utilized for charging electric vehicles (EVs). The GHG premium is designed to encourage the adoption of electromobility and to decrease CO2 emissions; hence, the purer the electricity, the greater the CO2 savings achieved with an EV. 

The energy generation reference value inversely correlates with the share of renewable energy in the electricity mix: the lesser the renewables, the higher the reference value. This translates to reduced CO2 savings and consequently, a lower GHG premium. For example: 

  • For 2022: The reference value was based on the 2020 electricity mix, when the transport sector’s slowdown during the pandemic led to a decreased reliance on 'dirty electricity'. The value stood at 119 kg CO2 equivalent per gigajoule, resulting in 862 kg of CO2 savings per vehicle. 

  • For 2023: Reflecting the 2021 mix, where industrial ramp-up and societal activities increased 'dirty electricity' use, the reference value rose to 135 kg CO2 equivalent per gigajoule, reducing CO2 savings to 703 kg per vehicle. 

The Road Ahead 

As Germany continues to enhance the share of renewable energies in its electricity mix, the future looks promising for both a greener environment and more substantial GHG premiums. Transitioning to cleaner electricity not only supports sustainable development but also amplifies the financial incentives for adopting electric vehicles through the GHG premium. 

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