Speech by Svenja Schulze on recent climate policy developments in Germany

Svenja Schulze gave a speech at the climate conference in Madrid on the recent climate policy developments in Germany, international experience on climate legislation and fuel emissions trading.

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Ladies and gentlemen,

At the UN Secretary-General's Climate Action Summit in September, 66 heads of state and government announced that their countries want to become greenhouse gas-neutral by 2050. This sent a heartening message. Germany also pledged itself to this goal in New York. Since then, the German government has taken a series of decisions to translate this pledge into action.

The German government adopted the Climate Action Programme 2030 on 9 October 2019. It is the most comprehensive climate programme that Germany has ever had. With the programme, the German government is laying the foundation for achieving our climate action target for 2030 – a 55 percent reduction of greenhouse gas emissions compared to 1990 levels.

But it also includes much more. The programme ushers in a new era for climate policy in Germany. I want to emphasise three points:

  • First, climate action has been laid down in law.
  • Second, climate action will pay off for all citizens in future. Behaviour that harms the climate will cost more and behaviour that is climate-friendly will cost less and be more attractive. To achieve this, we have taken the decision to start comprehensive carbon pricing. There will now also be a carbon price in the buildings and transport sectors.
  • Third, the climate package promotes climate action, but it does not overburden anyone. The government will ease the burden in areas where it affects citizens.

An extensive package of measures including price incentives, funding, legal standards and requirements will pave the way for climate-friendly behaviour and innovations. The German government is prepared to spend a great deal of money on this – 54 billion euros over the next three years. This is making our country more modern, more innovative and more competitive.

  • This includes additional investments in making the train system and local public transport more attractive. Train travel will cost less, and flying will be more expensive.
  • It includes support programmes for modern heating systems and energy-efficiency improvements for buildings.
  • It includes support for purchasing electric vehicles and expanding charging infrastructure. Electric vehicles will be more affordable. Petrol, diesel and gas-guzzling cars will gradually cost more and more.

Beyond this, the German government has decided to phase out all lignite and hard coal-fired power plants in Germany by 2038 at the latest. This means we are phasing out both nuclear power and coal at the same time, while accelerating the expansion of renewable energies.

I want to speak about two core components of the climate package in more detail – first, the Climate Change Act and second, carbon pricing.

The Climate Change Act is the core component of the climate package. It establishes our climate targets and also annual emissions budgets. These are broken down by sector for energy, industry, transport, buildings and agriculture. This is the first time we have established how much greenhouse gas each sector is allowed to emit each year.

The Climate Change Act contains a strong review and control system, a safety net. There will be a review every year of whether emissions are going down by the required amount. If the target trajectory is not met in any one sector, the responsible ministry is obligated to immediately draw up a programme to take corrective action.

In addition, an independent council of experts from a range of disciplines will be set up. This council will review the emissions data in the different sectors and will advise the German government and the Bundestag on key decisions in plotting the course for climate policy.

In a nutshell, the Climate Change Act transposes the greenhouse gas neutrality pledge into clear, concrete tasks or "homework", if you will.

This homework is piling up in the buildings and transport sectors. These sectors have been the problem children for climate action in Germany. There has been too little progress in these areas in recent years.

This is why the climate package includes a second core component alongside the Climate Change Act. A national emissions trading system will be in place from 2021. This will put a price on carbon emissions that are not covered by the EU Emissions Trading System. In Germany, these emissions primarily occur in transport and buildings.

In setting up a trading system, Germany is joining the growing ranks of countries that are already putting a price on emissions: Denmark, Sweden, France, Switzerland, Canada – many countries have already gained experience in this area. More than 28 countries and regions have implemented emissions trading systems, and 29 are using a carbon tax. We have looked closely at the systems of our neighbours, for example Sweden and Switzerland, and thought long and hard about what fits our situation.

The German government has decided to make a gentle start with carbon pricing. Allowances will initially be sold at a fixed price, starting at 10 euros in 2021 and increasing to 35 euros by 2025. This will allow citizens and industry to adjust to the new system. This also allows the expansion of necessary climate-friendly alternatives, for example local public transport and electric mobility.

In 2026, following the introductory phase, a price corridor from 35 to 60 euros will be in place. Afterwards, the market price will generally prevail. The German government will follow the introduction closely and take a decision in 2025 on whether a price corridor is needed after 2026.

Comprehensive carbon pricing will make the climate-friendly choice cheaper, for example when choosing a car, a heating system or planning new construction. Choices that harm the climate will gradually become more expensive. This sends a clear message to consumers and manufacturers.

I also said at the outset that the climate package is not meant to overburden anyone. This was the motivation behind the regulated, moderate introductory phase. Revenues from the system will be returned to citizens and industry, for example through lowering electricity prices and increasing housing benefit for low-income households. We are very aware that climate action requires support from the public. This is also something we have drawn from the experiences of other countries, for example France, the Netherlands and Switzerland.

Germany is doing its homework. We are turning our commitment to the Paris Agreement and climate neutrality into concrete action.

I was so pleased to hear UN Secretary-General Guterres' words of praise when he called the Climate Action Programme 2030 "an absolutely outstanding contribution to defeat climate change". But the German government will not rest on its laurels. We have made a very deliberate decision to include robust review and adjustment mechanisms in the Climate Action Programme. It is possible that we will have to make adjustments in some sectors in the next year in order to reach our climate targets.

Updating the NDCs is on the agenda at next year's COP. I am advocating that the EU NDC be made more ambitious, which would also have an impact on our national climate policy.

To conclude, the Climate Action Programme sends a crucial signal, it sets out our trajectory. It marks the beginning, not the end of our path towards climate neutrality.

The German government has drawn on the experience of other countries in putting together its climate package for 2030. COP 25 and this side event are excellent opportunities for us to learn from one another, from the practical experience of different countries in climate legislation and carbon pricing.

Thank you for your attention, and I wish you all informative and fruitful discussions.

11.12.2019 | Madrid