“Tackling Climate Change” – a Virtual World Tour ahead of COP26: Germany - Part 1
After kicking off our Virtual World Tour ahead of COP26 with the UK, we’re now travelling to Germany to have a closer look at Europe’s largest economy, starting in this article with an overview of Germany’s political and institutional priorities, covering in more detail:
- Germany’s history of green legislation
- Its current state of ‘green play’, including greenhouse gas (GHG) reduction targets and national climate policies and programmes
- Climate action undertaken by the country’s public sector in the cities and municipalities, and
- The progress of German businesses on their journey to net zero carbon across sectors
An environmental champion set to address its dip in performance
Known as a pioneer of climate and environmental protection, it didn’t come as a big surprise when Germany, organising and hosting the 2007 G8 summit at Heiligendamm in the Baltic Sea at the beginning of Angela Merkel’s chancellorship, chose climate protection to be the most important topic on the agenda.
Fast-forward to today and it seems that the environmental champion at the heart of Europe has slipped in its efforts to lead the way in combatting the rise of our global temperature: in the 2020 Climate Change Performance Index (produced by a team of mainly German research and climate organisations), the country only ranked 19th. Considering that the tracking tool looks at the climate protection performance of 57 countries, which are responsible for over 90% of GHG emissions since 2005, Germany just about managed to slip into the top third with 56.39 points, a considerably lower score compared to top-ranked Sweden’s 74.42 and the 69.66 points of the runner-up, the UK.
So, since when and why has Germany started to lose its green credibility? How is it addressing its apparent dip in environmental performance in order to achieve net zero carbon by 2050? And is the German government already taking steps to deliver on what 80% of respondents to a recent survey commissioned by the country’s Environment Agency have asked for – for Germany to take a pioneering role in international efforts to protect the climate? We’ll have a look.
Germany’s green legislation and regulation reflects a long history of environmental awareness
One of the most densely populated and industrialised countries in Europe, Germany was a pioneer at introducing legislation on the federal, as well as ‘Laender’ (states), level to deal with severe pollution of water, soil, and air, to prevent unsustainable resource consumption, and to contribute to the protection of the atmosphere and global climatic conditions.
An MP shapes Germany’s determination to protect the environment…
“A planet is plundered” – a book written by German MP Herbert Gruhl – not only became a bestseller when it was published in 1975 but also shaped Germany’s stance on environmental protection for decades to come. In his book, Gruhl – similar to the Club of Rome’s report “The Limits to Growth” three years earlier – warned about the finiteness of global resources and the destructive environmental impact of the economies of Western industrialised countries. While the idea of limited resources sparked a new public debate in the country about how to address this fundamental issue, Germany had already acknowledged that the environment needed protection: in 1969, a new government, a coalition of liberal and labour parties, pledged to introduce measures to prevent damage to human health, vegetation, animals and property. In 1971, it passed an environmental programme that also included the reduction of air pollution, targeting to reduce automobile emissions to 10% of the mean value of 1969 by 1980.
In 1978, one of Germany’s main political parties, the Christian Democratic Union (CDU), added a fourth dimension to its previous economic policy target triangle of “full employment, price stability and steady growth in external balance”, stating in its ‘Ludwigshafen program’ that “the attainment of these goals is not enough on its own to ensure solidarity with future generations. They must therefore be extended to ensure the environmental future of our community” and making clear that “the preservation of natural life support systems is part of our responsible freedom. Who irresponsibly exploits the natural life support system in the present and interferes in the ecological relationships, violates the solidarity between the generations?”
With environmental awareness gaining momentum across the country, the German government declared in 1984 that it wanted the country to become “environmentally friendlier” and take a pioneering role in energy and environmental policy – and it would emphasise its commitment with a fiercely debated key environmental policy in the same year.
…while acid rain, “Waldsterben”, Chernobyl and Fukushima deeply affect the population …
When growing concerns about “Waldsterben” (“dying forests”), linked to acid rain as well as nitric oxide emitted mostly from cars, dominated the public debate and media coverage in the early 1980s, Germany became the first European country to draft a law for further reductions of automobile emissions. This law included the requirement for all petrol car engines to have a catalytic converter and the introduction of unleaded petrol (which was essential for the converters to work properly). While German carmakers protested that the policy heavily disadvantaged their industry against its international competitors and German car owners feared considerably higher costs, the government stuck to the policy, offering tax incentives for those willing to buy new cars with catalysts before 1989 and for owners who were willing to retrofit their vehicles.
