Climate protection and sustainability in the 2025 coalition agreement

Climate protection has achieved a level of importance in the coalition agreement that was not expected. It had not played a significant role in the election campaign. Climate protection has also come under pressure globally. The USA has once again withdrawn from the Paris Climate Agreement. The EU wants to simplify sustainability reporting with the so-called omnibus package and postpone the application of the new obligations.
Nevertheless, the future German government is committed to the national and European climate targets in the coalition agreement. Germany is to remain an industrialized country and become climate-neutral at the same time. The goal remains climate neutrality by 2045 – while maintaining economic performance, social balance and technological innovation. Climate change is seen as a global challenge that can only be overcome through joint action at international level. In doing so, the incoming government is also acknowledging its constitutional obligations. In its climate ruling of March 2021, the Federal Constitutional Court emphasized that the state must protect the natural foundations of life for future generations and reduce greenhouse gases. In its decision of April 9, 2024, the European Court of Human Rights also derived this obligation from human rights.

Ways to achieve the climate targets

The reduction of CO₂ emissions is to be at the heart of climate policy; at the same time, greater entrepreneurial freedom is to be created. This is in line with the coalition agreement’s vision of reducing bureaucracy, which is also used, for example, to justify the abolition of the Supply Chain Duty of Care Act. It remains to be seen whether the climate protection targets will be achieved despite the greater freedom. When reducing CO₂ emissions, so-called negative emissions – i.e. measures to remove CO₂ from the atmosphere – are also to be taken into account. In addition, credible emission reductions in partner countries should be able to be taken into account, provided they meet international and European standards. These elements are anchored in the European Emissions Trading System and the German Climate Protection Act, which defines the legally binding path to achieving the target.

In addition, the coalition partners support the goal of reducing European emissions by 90 percent by 2040 compared to 1990 levels. The coalition believes that a reliable economic environment is a prerequisite for investment in new climate protection technologies.

Emissions trading as a central control instrument

Emissions trading is to be further developed as a key climate policy instrument. The future government wants to advocate the continuation of the European Green Deal and the Clean Industrial Act in order to combine climate protection with economic competitiveness. Carbon pricing is to remain a key component of the instrument mix.

The plan is to expand emissions trading at both European and international level and to integrate further countries into a joint CO₂ pricing system. The aim is to ensure an economically viable price development so as not to overburden both industry and social acceptance. In the existing emissions trading system (ETS1), negative emissions and so-called Article 6 certificates are also to be taken into account as reductions in future – beyond the year 2038.

Introduction of the ETS2 and national integration

The CDU/CSU and SPD support the introduction of a second European emissions trading system (ETS2) for buildings and transport. The transition from the German Fuel Emissions Trading Act (BEHG) to this new system from 2027 should be as seamless as possible. Targeted compensation mechanisms should be put in place to avoid short-term jumps in CO₂ prices, particularly for households and small companies.

The coalition partners want to support particularly financially burdened households with funds from the European Social Climate Fund. The revenue from the carbon pricing is to flow directly back to citizens and companies through socially graduated relief and targeted support measures in the areas of housing and mobility.

Unbureaucratic compensation mechanisms are provided to maintain the competitiveness of particularly affected sectors. The aim is to distribute the burden fairly in order to ensure social acceptance of climate policy measures. Initially, agriculture is not to be included in the new European Emissions Trading System ETS2.

Realignment in the building sector

The coalition partners recognize that the building sector plays a particularly important role in climate protection as a decisive lever for reducing emissions. The coalition agreement provides for a paradigm shift: Achievable CO₂ avoidance is to serve as the central control parameter in future. The Building Energy Act (GEG) is to be renewed and made more technology-open, flexible and simple.
The coalition agreement also includes further measures such as tax incentives for the renovation of inherited properties, the temporary reintroduction of the EH55 subsidy and better dovetailing of the GEG and municipal heating planning. EU regulations on building efficiency are to be implemented pragmatically and sustainable building materials promoted through new action plans.

Secure industrial location, prevent carbon leakage

In order to prevent the relocation of energy-intensive companies (“carbon leakage”), the future government wants to further develop the Carbon Border Adjustment Mechanism (CBAM). If CBAM does not guarantee sufficient protection, free certificates are to be provided as compensation.
The coalition partners also want to expand the Climate Club, speed up approval procedures for industrial plants and implement EU directives 1:1. Funding programmes for the decarbonization of industry are to remain in place and in future be linked to criteria such as securing locations.

Climate criteria in public procurement law

Lead markets for low-emission products are to be strengthened and public procurement law adapted accordingly. The aim is to simplify the procedures while maintaining the SME-friendly approach. Specific exemptions are planned for certain sectors – such as the basic materials industry or safety-relevant areas – including for rail transport projects.

Conclusion

The Coalition Agreement 2025 shows a new direction in climate and sustainability policy. The CDU/CSU and SPD are focusing on open-technology management, economic incentives and administrative simplification. The success of this strategy will be measured by whether the constitutional and EU legal requirements are met and whether effective progress is made on climate protection at the same time.