Germany fails to regain climate leadership

Climate package proposed by Government falls short in meeting demand for ambitious action



David Donnerer

Publication date

September 30, 2019

It has been trumpeted as a “very powerful package” by the German government. The long-awaited draft of Germany’s first climate protection law, unveiled on September 20, is ultimately insufficient to catapult the so-called energy transition pioneer back into climate leadership.

The same day, more than a million German citizens took to the streets in the 20 September Global Climate Strike to call for ambitious climate action. Following marathon negotiations in the Climate Cabinet between the ruling Social Democrats (SPD) and Christian Democrats (CDU/CSU), German local governments, youth climate activists and citizens had held high expectations for the government’s proposal.  

Yet, the government’s climate package has failed to respond to the multiplying calls for ambitious action. While some of the measures proposed can be seen as a step forward, the overall package falls short in outlining a profound, systemic change in the energy system. Energy Cities analyses the key components of Germany’s first climate protection law:

The Good

  • Ban on installation of oil heating as of 2026

As of 2026, the installation of new oil heating will be banned in Germany. Oil heating is considered to be among the most polluting forms of heating homes and is largely responsible for making heating by far the largest source of CO2 emissions in German households, according to figures of the national environmental agency (Umweltbundesamt). The government will support citizens in shifting to more climate-friendly heating systems (e.g. heat pumps, solar thermal) by covering 40% of the installation costs.

  • Heating and train tickets to become more affordable for citizens

In order to reduce energy poverty, households covered by social aid programs will get 10% more subsidies to pay their heating bill. In addition to this, a reduced VAT on train tickets (from 19% to 7%) will be implemented to incentivize citizens to shift to clean public transport in their travels   

The Bad

  • Measures insufficient to meet 2030 target

The energy and climate measures listed in the package are collectively not adding up to meeting Germany’s 2030 emission target (-55% compared to 1990), according to initial calculations from the Climate Cabinet. Germany has already failed to meet its 2020 target of cutting its emissions by 40%, and currently looks set to repeat this failure in the next decade.  

  • Lack of incentives for citizen investment in the transition

The Christian Democrats’ idea of issuing green bonds to stimulate investments by citizens and businesses into carbon-neutral measures has not found its way into the final proposal. Managed by the government-owned Climate Foundation, this climate bond would have had a guaranteed interest rate of 2% over a 10-year period (until 2030). The money would have then served to refinance, free of interest, climate measures by households and companies.

The Ugly

  • Lackluster pricing mechanism on carbon

The proposed pricing mechanism on carbon does little to trigger a real difference in the way energy is produced and consumed across all sectors. The government proposal provides for a fixed initial carbon price of EUR 10 as of 2021, which is set to rise to EUR 35 by 2025. Thereafter, the pricing will be left to the market. Experts from the Potsdam Institute for Climate Impact Research, which had advised the Climate Cabinet on this issue, note that the proposed carbon price path is significantly too low to meet the country’s 2030 targets, nor to trigger a profound and systemic change in the energy system. They had demanded a starting price of EUR 50 per ton of CO2, which would then have increased to EUR 130 by 2030.     

  • New obstacles introduced to prevent deployment of renewables

Although the climate package calls for a 65% share of renewables in the electricity mix, it also outlines new obstacles to jeopardize the increased deployment of renewables in the country. New onshore wind turbines for example will be only approved, if they are positioned within a minimum distance of 1 km to residential areas.

What’s next for Germany’s climate protection law proposal?

The German government’s proposal will now have to be approved first by the entire Cabinet, and then by both legislative chambers (Bundesrat and Bundestag) in order to become law. The government aims to have its proposal adopted by the end of 2019. The German Greens and Left party have already announced that they will seek to significantly strengthen the government’s climate package in the legislative process. According to a recent poll, the majority of German citizens are also calling for a stronger climate package, saying that it currently doesn’t go far enough. Will Merkel’s government heed their calls to deliver on a climate protection law worthy of its name?

Energy Cities President Eckart Würzner comments on the German Climate Package (video in German)