News from Berlin: Germany's road to climate neutrality

The first legislative package is to be adopted before the summer recess. The "Easter Package" mainly comprises of urgent laws and regulations that focus on expanding renewable energy capacity. Currently, renewable energies cover around 40 percent of Germany's energy requirements — the government aims to increase this to 80 percent as energy requirements increase. In order to achieve this target, Habeck is primarily focusing on faster planning processes for wind and solar systems. Going forward, two percent of Germany's surface area is to be made available for wind energy. The planning rules are also to be reformed in order to give priority to wind turbines. In order effectively expand the use of renewable energies, Habeck needs the cooperation of the federal states. Whether the ambitious schedules can be implemented depends on whether the federal government, the federal states and local authorities can pull together. 

The Ministry is also moving up a gear when it comes to photovoltaic (PV) systems. By 2030, the capacity of PV systems installed should be trebled, to 200 gigawatts. Installing PV systems will be mandatory for new commercial buildings and they should be installed as a rule in the private sector. In addition, from 2025, newly installed heating systems will have to operate using at least 65-percent renewable energies.

Good news for companies: The German government continues to support "Carbon contracts for difference" (CCfD). These are differential agreements that make climate-friendly technologies competitively viable against conventional technologies, therefore bolstering the economy as it shifts towards sustainable practices.

The Easter Package will be followed by a summer package, but there are no details available for the summer package yet. The legislation will be concluded before the end of the year with an emergency climate protection programme.

But are these measures enough to achieve climate neutrality in Germany? The Mercator Research Institute on Global Commons and Climate change (MCC) estimates that by 2045, Germany will still release between five and ten percent of its current CO2 emissions.Opens in a new tab[1] These residual emissions either cannot be avoided or can only be avoided at very high costs, which is why the MCC views CO2 extraction as an additional opportunity to reduce greenhouse gas emissions. The annual report of the Science Platform for Climate Protection, published on 18 February 2022, also calls for a national negative emission strategy as a way to promote immediate research and development into different CO2 extraction technologies and practices.Opens in a new tab[2]

CO2extraction is when CO2 is extracted from the atmosphere using natural methods, such as agricultural practices, or specially developed technologies, such as air filters. According to the MCC, Germany could play a decisive role as a hub for technology and innovation in terms of establishing CO2 extraction technologies, provided that policy sets out the necessary framework conditions in time.

Decarbonisation requires a major economic transformation that affects all sectors: Energy companies and network operators will require more funding to make the switch to renewable energy. The entire real estate industry must carry out renovations and construct new buildings in accordance with the latest environmentally friendly standards. It is essential that this energy-intensive industry puts its production models to the test.

At the same time, climate protection measures also open up the opportunity for new business models, such as the nationwide expansion of charging infrastructure or the increased installation of (private) solar panels. Banks play a central role in all of these projects by enabling the transition to an environmentally friendly economy. 

Opens in a new tab[1] Opens in a new tabPolicymakers must now address the issue of carbon removals https://www.mcc-berlin.net/en/news/information/information-detail/article/policymakers-must-now-address-the-issue-of-carbon-removals.html — Mercator Research Institute on Global Commons and Climate change (MCC) (mcc-berlin.net)

Opens in a new tab[2] On the way to climate neutrality: Implementing the European Green deal and reforming climate policy in Germany | Annual Report 2021 of the Science Platform for Climate Protection (only available in German), Opens a pdfhttps://www.wissenschaftsplattform-klimaschutz.de/files/WPKS_JGA_Volltext.pdf