Germany

Germany’s recent climate policies move emissions projections downwards, but the three-party coalition government remains significantly divided on comprehensive action across all sectors, putting the country’s climate targets in danger.

The energy sector, in particular solar expansion, has recently shown significant improvement. Industry lacks sufficient short-term policies; buildings laws are behind expectations and the transport sector is entirely lacking in comprehensive policies. The government would need a step change in pace to be able to meet its own emissions reduction target, which itself is not ambitious enough to be considered 1.5°C compatible. The CAT rates Germany’s climate action as “Insufficient”.

The government intends to weaken the climate change law, replacing the compliance mechanism around binding sectoral targets with the possibility for sectors to compensate for each other, as long as the overall target is met. However, in reality it is highly unlikely that any sector will overfulfil its own target at least in terms of cumulative emissions. This proposed change also undermines the need for comprehensive action across all sectors, which is required for a 1.5°C compatible pathway.

Given a broad and just transformation to a 1.5°C compatible society is required, it is inadequate that Germany, as one of the world's richest countries, is not meeting its own reporting requirements and failing to implement even simple measures such as a general speed limit on freeways, as the world experiences record high temperatures and devastating climate impacts.

Recent positive policy developments include:

• Renewables and market-driven coal exit: the German government has systematically removed barriers to the expansion of renewables, such as by making the renewable expansion a higher public good. For solar it is on track to meet its own expansion targets, but not yet for wind.
  At the same time, Germany phased out the last of its nuclear reactors in spring 2022. Coal-fired power generation increased temporarily to compensate for reduced gas power plants, but is set to phase out nationally, at the latest, by 2038 and “ideally” by 2030. The EU ETS will likely drive coal out of the market in Germany by 2030.
• Germany-wide public transport ticket: since May 2023, a ticket for the country-wide use of public transport and regional and local trains has been available at EUR 49 a month. The immediate impact of the policy on emissions in 2030 is probably small, with critics claiming the price is still too high for the poorest to afford, and the infrastructure may be lagging behind demand for mobility. Yet, the ticket may mark a shift to make public transportation more accessible.

In most areas, Germany requires drastic improvements to meet its climate and energy targets and go beyond them, towards a Paris-compatible trajectory:

• Adhere to its own governance system: the government proposed a change in the climate law that makes the whole government responsible for meeting the targets, rather than individual ministries. However, responsibility of individual ministries for achieving the sectoral targets was explicitly introduced in the old law to make them accountable for climate policy in their respective sector. This dilution of responsibility reduces the likelihood of Germany meeting its targets. The government was late in providing its national projections required under EU law . The ministries of buildings and transport also failed to submit an emergency programme as required by the climate law.
• Develop and implement a transport sector strategy: the transport ministry seems to have no intention of implementing policies to initiate the sector’s transition towards zero emissions. Instead, it delayed the EU-wide emission standards for cars by lobbying for e-fuels, raised individual commuter support and expedited the planning of 144 freeway projects.
• Implement buildings sector energy law with 65% renewables target: the government had agreed in its coalition contract and thereafter that as of 2024 all new heating systems would use 65% renewable energy. However, the government was not able to agree how to implement this rule, with measures such as introducing a ban on new fossil fuel heating systems. A relatively ambitious draft law was significantly watered down, and still has to go through Parliament.
• Send clear signal against fossil gas in Germany and abroad: in light of the energy crisis, the government still supports new fossil fuel infrastructure in and outside of Germany. LNG import capacity is larger than needed and financing gas abroad is still being discussed.
• Focus on a socially just transition: climate policies in general are losing support in the German population, also because discussions are increasingly focusing on costs to private households such as in the negotiations on the building energy law. The government should therefore focus on the social aspects of climate policies. For example, it has not yet implemented the previously-agreed “climate dividend” where every citizen would receive a lump sum from revenue generated through the carbon price.

The CAT rates Germany’s overall climate targets, policies and finance as “Insufficient”, a rating that indicates Germany’s climate policies and commitments need substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit.

We rate Germany’s 2030 emissions reduction target as “Almost sufficient” when compared to modelled emissions pathways, consistent with 2°C of warming, and “Insufficient” when compared with its fair-share contribution to climate action. Germany should both further increase its emissions reduction target and provide significantly more and predictable finance to other countries to meet its fair-share contribution.

To achieve its target, Germany needs to enhance its policies and actions. With current legislation it would miss its 2030 target; with the new government’s plans, Germany will likely just about meet, but not overachieve it.

