i Introduction

Under the Basic Law for the Federal Republic of Germany (GG), the protection of the natural foundations of life and animals is a fundamental state objective. Mindful also of its responsibility towards future generations, the state shall protect the natural foundations of life and animals through legislation and, in accordance with law and justice, by executive and judicial action (Article 20a GG). Although this principle was embedded in the German Constitution no earlier than in 1994, the German state and German federal states have had a long tradition of environmental protection. This is particularly the case regarding the prevention of harmful effects of industrial installations on air, water and soil, the remediation of contamination as well as the use, storage, transport and disposal of hazardous substances.

Whereas environmental law has evolved consecutively and changed in an evolutionary manner (e.g., regarding specific areas of protection), climate change prevention has triggered rather systematic changes, especially in (environmental) energy law. Accordingly, climate protection is a key justification in the German 'energy turnaround', which aims to phase out nuclear energy by 2022, consecutively phase out energy production from lignite and hard coal (with the exact schedule still to be determined), reduce other fossil energy sources and promote renewable energy sources.

In general, German climate protection efforts concentrate on five greenhouse gas intensive sectors: energy, transport, agriculture, industry and trade, and buildings. Whereas the main focus of German climate protection efforts has for a long time been on the energy sector, current discussions increasingly include emission targets for the transport and agricultural sector.

Ii LEGISLATIVE FRAMEWORK

No different from any other Member State environmental law within the European Union, EU directives have had great influence on German environmental law. EU regulations such as the EU Chemicals Regulation 1907/2006 (REACH) and the EU Eco-Management and Audit Regulation 1221/2009 (EMAS III) form part of the supranational environmental law directly applicable in Germany. With specific regard to German laws and regulations on environmental protection and climate change discussed in this chapter, these laws are manifold and not comprehensively codified. The reasons are primarily of a historic nature and based on the division of legislative powers for environmental law between the German federation on the one hand and the 16 federal states on the other hand. For the most part, the different laws focus on particular subjects of protection (i.e., air, soil and water) or sources of hazards (e.g., industrial installations). Some laws have more comprehensive legal objects, such as nature conservation or liability for environmental damage in general. Environmental laws are often further specified in more detail in related ordinances as well as administrative regulations.

Most important for industrial installations is the German Federal Emission Control Act (BImSchG), which regulates various kinds of industrial facilities. Environmental protection is already taken into account for the construction permits of these installations, in particular, in connection with the provisions of the Environmental Impact Assessment Act and the Federal Nature Conservation Act. Regarding the operation of such facilities, the BImSchG aims to protect the environment from air or water pollution, noise emissions, vibrations and comparable harmful impacts mainly by limiting or avoiding emissions. Currently, 35 ordinances specify, in particular, technical details of the basic duties under the BImSchG. Also of great practical importance, in particular, regarding emission thresholds, are two administrative ordinances: the Technical Guidelines on Noise as well as the Technical Guidelines on Air Quality. The European framework for trading of greenhouse gas emissions is transposed in the Greenhouse Gas Emission Allowance Trading Act (TEHG), which links environmental protection to climate protection by establishing a cap and trade system for the amount of permitted emissions. The German Act on Carbon Capture and Storage, however, has hardly gained any practical relevance for the reduction of greenhouse gas emissions yet.

In addition to protection and prevention efforts, liability for nevertheless present or occurring contamination of soil and groundwater is governed by the Federal Soil Protection Act (BBodSchG), the Federal Soil Protection Ordinance (BBodSchV) and by the Federal Water Act (WHG) as well as water laws of the federal states. The BBodSchG particularly applies to harmful soil changes and contaminated sites, whereas the water laws apply to significantly detrimental changes to bodies of water. In addition, environmental damage caused by business activities potentially dangerous to the environment may result in liability under the Federal Environmental Damage Act. Operators of certain installations may also be liable for damage (including third-party damage) caused by their facility under the Environmental Liability Act.