With public awareness of environmental issues further increasing, German regulators continued to be very active over the next two decades in shaping environmental policies and in 1994 introduced environmental protection as a state objective into the German Constitution. However, it was Germany’s “Energiewende” (“energy turnaround”) that brought wide public backing and international acclaim. The “Energiewende” became the name for Germany’s transition to a low-carbon, nuclear-free economy, which the German government under Chancellor Angela Merkel outlined in its 2010 energy strategy (which interestingly makes no mention of the word “Energiewende). Key elements of the strategy include the phase-out of nuclear power by 2022 and of coal by 2038 at the latest, while the country’s electricity production should switch to renewables.
The decision to abandon nuclear power was a consequence of the fierce protests culminating in an anti-nuclear movement after the Chernobyl disaster in April 1986, which had shaken the German population to the core, causing the acceptance of nuclear technology to drop dramatically: in 1982, 52% of Germans were for the construction of more nuclear power plants, in April 1984 – in the aftermath of Chernobyl – 83% demanded an immediate stop.
In 2011, the German government went one (drastic) step further: four days after the incident in the Fukushima nuclear power plant on 11 March, with emotions running high across the population, Chancellor Angela Merkel announced a “nuclear halt”. The seven oldest reactors in Germany were temporarily closed (and ultimately wouldn’t return to the grid). On 22 March, the newly created “Ethics Commission for Safe Energy Supplies” started its work and later published a report, which confirmed the importance of phasing-out nuclear power as soon as possible; proposing 2021 as the deadline (one year earlier than agreed in the 2010 energy strategy). Since then, other countries have been closely watching Germany – as an early adopter of an energy transition – for lessons on how to wean a major economy off fossil fuels without sacrificing growth.
Fast forward to 2021, climate change was the German voters’ top concern when they went to the polling stations on 26 September for a federal election that saw Angela Merkel’s reign come to an end after 16 years. And while each of the two big parties, the CDU/CSU and the SPD, are courting the Liberals (FDP) and the Green Party to form a coalition, the voters’ mandate is clear: the new government will have to put climate considerations at the top of their agenda - setting the trajectory for future net zero and other environmental policies and action.
Meanwhile, an historic court ruling (which we cover in more detail later in this article) sends out a stark signal that the legislative powers, too, are closely looking and carefully assessing whether the government’s environmental ambitions are sufficient to ensure the wellbeing of future generations: Germany’s highest court ruled in April this year that key parts of the country’s Climate Change Act from 2019 are insufficient, and the law therefore was partly unconstitutional, demanding immediate improvements.
…and the government seeks international cooperation …
Appreciating that environmental issues don’t observe national borders, Germany, located in the centre of a densely populated region, sought international legal and political cooperation concerning the environment early on, signing multinational UN treaties as well as numerous multilateral and bilateral treaties and agreements. A few examples: Germany belongs to several international commissions on the protection of the transboundary rivers Rhine, Moselle and Saar, Elbe, and Oder; to a Dutch-German and a Polish-German Commission on the Protection of Transboundary Water Bodies. The country is also party to several international agreements for the prevention of ocean pollution and signed a convention on the protection of the Alps in 1991.
… while nudging the EU to take climate action …
Among EU member states, Germany had a reputation as a leader in environmental policy and often nudged – if not pushed – the EU legislator to adopt environmental measures across all EU countries – a move that wasn’t purely based on environmental concerns but also stemmed from the motivation to retain the competitiveness of its economy within the EU.
