By putting a price on climate-damaging CO2 emissions, introducing promotion measures and setting legal standards for greater innovation and investment, we intend to achieve the climate targets Germany has set for 2030: greenhouse gas emissions are to be cut by 55 per cent of the 1990 level. The Climate Action Programme spells out the way. We aim to implement the plan in a manner that is both economically sustainable and socially equitable.
Climate-friendly actions will be rewarded
One thing has to be clear – climate change mitigation has a price tag. We will, however, spread the new load equitably. Support will be given to those who act to protect the climate. We will introduce incentives to cut CO2 emissions and will foster technological solutions. Climate action affects us all, but nobody should be over-stretched. Climate change mitigation is a joint effort, and will also enhance Germany’s standing as a business and industrial location.
The elements of the Climate Action Programme
Pivotal to the Climate Action Programme is the decision to put a price on CO2 emissions in the transport and heating sectors as of 2021. As is already the case for the energy sector and energy-intensive industry within the framework of the European emissions trading scheme, a price is to be put on CO2 emissions caused by the building sector and by traffic and transport. Experts agree that this is the most economically cost-effective way to reduce emissions and achieve our climate targets.
The German government is to reinvest the revenues generated from CO2 pricing in climate change mitigation measures, or pass it on to citizens in the form of financial assistance and promotion measures.
The national emissions trading system will be launched in 2021. A fixed price per tonne CO2 will be specified in advance. Certificates will be sold to companies selling heating fuel and fuel for vehicles. The costs of the certificates will then be carried by the fuel trade. When a company sells heating oil, liquefied petroleum gas, natural gas, coal, petrol or diesel, it will need one certificate for every tonne CO2 emitted by the products they sell.
The fixed price will initially be 10 euros per tonne CO2, and will rise to 35 euros per tonne by 2025. This gives all stakeholders a reliable basis on which to plan. As of 2026, the market will set the price, within a fixed band. The total quantity of certificates issued throughout Germany will be in line with the imperatives of German and European climate targets.
The Climate Action Programme 2030, with its promotion measures, will ensure that everybody can cope with the new regime.
The costs of refurbishing buildings, for instance, to make them more energy efficient will be tax deductible. The programme also provides for high levels of subsidies (40 per cent) to encourage people to replace oil central heating with new more environmentally friendly systems. The environmental bonus for the purchase of electric vehicles will be continued.
The German government will support industry, with promotion programmes to encourage the development of more energy efficient technologies. At the start in particular, the Climate Action Programme will include more promotion measures to motivate as many people as possible to modify the way they live to make it more climate friendly and to select more climate-appropriate forms of mobility, before the CO2 pricing kicks in at stage two. The 2020s will be the decade of the energy and mobility transition.
Relieving the burden on citizens
In the medium term the German government will reduce electricity prices as a counterweight to the new CO2 pricing. The principle is, the more the revenue from the CO2 pricing rises, the lower the electricity prices will be.
As of 2021 commuters will be able to offset a higher sum if they live further away from their place of work. As of a distance of 21 kilometres, they can offset 35 cents per kilometre. This rule will expire at the end of 2026. The people who have the highest additional costs because they travel longer distances will thus benefit more from financial relief.
People receiving housing benefit are also to be cushioned from rising energy prices. To avoid social hardship, the German government will increase housing benefit by 10 per cent.
Users of public transport will also benefit from financial relief. People taking the train for longer distances will in future be able to do so more cheaply, as VAT will be charged at 7 per cent rather than 19 per cent.
Building and living
14 per cent of all CO2 emissions in Germany (120 million tonnes) come from the building sector. By 2030 this figure must be reduced to 72 million tonnes CO2 per annum. We want to make building and living in Germany more climate-friendly with a mix of more incentives, CO2 pricing and regulatory measures.
Refurbishment for energy efficiency to be tax deductible
The costs of refurbishment such as replacing central heating, fitting new windows, insulating roofs and outside walls are to be tax deductible as of 2020. Property owners, whatever their income class, will benefit equally. The assistance rates of KfW programmes already in place will be raised by 10 per cent.
Replacing central heating systems
Over the next few years it will be worthwhile replacing older oil and gas central heating systems with more climate-friendly models or switching directly to renewables. To encourage people to replace their oil central heating a "replacement bonus" will be introduced with 40 per cent assistance.
As of 2026 it will no longer be allowed to fit oil central heating in buildings in which it is possible to install a more climate-friendly heating system.
Traffic and transport
In comparison to 1990, transport-related emissions must be cut by between 40 and 42 per cent by 2030. A package of measures to encourage electric mobility, promote the railways and introduce CO2 pricing is to achieve this.
Expanding the charging infrastructure for electric mobility
In Germany, a total of one million charging stations are to be available by 2030. The German government will promote the development of a network of public charging stations by 2025, and produce a master plan for the charging station infrastructure. It will make it mandatory for all petrol stations in Germany to provide charging stations on their customer parking areas. Most charging will, however, take place at home or at the workplace. A buyer’s premium will thus also be made available for private and commercial charging infrastructure.
The legal provisions regarding the installation of charging infrastructure are to be simplified in the Act on the Ownership of Apartments and the Permanent Residential Right (Wohneigentumsgesetz, WEG) and in legal provisions governing renting properties. Landlords will be required to tolerate the installation of charging infrastructure.