Manufacturers and importers as well as downstream users of specific substances are further subject to restrictions regarding the use, distribution and labelling as well as registration of these substances pursuant to the Chemicals Act (ChemG), the Chemicals Prohibition Ordinance (ChemVerbotsV), the Ordinance on Hazardous Substances (GefahrstoffVO) and a variety of other ordinances, including, for example, the Chemicals Climate Protection Ordinance (restricting the fluorinated greenhouse gas emissions), which largely makes reference to European law. The handling and disposal of waste is regulated by the Waste Management Act (KrWG) and various related ordinances.

In addition to the above-mentioned TEHG, climate protection targets are part of several sector-specific laws and regulations aiming to reduce greenhouse gas emissions, and promote renewable energy and energy efficiency. In the energy sector this includes, in particular, the Energy Industry Act (EnWG) setting out basic principles of energy law, the recently revised Renewable Energy Sources Act (EEG) and the Wind Offshore Act, which promote electricity generation from renewable energy sources, and the Combined Heat and Power Act (KWKG) on promotion of combined heat and power technology (CHP).

IIi THE REGULATORS

As German environmental law consists of different laws on the federal level as well as on the level of the federal states, different authorities are competent to enforce environmental and climate change rules. Supreme authorities on both federal and state level are the respective ministries for environmental protection as well as energy. Of particular relevance during the current parliamentary term are the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety as well as the Federal Ministry for Economic Affairs and Energy. In their respective areas of responsibility, the ministries supervise the general administrative tasks of the higher federal environmental authorities, such as the Federal Environmental Agency, the Federal Agency for Nature Conservation and the Federal Office for Economic Affairs and Export Control. The same applies for the higher environmental authorities of the federal states. In some areas of environmental law, such as mid- and long-term disposal of nuclear waste and radiation protection, special environmental authorities, such as the Federal Office for Radiation Protection, enforce compliance with the provisions of these particular regulations.

At the federal level, the further substructure of environmental agencies differs. In some federal states, such as North Rhine-Westphalia, regional governments are, inter alia, competent for larger projects, such as power plants, and supervise the administration of the local environmental authorities. Other federal states, such as Lower Saxony, changed the three-tier administrative structure into a two-tier structure. In this more localised structure, trade and industry authorities are competent, for example, for permits under the BImSchG.

Where environmental authorities have to enforce environmental rules against other parties (see Section IV), the administrative courts ultimately decide whether or not any administrative order, sanction or decision on fees or costs is lawful and must be complied with. However, more often than not such disputes are settled at the administrative level.

Iv ENFORCEMENT

Environmental, technical, health and safety standards have increased and multiplied in recent years under German law, in particular, based on the implementation of EU standards. This exposes operators of industrial plants, managing directors as well as employees to liability risks at different levels ranging from reputational damage and civil liability to administrative sanctions and criminal punishment.

Environmental obligations regularly address the operator of an installation and, therefore, the respective company. In the case of violations of such environmental obligations, operators of industrial plants will mainly face administrative sanctions, as well as civil claims under the law of torts brought by third parties who suffered damage to their protected rights (body, health, property). In addition to imposing administrative fines, the competent authority may also suspend or revoke permits and prohibit non-compliant activities and order remediation measures. Managing directors and other individuals involved in violations of environmental standards may face (external and internal) civil claims and criminal charges. By contrast, German criminal law does not yet recognise criminal responsibility of corporations. However, administrative fines can be imposed on corporations if a person has committed an administrative offence that also violated duties of the respective company or worked for the benefit of that company.

Whereas most infringements of environmental law are dealt with by administrative offences law, criminal sanctions in connection with violations of environmental obligations may result from general criminal offences, such as offences against bodily integrity or damaging property as well as specific environmental criminal offences. The latter, inter alia, prohibit pollution of water, soil and air, unauthorised dealing with dangerous waste, unauthorised operation of an industrial plant requiring a permit under the BImSchG or endangering areas requiring protection such as water protection areas. Particularly serious cases of environmental crime, such as acting out of greed, are punished with imprisonment of not less than six months and up to 10 years. However, environmental criminal offences depend on the infringement of applicable environmental law. Consequently, acting in accordance with public environmental law or a permit or beneficial administrative act cannot constitute a criminal offence.

