Germany News Brief and Action Alert

Germany: The 2021 Climate Year in Review

February 6, 2022February 6, 2022
Germany: The 2021 Climate Year in Review

HIGHLIGHTS

  • Amendment of Federal Climate Protection Act (June, 2021)
  • Emission Trading Law and CO2 Pricing
  • Elections September 2021: New Regime Coalition Deal
  • Climate Protection Plan 2050

 

NARRATIVE

Amendment of Federal Climate Protection Act June 2021

In respect to national climate reduction measures, the amendment of the Climate Protection Act 2019 (KSG) responds to the decision of Germany’s Federal Constitutional Court, declaring that certain aspects within the KSG are incompatible with multiple fundamental rights. A new interim target was set, determining a 65 % GHG reduction by 2030, instead of the previously determined 55% (regarding 1990 levels). Also, reduction levels should reach 88% by 2040, GHG neutrality by 2045 and carbon negativity by 2050.

To meet the above targets, refinement of reduction targets from the most CO₂ intense sectors will be conducted. The energy industry especially will have to reduce its annual emissions from 280 million metric tons of CO₂ equivalent in 2020 to 108 million metric tons by 2030. Annual reduction targets are set across all sectors for the years 2031 to 2040. How those are divided between the sectors is to be decided in 2024.

 

Emission Trading Law and CO2 pricing

The Climate Protection Program 2030 Report, seen as a formal obligation for Germany to stick to national GHG emissions, introduced its CO2 pricing scheme in January 2021.

A price of 25 €/ton CO2 released during combustion of heating oil or fuel (e.g., LNG, LPG, diesel will initially be applied. Since January, companies that market these fossil fuels need to purchase the corresponding emissions certificates. The report also assumes that the CO2 price in the transport and buildings sectors will rise to 125€/ton of CO2 in 2030, and 275€/ton of CO2 by 2040.

Generated revenues from emissions trading are to be used to provide financial relief for private households, addressing an increase in costs. Overall purchasing and investment decisions are meant to be stimulated too.

Elections September 2021: New Regime Coalition Deal

The new German government, formed by the “traffic light coalition” made up of the Social Democrats (SPD), the Green Party, and the Free Democrats (FDP) agreed on a coalition treaty (which is supposed to impact international and European climate policy) including the EU Green Deal. Within this treaty, the three parties agreed on pulling forward the country’s coal exit “ideally” to 2030 from 2038, while rapidly speeding up the national rollout of renewables. (At COP26, 31 countries joined forces, signed an agreement, and committed themselves to a complete phase-out of internal combustion engine. Germany did not sign.) “With ambition and perseverance, we are making the country a pioneer in climate protection […]” SPD chancellor Olaf Scholz said on the treaty’s publication day.

Further, the coalition declared to establish a carbon floor price for the EU emissions trading system (ETS) with a rapid rollout to the transport and building sectors. It is hoped that this price will become a driver for the EU system, but collaboration is needed from EU countries and the European Commission to make this happen.

Another coalition aim is to help build Europe’s future reputation as a market leader for green hydrogen production technologies. Germany is far behind similar activities in the US or European neighbor countries. However, there are European coalitions in the making which are supposed to boost investment and clean-tech startup support within the DACH region. So, this is something to monitor within the next few years

Climate Protection Plan 2050

This Plan breaks down this overall target to individual sectors and defines climate targets for individual sectors. It will be updated at regular intervals, including a review of whether technical progress and economic developments give cause for readjustment between the target corridors of the sectors.

  • The energy industry plays a particularly important role in reaching the goal of GHG neutrality. In the long term, electricity must be generated almost entirely from renewable sources. The energy industry will still be allowed to emit a maximum of 175-183 million metric tons of CO2 equivalents in 2030 (1990: 466 million metric tons), 62-61 % less than in 1990.
  • The building sector also plays a key role in the Climate Protection Plan 2050, as it is responsible for around 1/3 of GHG (largely resulting from heating). By 2050, the primary energy demand of buildings is to be reduced by 80% compared with 2008.
  • The “Energy Efficiency Strategy for Buildings” (ESG) also builds on this, setting out a resilient path to a virtually climate-neutral building stock by 2050. It specifies that the building sector should emit only 70-72 million metric tons of CO2 equivalents (direct emissions) in 2030 (a reduction of up to 67% compared to 1990).

Ambition and feasible progress are often not going hand in hand. It’s important to bear this in mind when we look at the set ambitious plans. The Ministry of Environment (BMU) states in its projection report of 2021 that Germany will fall well short of its climate targets. Without further measures, CO2 emissions will only drop by 49% (instead of 65%) by 2030. For 2040, a reduction of only 67% is predicted (far below the 88% emissions reduction, required by the Climate Protection Act). Thus, the efforts made to date seem unlikely to be sufficient to achieve the targets the country has set itself. However, this is challenging. The Paris Agreement does not define emission reduction targets for individual signatory states. Therefore, the fact that every country is only independently submitting any self-developed national targets and measures (NDC’s) for GHG reduction, does not indicate proficient guidance. Stronger, international measures, private-public cooperation, and financial support for breakthrough technology are in need.

Learn More Resources

 

This Post was submitted by Climate Scorecard Germany Country Manager Cimberley Gross

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