Germany’s 2025 Coalition Agreement: Key ESG Takeaways
Overview
Germany’s new coalition agreement outlines major shifts in energy and climate policy. It reinforces the country’s path toward decarbonization with specific targets, timelines, and investment plans.
Photo by Samuel Hagger on Unsplash
The Energy Transition
The agreement moves Germany’s target of exiting coal power by 2030 from the original 2038 deadline to 2030.
Renewable energy expansion will play a central role, with a goal to reach 80% of electricity from renewables by 2030.
Onshore and offshore wind, along with solar, will see increased investment and streamlined permitting processes.
The coalition supports faster grid expansion and the creation of a hydrogen-ready gas infrastructure to support renewable energy integration.
Carbon Pricing and Fossil Fuel Reduction
A national emissions trading system will continue and be aligned with the EU ETS.
The price trajectory for carbon will be reviewed to ensure effectiveness in reducing emissions.
Subsidies for fossil fuels will be phased out. This includes tax advantages for diesel and support for oil heating.
Reversal on Supply Chain Due Diligence
The coalition plans to drop the national Supply Chain Due Diligence Act. The law, which came into effect in 2023, required large companies to identify and address human rights and environmental risks in their global supply chains.
Instead of a national framework, Germany will rely on the upcoming EU Corporate Sustainability Due Diligence Directive. The change reflects a preference for harmonized EU regulation over country-specific rules.
Green Industry and Infrastructure
The government will promote the use of climate and carbon contracts to decarbonize heavy industry.
Public tenders will prioritize climate-friendly solutions.
New building standards will mandate sustainable practices, including higher energy efficiency requirements.
Governance and EU Alignment
All new legislation will undergo a climate impact assessment.
Rhe government aims to embed climate protection across all ministries.
Germany will support the EU’s Green Deal and calls for an ambitious reform of the EU’s energy and climate laws.
The coalition agreement sets a clear direction for Germany’s energy and climate policy. Effective implementation, legal reform, and coordination across sectors will determine how quickly and successfully these goals are achieved.
Read more here: https://www.herbertsmithfreehills.com/notes/energy/2025-posts/germanys-2025-coalition-agreement-whats-ahead-for-energy-and-climate-policy