In addition to public enforcement, the Environmental Appeals Act enables recognised environmental associations to challenge decisions and permissions regarding certain environmentally sensitive projects. Without this privilege, only persons individually affected by the respective project would be able to take legal action under general principles of German administrative law.

Following the diesel emissions scandal, which led to the admission of car manufacturers to having used software manipulating emissions controls, the German legislator introduced a model lawsuit procedure on 12 July 2018 enabling consumers to join a lawsuit without assuming any legal risks, thereby providing for an indirect contribution to air pollution control.

V REPORTING AND DISCLOSURE

In Germany, there is no general legal obligation to provide the authorities with contamination-related information. However, specific notification requirements especially exist in the (partially different) laws of the federal states. In general, the polluter, his or her universal legal successor, the current or former owner and the occupant have to notify the competent authority of indications of contamination of real property. Similar obligations apply in the case of release of substances hazardous to water. Facilities handling substantial quantities of harmful substances, inter alia, have to report to the competent authority explosions, inflammations or release of a certain amount of hazardous substances, damage to persons or real estate and certain direct damage to the environment.

Without constituting a notification requirement in the strict sense, the notification of a present or ongoing contamination to the authorities can, under certain circumstances, also be a means to avoid or mitigate responsibility under criminal law. There is, however, no particular protection for whistle-blowers under German law. Related legislative initiatives have never been adopted because the federal government considers that existing labour law regulations provide sufficient protection in such cases. Obligations for companies to implement whistle-blower hotlines while at the same time protecting confidentiality exist, for example, in the financial sector but not regarding environmental matters.

Potential disclosure obligations in relation to prospective purchasers are subject to civil law. Not disclosing known or suspected environmental liabilities may amount to fraudulent misrepresentation and thereby give cause for annulment of a contract. Unknown environmental liabilities may trigger warranty rights subject to contractual arrangements.

Regarding financial reporting obligations, environmental incidents may gain such financial importance for the performance of a company that they have to be mentioned in corporate reports in accordance with general reporting standards. Major corporations additionally have to report on environmental matters in their situation report, including environmental protection strategies and programmes, preventive measures, compliance with environmental standards, use of energy and water, as well as emissions and waste management.

Vi ENVIRONMENTAL PROTECTION

i Air quality

The protection of air quality is foremost subject to maturely developed emissions law. Under the BImSchG, the construction and operation of facilities that are particularly likely to cause harmful effects to the environment or otherwise endanger or cause significant disadvantages or significant nuisances to the general public or the neighbourhood, require a specific emission permit. The main criteria determining the permit requirements are the materials used or produced and the functions of the facilities as well as the production volumes. The respective facilities are listed in the Fourth Ordinance Implementing the Federal Emissions Control Act.

The Technical Guidelines on Air Emissions (TA Luft) specify emission values for all relevant airborne pollutants. The TA Luft are currently undergoing revision to adapt standards to the current technical state-of-the-art. It is expected that emission values will decrease owing to European regulations (BAT conclusions), but also as a consequence of the federal government's air pollution control goals under the new 43rd BImSchV of 31 July 2018. The reductions shall apply as of 2020 compared to the year 2005. The federal government is expected to present a first clean air programme on 31 March 2019. Some federal states have also developed guidelines for odour emissions to establish presence of odour nuisances. Standards for odour emissions shall also be incorporated in the revised TA Luft. The competent authority shall periodically monitor air quality (Sections 44 ff., 40 BImSchG), for example, regarding air pollution caused by traffic. In this case, the competent authority may restrict or prohibit the use of motor vehicles.