Encouraging people to switch to electric vehicles
The premium scheme for people buying electric, hybrid and fuel cell vehicles is to be continued and extended to cover the purchase of vehicles costing less than 40,000 euros. The aim of the German government is to have between 7 and 10 million electric vehicles registered in Germany by 2030. First-time-registrations and retrofitted electric vehicles will initially pay no vehicle tax. This regulation is to be extended until 31 December 2025. Tax breaks for electric company vehicles are also to remain in place, with particularly attractive conditions for purely electric vehicles (up to a purchase price of 40,000 euros).
More attractive local public transport
The German government has raised federal funding for local public transport to one billion euros a year as of 2021. The additional funding is to be used to expand local public transport networks. As of 2025 the funding is to rise to 2 billion euros a year. Incentives are, for instance, to encourage bus fleets to switch to electric, hydrogen- and biogas-powered technology.
Investment in the railways
Between now and 2030, the German government and the railway company Deutsche Bahn are to invest 86 billion euros in the track infrastructure. Goods traffic will also benefit from this modernisation, which will allow more goods to be transported by rail. The railways will receive one billion euros a year from 2020 to 2030 to modernise, expand and electrify the rail network.
Rail travel to be cheaper – short flights to be more expensive
Value added tax payable on railway tickets for long-distance travel will be charged at a reduced rate of 7 per cent. In air travel, the German government is to raise the air traffic surcharge as of 1 January 2020 as well as preventing dumping prices.
Consistent CO2-based reform of vehicle tax
The German government will gear vehicle tax more closely to the CO2 emissions of the vehicle and to this end produce a bill to reform vehicle tax for passenger cars. For vehicles registered for the first time as of 1 January 2021 tax will be calculated primarily on the basis of CO2 emissions per kilometre, and gradually increased above the level of 95 gCO2/km.
In 2030 the agriculture sector must generate no more than 58-61 million tonnes CO2 per annum. Instruments already in place will reduce emissions to about 67 million tonners CO2 per annum by 2030. A mix of measures is to make Germany’s agriculture more climate-friendly, with
• lower nitrogen surpluses
• more organic farming
• fewer emissions in livestock farming
• conservation and sustainable management of forests and timber use
• less food waste.
By 2030 industry must reduce its emissions by about half (of the 1990 levels). By 2016 it had already achieved significant reductions. Additional measures to promote energy and resource efficiency and to expand the use of renewables are to achieve further CO2 savings.
Investment programme – energy efficiency and process heat from renewables in industry
This programme brings together five existing programmes and takes them to the next level. Companies have less work and can benefit from a one-stop shop. The programme focuses on investment in energy-saving production.
National decarbonisation programme
This programme supports the development of climate-friendly production processes in emission-intensive industries (such as steel and aluminium).
In the energy sector, emissions are to be reduced to between 175 and 183 million tonnes CO2 by 2030. Significant reductions have already been achieved over recent years. With the phasing out of the use of coal, the expansion of renewables and enhanced energy efficiency, we aim to continue this positive trend.
Phasing out coal-fired power stations
In line with the recommendations of the Commission on Growth, Structural Change and Employment, coal-fired power stations are to generate only 17 GW of electric power by 2030. By 2038 at the latest, no more power is to be generated from coal. The German government has put its Structural Development Act (Strukturstärkungsgesetz) for coal-mining regions before parliament and by November the Cabinet will approve the decision to end the use of coal in power generation. The emergency programme for lignite-mining areas is the first step in actively addressing structural change.
Renewables to generate 65 per cent of Germany’s power
The continued, ambitious, efficient, market-oriented expansion of renewables, such that it is compatible with the national grid is a crucially important factor in achieving climate targets. The German government aims to see renewables account for 65 per cent of electric power consumed in Germany by 2030.
New regulations on the distance between wind turbines and adjacent buildings are to increase acceptance for wind power, along with new financial advantages for local authorities within which wind turbines are erected. Offshore wind farms are to generate 20GW by 2030 – a new target. The current ceiling of 52 GW on photovoltaic plants eligible for state assistance is to be removed.
Research and development
The growing role of hydrogen
Hydrogen is pivotal to efforts to make the economy more climate-friendly. By the end of the year the German government will finalise a Hydrogen Strategy.
Strengthening battery cell production in Germany
The German government has earmarked about one billion euros to develop battery cell production. This will result in several production sites in Germany. The overall concept "Forschungsfabrik Batterie" (Research Factory for Batteries) supports capacity and technology development all the way along the battery cell value chain.
Storage and use of CO2
The German government is to promote research and development into the storage and use of CO2. This could be a solution for emissions that cannot otherwise be avoided. The German government will launch a dialogue with all stakeholder groups.
How is the Climate Action Programme to be implemented?
Before the end of the year the Cabinet is to adopt legal measures to implement the programme.
To achieve the climate targets by 2030 with a degree of certainty, the annual reduction goals taken from the Climate Action Plan 2050 will be translated into law.
The German government will precisely identify progress each year and will have the support of a council of experts. The Climate Cabinet will examine once a year how effective the measures are and how they are achieving their goals. If one sector is failing to meet its targets, the responsible ministry must produce an emergency adjustment programme within three months. On this basis the Climate Cabinet will adjust the Climate Action Programme 2030 to ensure that the targets are met.
All additional income from the Climate Action Programme are to be reinvested in climate change mitigation measures or passed on to citizens to relieve their additional financial burden. The German government does not aim to generate revenue for the state.
The planned measures will be incorporated in the 2020 economic plan of the Energy and Climate Fund. It thus remains the key financing instrument for the energy transition and climate change mitigation in Germany. Along with funding from outside the Energy and Climate Fund, the German government will be providing a sum in the triple-digit billion range for the energy transition and climate action by 2030. This should trigger further investment in climate-friendly measures and support the economy, making Germany a business and industry location that is fit for the future.