Today, considered to have the most extensive environmental laws of any international organisation, the Institute for European Environmental Policy estimates that EU environmental law amounts to well over 500 directives, regulations and decisions, directly impacting how its member states address climate and other environmental issues. Climate targets, for example, derived from the EU’s emission reduction plans, with almost 60% of total domestic EU emissions limited under the “Effort Sharing Regulation”, covering emissions from those industries not included in the EU’s Emissions Trading System (ETS): transport, buildings, waste, some smaller industries and agriculture. The Effort Sharing Regulation stipulated that member states must achieve an overall emissions reduction of 30% by 2030, compared to 2005 levels. Countries were, however, required to contribute depending on their relative wealth, meaning that Germany had a much higher responsibility than some other EU countries: the country’s allocated emission reduction target was set at 38% by 2030.
Aiming to transform almost all aspects of the EU economy in order to achieve net carbon neutrality by 2050, the EU announced its €1 trillion European Green Deal in December 2019. The deal meant that Germany and the other 26 member states would be heavily affected because their 2030 GHG emissions reduction targets would have to be raised in order to meet the new Green Deal targets.
… and calling for a green COVID-19 recovery on EU level …
In April 2020, Chancellor Angela Merkel said recovery efforts post the COVID-19 pandemic “will not just be a question of carrying on as we did before the pandemic” and called for the EU’s recovery fund to invest in “climate action”; an aim that has the support of Germany’s business community: over 60 German companies — including household names such as Bayer, ThyssenKrupp and Puma — issued a joint statement calling for any stimulus they receive to be tied to a green transition: “We appeal to the federal government to closely link economic policy measures to overcome both the climate crisis and the coronavirus crisis,” they wrote. Some have offered specific proposals. Salzgitter AG, for example, one of Europe’s biggest steel manufacturers, is lobbying the government to seize this moment to transition steel production from coal-powered to hydrogen-fuelled now.
…while suffering court defeat with its first major climate law
Germany’s first major national climate law, the Climate Protection Act, entered into force on 18 December 2019 as part of an extensive climate package – which we outline in detail in our second Germany article – to reach 2030 climate targets in line with EU goals.
Under the act, Germany is obliged to cut GHG emissions by 55% by 2030, relative to 1990 levels. It also sets-out yearly upper limits for greenhouse gases across various sectors such as energy, transport, buildings and agriculture. If these individual targets are missed, an obligation to make improvements takes effect. Furthermore, it stated that an independent council of experts on climate issues will be set-up to evaluate emissions data, changes in climate action programmes and more – the five members were appointed in August 2020.
However, in what was widely hailed a historic decision, Germany’s highest court ruled in April 2021 that key parts of the climate law are insufficient, and the law therefore was partly unconstitutional. As a result, the Constitutional Court demanded that the government introduce details on GHG reduction targets for the period after 2030 by the end of 2022. The landmark ruling came after ‘Fridays for Future’ and other climate activists, supported by Germanwatch and Greenpeace, had sued the German government in early 2020 over what they said was its insufficient action to tackle climate change.
Presented in May 2021 as the first reform of the law, the government proposed to reduce emissions by 65% by 2030 (from the current goal of 55%, and in line with the EU’s Green Deal targets) and introduced a new goal of an 88% reduction by 2040.
Current state of green play suggests upward trend, but urgent improvements are required
Similar to its mediocre ranking in the 2020 Climate Change Performance Index, Germany only came 12th (out of 41 countries) in the ‘Environmental Policies” dimension of the 2020 Sustainable Governance Indicators (SGI), a tracking tool for effective governance. However, the SGI project team noted improvements: “After a period of complacency, a new set of measures has revitalised Germany’s climate-change policy.”  So, how is Germany currently performing on an environmental level? We share a few observations below:
The COVID-19 pandemic helps Germany achieve its 2020 GHG emissions target …
Due to the pandemic, greenhouse gas emissions in Germany fell significantly, by more than 10% within a year. As a result, 2020 GHG emissions were 42.3% lower than in 1990 and hence beyond the national target of 40% by 2020. However, critics have pointed out that Germany would have missed its target if the lockdowns imposed due to the COVID-19 pandemic hadn’t brought the country to a virtual standstill and that emissions – adjusted for this one-off effect – would have only fallen by 25 million tons, putting the total reduction at 37.8%. With a return to economic activity, they claim that emissions in Germany will rise again in 2021, reversing the positive trend.