In the wake of the diesel emissions scandal, discussions on general traffic bans for older diesel cars in German city centres gained momentum. On 1 June 2018, the city of Hamburg decreed the first driving ban for older diesel vehicles on selected streets particularly impacted by high values of nitrogen oxides. Other cities, such as Berlin, Frankfurt and Stuttgart, are currently preparing or have already decided on gradual driving bans as well. The federal government recently decided on a set of measures, including software and hardware updates, as well as replacement strategies to avert further traffic bans, and is also going to determine by way of an amendment of the BImSchG that traffic bans are regularly disproportionate where the concentration of nitrogen dioxide does not exceed an annual average value of 50 mg per m³ (the statutory threshold is 40 mg per m³).

The permit under the BImSchG does not only cover emissions originating from the respective plant but also other public law requirements, in particular under building law (the concentration effect). The permit typically contains collateral clauses and regulations specifying the content of the permit. A modification or alteration of an existing plant must either be notified to the authority or – in case of material alterations – will require a new permit.

If an emitting plant is constructed, altered or operated without the required permit, the competent authority may order the operator to shut down or even demolish the plant. In addition, the operator's misconduct may constitute a criminal offence. If an operator holds a permit but does not comply with the applicable requirements, the competent authority may order remedial measures by way of a subsequent order or may prohibit the operation of the plant. If an operator or owner finally ceases the operation of a plant, he or she is obliged to take necessary measures to return the site to a satisfactory state, for example, by demolishing the installations.

ii Water quality

Water quality in Germany is, inter alia, protected by the provisions of the WHG. Under this Act, certain practices with possibly detrimental effects on the natural water resources require permission and are subject to certain provisions. In particular, installations for handling substances hazardous to water must be built and operated in such a manner that no contamination of water or any other detrimental change of its properties is to be feared. Currently, specific technical requirements for such installations, including reporting and safety requirements, are regulated by the Ordinances on Installations for the Handling of Substances Hazardous to Water of the federal states, whereas the obligations of operators are regulated in the Ordinance on Installations for the Handling of Substances Hazardous to Water.

Installations handling substances hazardous to water must be tested and classified with respect to their properties. Substances are classified on the basis of the Administrative Regulation on the Classification of Substances Hazardous to Waters. According to this regulation, there are three water hazard classes (WGK):

  1. WGK 1: a low hazard;
  2. WGK 2: a hazard; and
  3. WGK 3: a severe hazard.

iii Chemicals

Under German law, a company that handles, stores or uses chemicals and other hazardous substances, in particular, explosive, oxidising, flammable or toxic substances, must comply with certain safety regulations and provide safety measures as stipulated in the above-mentioned ChemG, ChemVerbotsV, GefahrstoffVO, the Technical Rules for Hazardous Substances, the Industrial Safety Ordinance and the Technical Rules for Safety in Work Places.

A company storing hazardous substances must prepare a comprehensive risk assessment determining the necessary occupational safety measures for the working place described. For example, hazardous substances have to be stored in containers that cannot be mistaken for containers containing food regarding the packaging (label, shape). The employer also must appoint a duly qualified responsible person observing compliance with labour safety and protection regulations.

Facilities handling substantial quantities of harmful substances are also subject to the additional requirements of the Ordinance on Hazardous Incidents, including precautions to prevent hazardous incidents and enhanced safety measures as well as notification and reporting obligations. To this end, the Ordinance provides a general concept to prevent major accidents in such areas. The operator must develop an individualised concept, including a safety management system, to prevent major accidents before starting to operate the respective facility. In addition, the operator might be subject to increased duties, for example, to submit a safety report and an alarm and hazard control plan and to fulfil certain information requirements.

The transport of dangerous goods is also subject to special regulations under German law, including the Dangerous Goods Transportation Act and several ordinances. The transport of dangerous goods is generally only permitted if all required safety regulations are fulfilled. A safety adviser must be appointed if a company takes part in the transport of dangerous goods by railroad, aircraft, sea or land vehicles.

iv Solid and hazardous waste

German waste law as provided by the KrWG and various ordinances regulates the handling and disposal of waste. According to the KrWG, waste first must be avoided and second must be recycled or recovered or be used to produce energy. Waste that is not recycled must be disposed of in accordance with basic principles of waste management guided by public interest (waste hierarchy). To ensure such disposal, records of proper waste management have to be prepared.

