What Germany's 2025 coalition treaty says on climate and energy

The parties forming Germany's prospective next government, the conservative Christian Democrat Union and Christian Social Union (CDU/CSU alliance) and the Social Democrats (SPD), have presented their coalition agreement. The document outlines policy proposals for their legislative term until early 2029, with the agreement paving the way for CDU head Friedrich Merz to be sworn in as Germany's next chancellor in early May.

The parties agreed to stick to Germany's 2045 target to become climate neutral, to reduce energy prices to increase competitiveness and ramp up investments in the country's ailing infrastructure.

Key climate and energy plans in 2025 coalition agreement

Climate policy and energy targets

• Commitment to German and European climate targets
• Emissions reductions are needed to reach climate neutrality, as well as offsets and, "to a limited extent, through highly qualified and credible CO2 reductions in non-European partner countries"
• Support EU target for 90 percent emissions reduction by 2040 if CO2 reductions in international countries can be counted to meet three percentage points of Germany's own reduction goal
• Stick to the agreed coal phase-out deadline of 2038 at the latest
• Carbon pricing is the central component for climate protection and competitiveness
• Pragmatic implementation of the circular economy strategy
• Give CO2 revenues back to households and industry
• "Additional” efforts would be made to achieve “permanent and sustainable” negative emissions, with  Direct Air Capture is mentioned as a “possible future technology” to contribute to this goal.

Industry and business

• Introduce a "Germany fund" worth at least 10 billion euros of public money for investments in the country
• Prices for companies and households should be reduced by at least five cents per kilowatt hour (average power price in 2024 was 41.2 ct/kWh for households and 20.5 ct/kWh for non-households).
• The electricity tax will be cut to the European minimum and grids and levies be reduced as well, ideally with a permanent cap on grid fees.
• Energy-intensive companies that cannot be supported otherwise and lack flexibility in adapting their operations will get access to a special industry power price.  
• Create lead markets for climate-friendly products through quotas for low-emissions steel production or public procurement regulations
• Continue with funding programmes for the decarbonisation of industry, including "climate contracts"
• Support projects for the extraction of critical raw materials in Europe + create a national raw materials fund

• Steel industry is of central strategic importance for Germany, “we will keep it and make it future-proof, and support it in the transformation of production processes on the way to cliate neutrality”

• The parties reject the splitting of Germany’s uniform power price bidding zone.

• Germany’s national Supply Chain Act (Lieferkettengesetz) will be abolished and replaced with a law on international corporate responsibility that implements the EU’s due diligence directive CSDDD.

• Lead markets for climate friendly or climate neutral products should be established through quotas for the low-emission production of steel, a green gas quota or public procurement regulations.

Renewables and power system

• Renewable power installations should be made ready to fully finance themselves on the market. The further expansion and the installation of adequate storage capacity likewise should be achieved through “a greater use of market instruments.”
• Support should be made more conducive to stabilizing the power system by integrating storage units and feed-in mechanisms. Private household should get easier access to installing solar PV and the dual-use principle, for example for agriculture and solar power, should be expanded.
• Spatial needs for wind power will be re-evaluated for the time after 2032 and nearby communities better integrated in planning procedures. Direct access options for citizens and companies should also be strengthened. Cooperation with North Sea neighbour countries should be intensified to achieve an optimised installation pattern for offshore wind turbines. 
• Up to 20 GW of new gas-fired back-up power plants should be built through “technology-open auctions as soon as possible.” The plants should be constructed at existing plant locations to balance regional needs. Reserve power plants in the future no longer should only help bridge supply gaps but also serve to regulate power prices.
• A “technology-open and market-oriented” capacity mechanism should provide a “system-supporting technology mix” of including bioenergy, combined-heat-and-power plants, storage units and flexibility options.
• Cooperation mechanisms for renewables expansion between the states and the federal government will be continued to facilitate Energy infrastructure planning. The principle of reduced environmental regulation for the construction of renewables will be assessed to also accelerate the construction of other infrastructure needed for the energy transition.

Hydrogen, carbon capture

• Ramp up the hydrogen economy, using all colours in the run-up (for example hydrogen produced with renewables, nuclear, gas)
• Adopt legislative package "immediately after the beginning of the legislative period" to enable the capture, transport, utilisation and storage of carbon dioxide (CCS/CCU) for industrial processes where emissions are hard to avoid, as well as for gas-fired power plants
• Enable CO2 storage offshore in North Sea continental shelf as well as onshore "where geologically suitable and accepted"
• Direct air capture is a potential technology for negative emissions

Transport

•  “Clear commitment” to the car industry and jobs, based on “technology neutrality”  
• We welcome electrification of vehicle fleets, but reject legal quotas
• Not mentioned in the text: Reversal of 2035 EU combustion engine phaseout, speed limit on the country’s motorways
• “We will support e-mobility using purchase incentives” and additionally via: tax incentives for company and private electric cars, exempt e-cars from car tax until 2035, support programme for low income households for switching to e-mobility,  support for plug-in hybrids and electric cars with range extender
• More support for broad rollout of charging infrastructure for cars and trucks
• Support for a “hydrogen charging” network for trucks
• Check how to support switch of existing car factories to armament production  
• Increase rail investments
• Speed up rail electrification
• Make driving licenses cheaper
• Support walking and cycling as part of sustainable mobility
• Speed up permitting of heavy duty road transport
• Move more freight transport from roads onto rails
• Reverse aviation tax increase
• Immediately abolish aviation power to liquid quota that exceeds EU rules
• Ensure that European airlines are not disadvantaged in the Sustainable Aviation Fuel (SAF) quota

Buildings and heating

• Introduce a "new buildings energy act" (Germany's law to phase out oil and gas boilers) that is "open to technology, more flexible and simpler" to modernise Germany's heating supply. "Achievable CO2 avoidance is to become the central control parameter"
• Simplify communal heat planning
• Continue to subsidise renovation and heating systems
• Strengthen urban development, combat vacancies and adapt city centres and social infrastructure to climate change
• Use the potential of serial and modular construction to speed up construction
• Introduce end-of-waste regulation to increase the use of recycled construction materials
• Draw up an action plan for bio-based building materials and an action plan for energy-intensive building materials
• Incentivise simple, climate-friendly construction through funding programmes by state bank KfW
• Establish a federal research centre for climate-neutral and resource-efficient construction together with the federal states of Saxony and Thuringia, secure permanent funding
• Develop Building Information Modelling (BIM) as a central instrument for the digitalisation of the construction industry
• Implement the European Energy Performance of Buildings Directive (EPBD), extend implementation deadlines

Climate adaptation

• Implement the climate adaptation strategy, use existing funding programmes
• Put financing for climate adaptation "on solid footing" with federal states, examine making this a "joint task"
• Accelerate flood and coastal protection measures
• Implement prioritised measures of Germany's water strategy and continue to develop it further

EU and international

• Support the introduction of ETS II, ensure a smooth transition from national carbon pricing to European system from 2027
• The agriculture sector will not be made subject to the EU’s ETS 2 regulation.
• Support a European energy union that completes the internal energy market with an efficient cross-border infrastructure and the removal of obstacles to state aid