Federal Cabinet adopts new provisions for renewable energy in transport
Following a proposal by Federal Environment Minister Svenja Schulze, today the German government adopted new provisions for renewable energy use in the transport sector. These provisions raise the greenhouse gas reduction quota for fuels from the current 6 percent to 22 percent by 2030, thus taking Germany well beyond the EU requirements. Besides stepping up incentives for the use of green hydrogen, new charging stations and advanced biofuels derived from residues rather than food crops, this package of measures places an immediate restriction on biofuels from palm oil and lays down provisions for their complete phase out.
Federal Environment Minister Schulze stated: "Transport is still an issue on the road to climate neutrality. To achieve our climate targets in the transport sector, we need more state-of-the-art, clean technologies. That is why we have to make some course adjustments. This ambitious support for climate-friendly fuels is an effective tool that enables real cuts to greenhouse gas emissions. But we do not want to simply tank up indiscriminately with yet more alternative fuels. Fuels that replaces petroleum must not destroy rainforests at the same time. I want to promote fuels that are efficient and affordable, and which do not combat climate change at the expense of nature."
The revised law transposes the EU Directive for renewable energies in transport (RED II). Under the Directive, the transport sector must achieve a renewable energy share of 14 percent by 2030. The German government aims to raise the renewable share in transport to 28 percent in the next ten years, thus significantly exceeding the EU requirement. This ambitious target will make Germany a pioneer of renewable energy in transport. Germany introduced a greenhouse gas reduction quota in the Federal Immission Control Act to implement the European renewable energy target. Under the new law, the GHG quota will be gradually increased from the current 6 percent to 22 percent by 2030.
With regard to the individual fuel options, transposing RED II into German law means significantly raising the share of advanced biofuels in the GHG quota. Biofuels from waste cooking oil will continue to contribute to the target. In future, producers will be able to count biofuels from animal waste products towards the THG quota. For environmental reasons, biofuels from food and feed crops will not receive further support, and their share will be frozen at the current level. The quantity of palm oil in this share will be heavily restricted. It may not rise any higher and is to be gradually reduced. From 2026 its use will no longer be permitted. To advance the market scale-up of green hydrogen in all sectors, the German government has specified a new minimum quota for kerosene produced with green electricity. The use of green hydrogen in refineries for fuel production will also count towards the GHG quota in future. To support electric mobility the German government has strengthened incentives for the private operation of charging infrastructure in Germany.
Advanced biofuels, which at present are not a part of the greenhouse gas quota, are to have a share of at least 2.6 percent by 2030. Advanced biofuels are obtained, for example, from residues such as straw and manure. This form of recycling is sustainable, and from a specified amount will even be encouraged by doubling its weighting (double counting) towards the GHG quota. Fuels from waste cooking oils and, for the first time, from animal waste products as well, can also contribute to the quota.
In future, there will be no additional support for biofuels from food and feed crops. The current upper limit of 4.4 percent will no longer be exceeded. Svenja Schulze commented: "Increasing biofuels from food and feed crops is not an option for us. Clearing forests and destroying nature to produce biofuels is unacceptable. That is why, from this point on, the amount of palm oil used may not be increased any further. In a gradual process, palm oil will be banned from fuels by 2026."
Electricity-based fuels from green hydrogen are to play a key role in achieving the climate targets in the transport sector. But green electricity is a precious commodity, and the capacities needed to produce fuel from electricity have yet to be created. For this reason, the German government will prioritise the use of green hydrogen in areas where there are currently no climate-friendly, more efficient alternatives to the direct use of power. This is particularly the case for aviation as well as industry. Therefore, a minimum quota for liquid fuels from green electricity (power-to-liquid PtL) will be introduced from 2026 and gradually raised to 2 percent by 2030. Electricity-based fuels in motor-vehicle transport will also count twice towards the GHG quota. The use of green hydrogen in refineries will be boosted through double counting as well. Other fuels are produced in refineries besides those based on electricity, and therefore, the use of green hydrogen here can help to reduce greenhouse gas emissions in other areas of transport too.
The direct use of electricity in vehicles will be promoted with a triple count towards the GHG quota. In this way the mineral oil industry will contribute indirectly to the creation and operation of a nationwide charging infrastructure. The expansion of this infrastructure is currently still largely financed through taxes. The German government has included a protection mechanism in the law to prevent electricity from squeezing biofuels and green hydrogen out of the market.
Following the decision of the Federal Cabinet, the legislative proposal must be adopted by the Bundestag and passed by the Bundesrat. The law will enter into force on the first day of the quarter following promulgation and will be reviewed in 2024 at the latest. Following adoption of the act, the German government will begin working on the relevant ordinance. This ordinance will implement the new provisions on biofuels and on counting electricity towards the greenhouse gas quota.