FACTBOX-German government agrees on tougher climate targets

by Reuters
Wednesday, 12 May 2021 10:58 GMT

(Updated May 11 factbox with decision taken)

FRANKFURT, May 12 (Reuters) - The German cabinet agreed on Wednesday on tighter sector targets for carbon emission curbs which implies bringing forward an exit date for ending coal generation, currently set at 2038.

A new law, which could trigger 8 billion euros ($9.70 billion) of additional climate protection spending in the 2022 budget and measures within weeks after passing parliament, showed the energy sector should become a key CO2 emissions cutter, via electrification.

It must curb carbon pollution by nearly two-thirds between 2020 and 2030, far ahead of a rough third for industry and a fifth for agriculture, and 43% for buildings and transport each.

The moves follow a court ruling last month https://www.reuters.com/business/environment/germany-must-further-tighten-climate-change-law-top-court-rules-2021-04-29 that a 2019 law failed to ensure sufficient climate protection.

It could help Germany gain an edge in low-carbon technology

The law will affect this year's general election campaign when Chancellor Angela Merkel's conservatives compete with the environmentalist Greens, who are currently leading in polls.

HIGHER OVERALL EMISSION TARGETS

Germany will now aim for a 65% cut in carbon emissions by 2030 and net zero by 2045, up from a previous 55% for 2030 and net zero by 2050.

Germany's actual CO2 emissions are currently 40% below the 1990 level.

The law stopped short of making detailed recommendations for post-2030.

LEVER

One important tool to implement the law will be a levy on carbon charged to suppliers of heating and transport fuels since Jan. 1.

By collecting an initial 25 euros per tonne CO2 equivalent, due to rise to 55 euros a tonne, it enforces emission cuts while raising money for the government to help consumers with rising heat, electricity and travel bills.

The law expressly allows a "different pricing structure" in order to drive a departure from oil and gas heating systems and purchases of battery-powered cars, which will be tax-advantaged.

Landlords are likely to shoulder half the additional costs for heating arising from the legislation. ($1 = 0.8243 euros) (Reporting by Vera Eckert and Markus Wacket, editing by Kim Coghill)

Our Standards: The Thomson Reuters Trust Principles.