We rate Germany’s policies and actions until 2030 “Almost sufficient” when compared to modelled domestic pathways. We project that implemented policies and actions will lead to emissions reductions of between 61-63% below 1990 levels by 2030 excl. LULUCF. This is significantly lower than previous projections but falls short of Germany’s 2030 target of an at least 65% reduction below 1990 levels.

The current German government, in power since December 2021, is significantly accelerating domestic climate policy implementation, but remains deeply divided on the general approach, reflecting unconsolidated positions of the different coalition parties. While the Green Party is pushing for fast action, e.g. in buildings and the expansion of renewables, the Social Democrats and in particular the Liberal Party are delaying implementation. All parties support expansion of LNG terminals, which is counterproductive to climate policy.

In the coalition contract of 2021, the government decided not to raise the ambition of the mitigation target, but promised that the measures adopted in the agreement would overachieve the target (ARD, 2021). But with currently implemented measures, Germany is not even on track to meet its climate target for 2030, let alone to overachieve it.

It seems unlikely that the government will step up the kind of pace in action required to meet its own emissions reduction target. After two years of the coalition government, the government’s own projections report and Expert Group on Climate Policy found that current policies are not sufficient to meet its target. The government has still not submitted the emergency programmes required by the current climate law. Given the heated debates about the recent climate policies, it appears unlikely that significant new policies can be agreed in the remaining time of the coalition government.

The coalition also wanted to introduce a climate check for each new piece of legislation, but implementation has been slow. In spring 2023, the Federal Environment Agency (UBA) tendered a project to consider possible approaches. Given the timeline of this project, it seems that the climate check will not conclude in 2023.

To cope with Russia’s unlawful invasion of Ukraine and related energy security issues, Germany has introduced a set of measures, some of which are counterproductive to climate policy. This includes measures related to transport in mid 2022, a sector that is already lagging in climate action, but also the planned overcapacity of LNG import infrastructure (Höhne et al., 2023a), which risks a lock-in of fossil fuels, and brings into question Germany’s long-term ambitions for GHG neutrality.

The coalition committed to making the climate transition socially just, but has so far failed to do so. A climate dividend (“Klimageld”), to pay back revenues from carbon pricing on a per capita basis, was planned in the coalition contract but will now probably only be implemented in 2028, under the next government. A temporary rebate on VAT for fuels and a compensation mechanism for high gas prices were given without social differentiation. One positive outcome is that the new heating law contains plans to differentiate the subsidies for CO₂-free heating systems by household income.

The full policies and action analysis can be found here.

We rate Germany’s 2030 reduction target of 65% below 1990 levels as “Almost sufficient” when compared to modelled emissions pathways. The “Almost sufficient” rating indicates that Germany’s proposed reduction target in 2030 is not yet consistent with the 1.5°C temperature limit but could be with moderate improvements, if changed to 69%.

If all countries were to follow Germany’s approach, warming could be held at—but not well below—2°C. While this target represents a significant improvement compared to its previous target, Germany’s new target is not stringent enough to limit warming to 1.5°C and needs further improvement.

The CAT’s assessment of Germany’s total fair share contribution takes into account its emissions reduction target and its climate finance.

We rate Germany’s 2030 target of 65% below 1990 levels excl. LULUCF as “Insufficient” when compared with its fair-share emissions allocation. The “Insufficient” rating indicates that Germany’s target in 2030 needs substantial improvement to be consistent with the 1.5°C temperature limit when compared to its fair share.

Germany should both further increase its emissions reduction target and provide significantly more and predictable finance to others to meet its fair-share contribution. Germany’s target is at the least stringent end of what would be a fair share of global effort, and is not consistent with the 1.5°C limit, unless other countries make much deeper reductions and comparably greater effort. If all countries were to follow Germany’s approach, warming would reach over 2°C and up to 3°C.

Germany’s international public climate finance contributions are better than most developed countries but still rated "Insufficient." Germany has committed to increase its climate finance, but contributions to date have been low compared to its fair share as assessed by the CAT.

To improve its rating, Germany needs to increase its international climate finance contributions in the order of factor of three, and, most urgently, stop funding fossil fuels abroad. At COP26, Germany signed a declaration to stop financing fossil fuels abroad, but later pushed to roll back this decision. The CAT rates Germany’s international climate finance “Insufficient”.

Germany’s climate finance is not sufficient to improve the fair share rating, and the CAT rates Germany’s overall fair share contribution as “Insufficient”.

In June 2021, Germany adopted its 2045 net zero target in its revised climate law. The net zero target generally covers key elements but fails to meet good practice standards for some of them.

We evaluate the net zero target as: “Average.” The German government needs to legislate its commitments to include international aviation and shipping emissions and undertake planning on how to reach the 2045 target to improve its rating to “Acceptable”.