Germany’s parliament has approved a significant tightening of climate regulations in the transport sector, pushing beyond the government’s own proposals and intensifying a policy direction that has already placed financial strain on businesses and households.
Under the new law, oil companies will be required to cut the carbon dioxide emissions of their products by 65% by 2040. The measure raises the so-called greenhouse gas reduction quota, currently set at 12%, in gradual steps over the coming years.
The legislation implements an EU directive but goes further than the government’s initial target of 59%.
The bill, backed by the governing coalition of the centre-right CDU and the Social Democrats, aims to accelerate the shift to renewable energy in transport.
This is expected to rely on a combination of biofuels, increased use of electric vehicles, and a growing role for hydrogen produced from renewable sources.
Environment minister Carsten Schneider welcomed the decision, arguing it would strengthen Germany’s resilience in future energy crises. He said expanding electric mobility and alternative fuels would reduce reliance on fossil energy sources.
However, the law has drawn sharp criticism from opposition parties and industry voices, who warn of rising costs and practical limitations. The government’s own estimates suggest additional costs of around €2.7 billion by 2030, alongside increased bureaucracy and regulatory oversight.
Germany’s broader energy strategy—pursued by successive governments—has compounded these challenges. The phase-out of nuclear power and the end of cheap Russian energy imports have removed relatively low-cost energy sources, while the transition to greener alternatives has required substantial subsidies and investment, often passed on to consumers through higher prices and taxes.
There are also concerns about feasibility. Germany has limited capacity to produce key inputs such as biomass and green hydrogen domestically. Agricultural land is already heavily used, and hydrogen infrastructure remains underdeveloped, with a planned 9,000-kilometre core network not expected to be completed until 2032 at the earliest.
Opponents of the new law say it could leave Europe’s largest economy increasingly dependent on energy imports, undermining claims of greater independence.
As Malte Kaufmann, an MP for the right-wing populist AfD party, stated recently, a return to nuclear power would be the right approach because it would “lead to further diversification of energy sources and reduce such dependencies.”