… but the ‘Energiewende’ comes at a high price …
While renewable sources reached a new high at 46.2% of Germany’s power consumption in 2020, 3.8 percentage points more than in 2019, with wind energy alone contributing more to the electricity mix than brown coal (lignite) and hard coal combined, lignite remains the country’s second most important energy source. In 2020, it had a share of 16.8% (down 3.3% from 2019) in the electricity mix, while the share of hard coal fell more sharply, by 22%, to 7.3% in 2020. While the latter looks promising, going the last mile in exiting coal power however is estimated to cost the country more than €40 billion. We’ll look in more detail at the country’s coal exit strategy in our second article about Germany.
…and performance in achieving energy efficiency is patchy …
The “Energiewende” is often only associated with the energy transition to renewables: however, another major pillar of the strategy is to improve the energy efficiency of the German economy – considered an essential component to reach climate neutrality by 2050.
Saving energy on a large scale, which requires changing behaviours and introducing new and often expensive technologies in different sectors, relies on everyone’s participation, and this has proven a hard sell so far. While the country aims to reduce primary energy consumption by 20% by 2020 compared to 2008 levels, in 2019, it was only about halfway there, with consumption dropping by 6.7%. While a carbon price – as part of the Climate Protection law – has been imposed this year in the building and transport sectors for the first time, at €25 per ton, market observers consider the price too low to have any great impact.
… meanwhile, further strengthening climate action will be the most pressing task for Germany’s new government …
With opinion polls in the run-up to the German federal election swaying this way and that, and early in the year suggested the country’s Green party could win 20% of the vote - more than double the share it received in the last “Bundestag” election – the main parties, the conservative CDU, the Social Democrats (SDP) and the Liberals (FDP) increasingly fine-tuned their campaign to reflect what polls had brought up to be the major concern for the 60 million Germans eligible to vote: environmental protection and climate action.
The results of the September election saw the SDP narrowly beat the CDU (25.7% versus 24.1%) while the Green Party received 14.8% of the vote, followed by the FDP with 11,5%. Coalition talks are ongoing, but all four parties have proclaimed that climate and energy policies are featuring heavily in the discussion about who will form the new government.
Germany’s public sector accelerates climate action through citizen engagement and participatory governance
Similar to the UK, a wide range of initiatives are evidence that Germany’s public sector is striving to spearhead the fight against climate change: more than 104 cities, for example, had declared a climate emergency by the end of 2020, with many drafting emergency plans to bring net-zero forward from 2050 to 2035. Below we’ve picked some highlights:
- Of the 140 cities (totalling 25.5 million residents) with renewable energy targets, 61 German cities had 100% citywide renewable energy targets in 2020 and 17 had already achieved their targets as of 2020.
- 11 cities have introduced renewable energy obligations (typically solar photovoltaics or solar thermal) for new buildings with more cities planning to follow suit in 2021. Meanwhile, Hamburg ordered a fossil fuel ban in buildings.
- Smart cities: in 2019, the German Federal Ministry of the Interior, together with domestic development bank, KfW, launched the “Smart Cities Pilot Projects” programme, which provides grants over the next ten years with a total volume of €750 million to towns, villages and municipal organisations to promote digitalisation with a particular focus on climate change mitigation and adaptation.
- Green cities: in 2018, the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety published a white paper “Green Spaces in the City” outlining the importance of such places in the fight against climate change and proposing measures for municipalities, which include: strengthening the importance of urban green spaces in planning law and planning practice, introducing a “Climate-change-compatible regional planning” tool for communities, strengthening urban green spaces and urban green infrastructures in urban funding programmes, developing heat reaction plans as well as concepts for water-sensitive urban development in various towns and cities.
- Public role model: one of Germany’s largest real estate owners, the Institute for Federal Real Estate (BImA), which has property with an overall size of around 490,000 hectares and around 38,000 apartments and also manages more than 18,000 properties, has pledged to take a leading (and visible) role in developing its own real estate in a sustainable way with measures such as: identifying and expanding green spaces on its real estate; developing a maintenance strategy for federal real estate that can also be applied to municipal areas; optimising waterways to reduce the consequences of climate change, and increasing the importance of “green architecture”.
