Germany's Climate Action Law

German lawmakers in summer 2021 adopted a crucial reform of the still young Climate Action Law, introducing more ambitious greenhouse gas reduction targets and details on post-2030 goals. This became necessary after a landmark ruling by the Constitutional Court on 29 April 2021. Germany's highest court ruled that the law was insufficient because it lacked details on emissions reduction beyond 2030. Following this ruling, the government greenlighted the necessary legal changes to speed up the country's bid for climate neutrality, aiming to hit the goal five years earlier in 2045. The cabinet approved a reform of the climate law that also includes stepping up the 2030 target for emission cuts to 65 from 55 percent, tougher emission budgets in all sectors, and new annual reduction targets for the 2030s.

Germany's ruling coalition of Social Democrats (SPD), Green Party and Free Democrats (FDP) in June 2023 proposed to reform the Climate Action Law. The government aims to shift away from the current focus on annual emissions reduction targets for each economic sector, and obligatory short-term measures if the targets are missed – to a cross-sectoral view and a focus on 2030. This move was heavily pushed for by the three-party coalition’s smallest member, the FDP who are in charge of the transport ministry. This means if a target in one sector such as industry, transport, or buildings is missed, another sector can compensate for it. The reform - which would also see the government introduce a reduction target for technical negative emissions 2035, 2040 and 2045 (such as direct air capture and carbon storage – DACCS) - will now be debated in parliament.

The climate law first entered into force on 18 December 2019. It was part of a wider climate package the government decided in autumn of that year. Already in their 2018 coalition treaty, Chancellor Angela Merkel’s conservative CDU/CSU alliance and the Social Democrats (SPD) promised to introduce “a law that guarantees compliance with the climate targets for 2030.”.

Until 2019, Germany did not have a climate law, like the UK’s 2008 Climate Change Act - one of the world’s earliest comprehensive framework laws on climate. Instead, Germany’s climate action policies were embedded in a multitude of national laws, government programmes, EU regulations and international agreements. Several German states have their own climate action laws.

Germany’s national climate targets were specified in government policy programmes in 2007 and 2010 and have been upheld by every government since. They were reinforced with Germany’s Climate Action Plan 2050, the country’s long-term climate action strategy.

German environment minister Svenja Schulze aimed to make these climate targets legally binding – also for future governments – and better translate EU goals into national regulation. She presented the first draft of a German Climate Action Law in February 2019. It was, however, heavily criticised by many in the coalition, and for some time there were doubts Germany would get a major framework climate law. Instead, critics within the government called for only a policy programme with climate action measures for each sector.

However, with mounting public pressure to get serious on climate – following heat waves, droughts and the Fridays for Future student climate protests in 2018-2019, the government in October presented a draft following months of internal negotiations.

The Bundestag (federal parliament) adopted the reform of the climate law on 24 June 2021, with minor changes compared to the government's draft. The Bundesrat (representatives of state governments) gave the green light the following day.

General purpose of the law

• Guarantee that Germany fulfils national and European climate targets “to safeguard against the effects of global climate change”
• Law “rests upon” the Paris Agreement target of limiting global warming to well below 2°C and possibly to 1.5°C

Enshrining Germany’s national greenhouse gas reduction targets in law

• At least 65 percent by 2030, compared to 1990
• At least 88 percent by 2040
• Net greenhouse gas neutrality by 2045
• Negative greenhouse gas emissions after 2050
• Ambition of national targets can be raised should this be necessary to meet European or international obligations - but not lowered

Contribution of LULUCF

• Stronger contribution by the land use, land-use change and forestry (LULUCF) sector:
  • At least minus 25 million tonnes CO2 eq by 2030
  • At least minus 35 million tonnes CO2 eq by 2040
  • At least minus 40 million tonnes CO2 eq by 2045

