Germany Ties Climate Goals to Carbon Offsets Amid Economic Fears

• Apr 24, 2025

Germany’s incoming government has agreed to support the European Union’s 2040 climate goal—but only under certain conditions. The country will back the EU’s target to cut greenhouse gas emissions by 90 percent by 2040, but it wants international carbon offsets and carbon removals to count toward that target.

This conditional support comes from a new coalition deal between Germany’s centre-right Christian Democrats (CDU) and the centre-left Social Democrats (SPD), following the CDU’s victory in a snap election held in February. The 144-page agreement, released by the European Commission on April 17, still needs to be approved by over 300,000 SPD members before it becomes official.

Germany has already committed to achieving climate neutrality by 2045, but the new government insists that EU member states must be allowed to use international carbon credits and carbon removals to meet their targets. This approach shifts some of the emissions reduction responsibility to trade partners, rather than placing it solely on German industry.

According to the agreement, countries would be allowed to meet up to 3 percent of their 2040 emissions target by paying for emissions reductions in other countries. These carbon credits must be certified, lead to permanent reductions, and meet strict quality standards. Still, the cost of reducing those emissions would fall on the partner countries, not Germany.

This compromise has sparked criticism from environmental groups and lawmakers across the EU. Tiemo Wölken, an SPD Member of the European Parliament, warned that the policy would harm the EU’s credibility and create large loopholes instead of encouraging real emissions cuts within Europe.

Concerns over Europe’s declining economic competitiveness—especially compared to the US and China—have led the EU to relax its green ambitions, according to a report by former Italian Prime Minister Mario Draghi. The European Commission is now considering allowing the use of international offsets in meeting its climate goals, a move that has alarmed many climate advocates.

In addition to climate policy, the German coalition plans to explore conventional gas production and has dropped previous plans to revive nuclear energy. The government will also scrap a clean heating law passed by the last administration, replacing it with a revised version. The original law, set to ban fossil-fuel heating systems from 2045, had been praised by the International Energy Agency.