Transport and traffic
- The slow progress of charging station installations in Germanyhas been seen as a bottleneck for the rollout of electric cars but 2020 has finally brought a steep increase in charging stations: Berlin has expanded its lead as the city with the most electric car charging stations in Germany, increasing the number of charging stations by 70%, from 974 in December 2019 to currently 1,694. Berlin is closely followed by Munich with 1,310 charging stations, Hamburg (1,226) and Stuttgart (616). The dynamic expansion is also seen among the states: Bavaria has recorded an increase of almost 50% since December 2019 and is currently in first place with 8,325 stations, followed by Baden-Württemberg, up 70% to 7,047 stations and North Rhine-Westphalia with a total of 6,164 charging stations.
- So far, 81 German cities have introduced low-emission vehicle zones.
- Take-up of electric buses kicked-off in 2020 with around 500 electric buses on the road in Germany.
- Recycling: Germany is hailed worldwide as a recycling champion. In 1991, the country introduced a new, unparalleled recycling system, the “Green Dot” system, where companies pay a fee to finance the collection, sorting and recovery of packaging waste – the more packaging there is, the higher the fee. This system has led to less paper, thinner glass and less metal being used, thus creating less garbage to be recycled. The net result: a drastic decline of about one million tons less garbage each year. Since 2003, the country also operates a deposit return scheme for single-use drinks containers. In 2015, more than 2.3 billion drink cans made of aluminium or steel were sold; 99% of them entered proper metal recycling streams, 96% via the deposit return scheme.
- Circular economy: unsurprisingly, considering its extensive recycling system, Germany ranks first out of all EU member states in two circular economy indicators, namely the recycling rate of municipal waste and POLITICO’s circular economy index. We will look into the importance of the country’s circular economy in greater detail in our second article about Germany.
- Germany has a long history of national and international NGOs – such as for example, the “Bund für Umwelt und Naturschutz” and the “Deutsche Umwelthilfe” – participating vigorously in public hearings about major environmental issues and policy debates, increasingly with the help of environmental lawyers and often through initiating court proceedings to stop or change projects perceived to have an adverse environmental effect.
- Community energy projects enjoy high popularity: in 2020, over 1,750 projects were registered, with community members aiming to drive the energy transition forward through local governance and collaboration. Cities are choosing the same way forward: in 2020, there were over 300 cases of German cities aiming to buy utility providers – often working with citizen cooperatives to achieve this. German city governments are also involving their citizens in developing climate and energy plans. In Münster, 1,200 local citizens helped draft the city’s 2050 climate roadmap, which targets a 95% reduction in GHG emissions by 2050.
- In April this year, two climate NGOs launched Germany’s first Citizen’s Climate Council with 160 randomly selected citizens in an effort to get the public involved in pushing for stronger climate policies. The NGOs have also attracted former German President Horst Köhler as a prominent patron for the initiative. As part of the initiative, members will meet over a two-month period, listen to experts from various fields and work out recommendations to be presented to MPs in the autumn. While the recommendations are non-binding, organisers say the council’s work will show that the population is ready for effective climate action.
German businesses voice their frustration about a lack of government support and clarity while fostering collaborations to accelerate green progress
While the UK government presented its Industrial Decarbonisation Strategy in March this year, the first major economy to do so, the BDI, the Federation of German Industries, urged the government and the European Commission in April this year to “finally present an ambitious industrial strategy”, emphasising that “a bold industrial strategy is essential to translate the ambitious climate and digital policy goals into growth, sustainable business models and innovation dynamics“.
The overall sentiment of frustration amongst German businesses about a lack of clarity around how to reach the ambitious carbon emission targets by 2050 is equally reflected by the demands from the “Bundesverband mittelstaendischer Wirtschaft’, which represents over 900,000 SMEs: improving and expanding the ETS, introducing incentives for businesses to use more recycled material for their production and rewards for businesses which protect biodiversity are just a few of the association’s requests to ensure environmental protection as well as economic success for its members.
