When, after 30 hours, the German government’s coalition partners finally finished their latest round of negotiations on climate and transport policy, they had very little to show for it.
In what is a major setback for the Green party, the government decided to fast track 144 new highway sections and has not ruled out building any of the other highway extensions and upgrades in its road building plan. With one caveat. When building new highways, planners will have to check whether they can be lined with solar panels. What was ridiculed as a joke when the conservatives first suggested it in Berlin a couple of months ago has now become official government policy.
Following the liberal FDP’s unprecedented threat to derail the EU’s 2035 CO2 emissions standards in order to gain political points at home, hopes were high for chancellor Scholz to finally make true his promise to be a „Klimakanzler“ (chancellor for the climate). He did not deliver and the FDP has doubled down on its support for e-fuels and has already begun to spin the results as a major step towards more e-fuels in road transport.
Worse than that, he unraveled one of the most significant victories on climate of his own party, the SPD. During the last Merkel-administration, the SPD’s environment minister, Svenja Schulze, succeeded in passing a climate law which sets clear emissions reduction objectives for each ministry, including transport. Under the new compromise those sectoral goals are substantially weakened as they were replaced by an approach that mainly looks at Germany’s overall emissions and their trajectory. The liberal FDP had pushed for such a change for months as their transport minister, Volker Wissing, refuses to implement measures to reduce transport emissions. This behavior can now continue unchecked.
The coalition realizes the leading role fleets can play in the electrification of road transport by obligating the car sharing providers to successively increase the share of CO2-neutral cars in their fleets from 2026 on. This could pave the way for an ambitious fleets mandate that also covers larger corporate fleets like leasing providers. Nevertheless, the emphasis here is on “CO2-neutral” – as according to the coalition committee, e-fuel-only cars should be treated the same as electric cars when it comes to company car taxation. This is barely understandable, as many European countries already focus with great success on a clear CO2 orientation within their taxation systems. Moreover, they introduce negative incentives for climate-damaging internal combustion vehicles instead of subsidies.
While transport generally suffered serious setbacks, the only areas where the coalition made significant progress are rail and trucks. The Greens succeeded in introducing a CO2 charge of €200 per tonne of carbon, the equivalent to a toll increase from 19 to 35 cents per km for a 40-tonne heavy truck. This is only possible since the recent reform of the EU’s Eurovignette law. On top of making polluting diesel trucks finally pay for their climate pollution, zero-emission trucks will continue to be exempt from tolling charges until 2025 and pay 25% from the following year.
This underlines Germany’s commitment to cleaning up the road freight sector and paves the way for cost parity and a fast uptake of electric rigs over the coming years. Other EU countries have to and will follow Germany’s lead. The coalition also agreed to end decades of ‘road for road’ thinking by earmarking 80% of the revenue generated by the new CO2 charge for rail infrastructure rather than new roads. Rail freight’s competitiveness will also massively benefit from the fact that climate externalities from trucks are finally accounted for, creating a (more) level playing field between the modes.
Even though most of the impacts of the decisions will be felt primarily in Germany, there are implications for EU policy making as well:
- For the upcoming revision of the German emission trading system, Germany aims to explore the flexibilities of the Effort Sharing Regulation (ESR).
- The German government voiced support for the Commission’s proposal on the reform of the Energy Taxation Directive. This could open the door to finally tax the kerosene used in aviation. However, the language used remained vague and no immediate next steps were outlined.
- Following the announcement by the Commission to set targets for carbon storage as part of the Net Zero Industry Act, Germany will have negative emission targets starting in 2035 as part of its climate law.
- Including a loophole for green and blue hydrogen in the mandate for heating systems in new houses could worsen the country’s role in the EPBD trilogue negotiations.
Instead of standing up to the FDP, Chancellor Scholz decided to put lipstick on a pig and allowed weak compromises like solar panels next to highways in exchange for derailing Germany’s climate policy, particularly on transport. While some progress was made on phasing out gas and oil in domestic heating, this too was watered down from earlier proposals, which would have put an end to fossil fuels in boilers. Worse still, most of what was agreed to was already part of the coalition agreement two years ago. And with the FDP’s track record of not adhering to agreements or promises made, even the small wins in the agreement should not be taken for granted. As long as Scholz refuses to show leadership on today’s most pressing issues, Germany cannot be seen as a champion for the climate or a reliable partner in Europe.