Germany brings net-zero forward to 2045, power sector hit hardest by new 2030 target

London — Germany approved a reform of the 2030 climate law, tightening annual targets from 2024 and bringing net-zero forward to 2045, environment minister Svenja Schulze said May 12.

The new 2030 target of a 65% cut in CO2 emissions is equivalent to an additional 102 million mt/year for energy, industry, transport and heating in Europe's biggest economy.

The power sector was hit hardest with 2030 power plant emissions now capped at 108 million mt, down 38%, or 68 million mt from the previous target aligned to coal closure dates.

The tighter target could spell a faster exit from coal, with the law only setting a 2038 date.

The reform also adds annual sector targets through to 2040, with a new 88% target leaving just 150 million mt in annual economy-wide emissions.

The sudden measure first announced May 3 follows a ruling by Germany's constitutional court calling for detailed and balanced post-2030 decarbonization pathways as well as the elections in September.

Adjusting the law in light of the tighter EU27 target of a 55% cut in CO2 emissions was only expected after the elections.

The current coalition is under pressure from the Greens, having tripled support since the 2017 elections and now topping opinion polls with Chancellor Angela Merkel not running for reelection.

Details on how to achieve the higher targets were not yet presented except an Eur8 billion ($9.6 billion) program to help offset the impact of higher CO2 prices, especially for the housing sector.

Transport emissions were to drop 43% from 2020 targets, with the new sector target of 85 million mt set for 2030, down 10 million mt versus the previous target.

Targets for transport were only adjusted from 2028 onward.

A new CO2 tax of Eur25/mt rising gradually is to support first decarbonization efforts in transport and heating, while power and industry already covered by the EU Emissions Trading System were set to achieve most of the emissions cuts this decade.

EU CO2 prices hit a new record May 12 trading at Eur54.97/mt on ICE compared with levels below Eur5/mt only four years ago.

Former state secretary for energy Rainer Baake, now heading an environmental think tank, called May 11 for a floor price for CO2 in power generation starting 2025 at Eur50/mt and rising to Eur65/mt in 2030.

German 2020 emissions fell 8.7% on the year at 739 million mt CO2e, according to preliminary data by environment agency UBA.

The annual decline of 70 million mt was the largest since unification in 1990 and the third year in a row with a sharp decline, with only a third of the 2020 decline due to the coronavirus pandemic, Schulze said previously.

On average, the new target would require annual cuts of 30 million mt, but the sector targets were backloaded toward the end of the decade with no annual targets for power.

German CO2 emissions targets:

(million mt, previous in brackets)

Source: 2030 climate law draft approved May 12; excluding agriculture, interim targets