Japan looks to tighten overseas coal financing policies

German coalition eyes 'limited' foreign carbon credits

German coalition eyes 'limited' foreign carbon credits

Berlin, 9 April (Argus) — The parties likely to form Germany's next government today presented their coalition treaty, which pledges to allow the use of foreign carbon credits to reach the country's 2040 climate target. The treaty, presented in Berlin by the four party leaders Friedrich Merz of the CDU — the likely next federal chancellor — Lars Klingbeil and Saskia Esken of the SPD, and Markus Soeder of the CDU's Bavarian sister party CSU, stresses the parties' commitment to German and European climate targets, the Paris climate agreement, and reaching climate neutrality in Germany by 2045 "by combining climate action, economic competitiveness and social balance, and by focusing on innovation". "We want to remain an industrialised country and become climate neutral," the treaty reads. The parties' support for the EU's suggested interim target to reduce its emissions 90pc by 2040 compared with 1990 levels is conditional on two points. Germany must not be expected to go beyond its 88pc reduction target for 2040 enshrined in the country's climate action law. And its companies must be allowed, with a view to reducing their residual emissions in an "economically viable" way, to resort to "permanent and sustainable negative emissions", and to "credible CO2 reduction through highly qualified, certified and permanent projects" in "non-European partner countries". Making use of the latter activities should be permissible for up to three percentage points of the 2040 reduction target, although the "priority" for companies will be to reduce carbon emissions. And allowing these options must be reflected in the European Climate Law and the EU emissions trading system (ETS), the parties stipulate. The treaty also underlines the importance of "effective" carbon leakage protection to preserve Germany's "industrial value creation". The treaty calls for the European Green Deal and Clean Industrial Act to be further developed to "bring competitiveness and climate action together", and stresses the importance of carbon pricing instruments, which more countries should be persuaded to introduce. The parties also flag the importance of social acceptance, advocating an "economically viable price development" and pledging to ensure the smooth transition of Germany's domestic carbon price for the heating and transport sectors into the EU ETS 2 on the latter's launch in 2027. The parties pledge "immediately" to adopt a legislative package that enables carbon capture, transport, use and storage (CCU/CCS), particularly for industrial emissions that are difficult to avoid, and also for gas-fired power plants — a disputed issue within the SPD, and the reason why CCS legislation did not pass under the outgoing SPD-Green-led federal government. The new government said it will legally enshrine the "overriding public interest" of the construction of CCS infrastructure, as well as pledging to give the "highest priority" to ratifying the [amendment to the] London Protocol, allowing cross-border CO2 transportation, and to enter bilateral agreements with neighbouring countries on storing carbon. The new government will enable CO2 storage offshore in Germany's exclusive economic zone and the North Sea, as well as onshore where geologically suitable and accepted. The parties see direct air capture as a "possible" future technology to "leverage negative emissions". By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.