The growing impatience of Germany’s businesses with the government is also linked to the apparent lack of an appropriate policy response from ministers after the BDI published its highly anticipated study “Climate paths for Germany” in 2018, in which it laid out economically cost-efficient strategies for a successful 80% to 95% GHG reduction by 2050 and concluded that “reducing emissions by 80% by 2050 is good for the economy under the right policy framework even if Germany goes it alone,” while a 95% reduction target is only realistic if other industrialised countries make comparable efforts. The BDI calculated that cutting emissions by 80% would require a total investment of €1.5 trillion by 2050, and €2.3 trillion for the 95% target.
While the public debate between industry representatives and the government – as well as between the regional governments and the federal government (last year, four regional states demanded changes to the coal exit law, arguing it would disadvantage hard coal plants versus lignite plants) – is ongoing and becoming increasingly fierce there’s nevertheless significant progress. Highlights include:
- Emissions reduction: in 2020, Germany’s energy sector recorded the greatest emissions reduction: nearly 38 million tonnes of CO2, a drop of 14.5% since 2019. The sector’s 221 million tonnes of CO2 fall well below the 280 million tonnes permitted annually for the sector by Germany’s Climate Protection Act. Transport sector emissions fell by 11.4% in 2020; however, this was mainly a consequence of the COVID-19 pandemic lockdowns. Meanwhile, a lower use of mineral fertilisers and declining cattle stock has helped the agriculture sector bring down emissions by roughly 1.5 tonnes (-2.2%) to 66 million tonnes – already below the 70 million tonnes target of the Climate Protection Act. Industry emissions dropped 4.6% year-on-year; with 178 million tonnes of CO2also achieving a volume below the annual emission limit of 186 million tonnes of CO With landfill decreasing, and associated emissions from landfill dropping, overall emissions in Germany’s waste management sector decreased by about 3.8%. Equally, thanks to more efficient processes and energy generation with lower carbon emissions, Germany’s chemical industry has already come a long way: between 1990 and 2017 GHG emissions from energy requirements and processes decreased by 48%.
- Offering 57 electric models between them, German car manufacturers have managed to grow their market share of electric cars in some major markets to a slightly higher proportion than their share of passenger cars overall. We look in detail how the sector is faring in our second article about Germany.
- Revenues of Germany’s closed-loop economy totalled around €84.1 billion in 2017 (rising 18% since 2010). With a gross value added (GVA) of around €28.1 billion, the sector is an important economic factor in Germany. We take a closer look at Germany’s circular economy in our second article.
- A voluntary Partnership for Sustainable Textiles, the “Textilbündnis”, which was launched in 2014 to improve the social and environmental conditions of its members’ global supply chains, covers nearly half of the German textile market through its 140 members.
- Green start-ups: the “Green Startup Monitor 2020” lists about 6,000 green start-ups in Germany; the majority are operating in the fields of information and communication technology, food and nutrition, and consumer goods, followed by more technology-intensive sectors such as energy and electricity, automobiles and mobility, and agriculture and farming.
- German engineering: the association for German engineers, VDI, has launched the Resource Efficiency Knowledge Centre EREK to support SMEs identifying ways to increase their resource efficiency.
- Last year, the BDI announced that leading German companies, including Siemens, Lufthansa and RWE, are investigating how an intercontinental supply chain for renewable hydrogen between Germany and Australia could be realised with the aim to pave the way for a long-term hydrogen partnership between the two countries.
- German construction sector, for example is considered one of the largest consumers of primary raw materials and also one of the largest CO2 The Karlsruhe Institute of Technology (KIT) is conducting research into replacing conventional building materials like concrete with renewable raw materials such as fungal roots, which can be mixed to produce lightweight bricks with good insulation properties.
- In the batteries sector, for example, CMBlu Energy AG, a company in the state of Bavaria, has experimented with lignin, one of the three main components of wood and a waste product of paper and cellulose production, as an alternative natural resource for batteries, which so far contain environmentally harmful metal compounds like lithium, lead or vanadium. Lignin is neither flammable nor explosive and ideally suited as the raw material for organic electrolytes for use in an organic-flow battery. Such batteries could be deployed worldwide in solar and wind farms, in industry, in power stations and residential areas or in a rapid-charging grid for electric vehicles. Production is planned to begin in 2022 at the latest.
In our next Germany-focused article of our Climate Change Virtual World Tour we’ll be looking in further detail at the country’s specific green challenges and opportunities.