Sectoral emissions reduction targets

• Divvies up Germany’s climate target between economic sectors (energy, buildings, transport, industry, agriculture, waste and other)
• Breaks up sectoral targets into annual emissions budgets (reduction “generally in even steps”)
• In case of target miss or overshot, the difference will be “evenly spread over the remaining annual emissions budgets of the sector” until 2030/2040/2045
• Once the EU decides to reform emissions trading and effort-sharing, German govt will propose reform to adapt national emissions targets until 2030
• In 2032, German govt will propose law reform to introduce overall annual emissions reduction targets for 2041-2045
• In 2024, German govt will decide sector targets for 2031-2040
• In 2034, German govt will decide sector targets for 2041-2045

Federal ministries responsible for sector targets

• Ministry most responsible for sector also responsible for reaching sector target
• Ministries must propose and implement necessary measures to achieve greenhouse gas reductions in their respective sectors

What happens in case of target miss?

• Responsible ministry must present emergency programme of measures to reach future targets

• Government then decides programme of measures (either in sector or cross-sector + possibility to change sector budgets)

Reporting

• Government publishes annual climate action report (with emissions data, status of implementation of climate action measures and effectiveness, status & projections for CO2 pricing within EU every two years)
• Government publishes emissions projections report every two years from 2021

Environment minister Schulze has said Germany’s climate action needs to become “more binding, so that we actually implement what we have committed to internationally.” The minister thus aimed to draft the law in such a way “that we can reach our targets in a plannable, reliable and fair manner.”

The EU’s 2030 climate targets are already legally binding for Germany. As the EU has decided a more ambitious greenhouse gas reduction target for 2030, it is now in the process of updating all relevant climate and energy legislation. This will have consequences for Germany’s policies.

Until such reforms are decided (probably in 2022-2023), the situation is as follows: For sectors included in the European Union's emissions trading system (EU ETS) – power production, energy-intensive industry and civil aviation – there is a combined EU target to cut greenhouse gas emissions by 43 percent over 2005. For non-ETS sectors, such as transport, buildings and agriculture, each country was assigned its own target. Germany must reduce greenhouse gas emissions from all non-ETS sectors combined by 38 percent by 2030 compared to 2005 levels.

The EU Effort Sharing Regulation translates this commitment into binding annual greenhouse gas emission reductions for each EU member state between 2021 and 2030. In years in which emissions are lower than the allocation, countries can bank surpluses and use them later. In years when emissions are above the annual limit, states can borrow a limited amount of allocations from the following year, or buy allowances from other countries. This makes climate action relevant to national budgets, and potentially expensive for countries that widely miss their targets.

The Climate Action Law divides up Germany’s annual targets and CO2 budgets between economic sectors. In 2016, the government’s Climate Action Plan 2050 set targets for each economic sector to achieve by 2030, but did not break them down into annual budgets. The government now does this and makes it legally binding. “Falling annually, the total amount of CO₂ emissions still permissible will be clearly regulated by the [climate action] law, and distributed across the transport, industry, energy, buildings and agriculture sectors,” Schulze told Tagesspiegel Background.

When Schulze presented her draft to the chancellery for early coordination in mid-February 2019, the Social Democratic minister’s submission was accompanied by fierce criticism from conservative lawmakers. Some politicians from Merkel’s CDU/CSU alliance opposed the idea of a single big framework law. They did not support Schulze’s idea to make ministries financially responsible for reaching climate targets in their relevant economic sectors and would have preferred to focus on the political programme of measures by introducing several ‘climate measure laws’ instead.

To overcome the climate action impasse, Merkel had set up the so-called climate cabinet, a group of ministers with responsibilities relating to climate issues, such as the environment, transport, buildings and energy. They were tasked with deciding the “legally binding implementation” of Germany’s climate targets for 2030 before the end of 2019. The climate cabinet presented key points of a comprehensive climate package on 20 September, and a detailed Climate Action Programme 2030 and the Climate Action Law on 9 October.