Special regulations apply to the disposal of certain waste substances not covered in the KrWG (e.g., nuclear fuel and radioactive substances or wastewater, which are subject to the national and federal water laws).

Following the nuclear phase-out in Germany by the end of 2022, the final storage of radioactive substances and nuclear fuel is a major challenge. In this regard, the Site Selection Act contains procedural steps for a science-based and transparent search and selection of a suitable site for the safe storage of highly radioactive waste. The selection process shall be completed by the year 2031 and the repository shall be operative by the middle of the century.

v Contaminated land

The liability for environmental contamination is mainly governed by the BBodSchG, the BBodSchV and by the federal and state water laws. The BBodSchG particularly applies to harmful soil changes and contaminated sites, such as former waste disposal and industrial sites. Harmful soil changes within the meaning of the BBodSchG are harmful impacts on soil functions that are able to bring about hazards, considerable disadvantages or considerable nuisances for individuals or the general public. This damage may be caused by contamination, but also by a compression or dehydration of the soil. The BBodSchG applies to all currently existing known and (still) unknown and all future harmful soil changes.

The BBodSchG stipulates a general remediation liability irrespective of involvement, fault or knowledge of such contamination. This responsibility applies to:

  1. the polluter;
  2. his or her universal legal successor;
  3. the current and, in the case of a sale after 1 March 1999, the former owner;
  4. the current occupant of the real property (e.g., the lessee); and
  5. persons or entities that, under commercial or corporate law, must answer for an entity that owns contaminated real property, or persons or entities that gave up ownership of such properties.

The competent authority may decide which person or entity shall be held liable for remediation measures, subject to the authority's discretion, guided by the consideration of which party will be able to carry out remediation most efficiently. This applies regardless of private law agreements about the responsibility for contamination, as can be found, for example, in lease contracts. To balance potential conflicts resulting from these statutory and administrative principles, the BBodSchG provides for compensation among the several responsible parties if the authority only requested a limited number of parties or only a certain party to carry out the remediation. The obligation to pay compensation and the amount of compensation depend on the extent to which the harmful soil changes or contamination was actually caused primarily by one party or another. By consequence, this provision de facto establishes a restricted 'polluter pays' approach.

As soon as contaminated soil is excavated in the course of construction or remediation works, it no longer falls within the scope of the BBodSchG. Instead, it may qualify as waste pursuant to the KrWG, which may result in additional disposal costs. An administrative provision by the Federal States' Working Group on Waste stipulates six categories on a contaminant-threshold basis for a proper and safe recycling or disposal of landfill. While landfills in categories Z 0, Z 1 and Z 2 may be recycled – subject to restrictions in Z 1 and Z 2 – by means of use for construction works, waste in categories Z 3 to Z 5 may only be disposed of on waste disposal sites. Although these rules are only (legally non-binding) guidelines, they are often used by the respective authorities as the relevant standards.

The Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety has, for quite some time, been preparing an Ordinance on Secondary Construction Materials, which shall establish binding and unified rules for the use of mineral secondary construction materials in Germany. This process was recently picked up again and shall also include a revision of the BBodSchV, which sets out the requirements for soil protection in more detail. The revision will, in particular, address the filling of excavations and open cast mines, pedological site support, harmful soil changes because of erosion by wind and the methodologies for determining the levels of contaminant content. However, only minor and rather consolidating changes are expected regarding the assessment and evaluation of environmental contamination, as well as their cleanup and decontamination.

VII CLIMATE CHANGE

Based on the global trend of decarbonisation, international and European law have had great influence on German climate protection regulations. In 2010, the German federal government decided to reduce greenhouse gas emissions by 80 to 95 per cent compared to 1990 by 2050. On a policy level, on 14 November 2016 the German federal government adopted the Climate Action Plan 2050 following a broad and controversial political and social debate. The plan outlines how Germany intends to achieve extensive greenhouse gas neutrality by the middle of the century. However, an independent discipline of climate protection law is still being developed in Germany. Accordingly, climate protection is not comprehensively regulated, at least not yet. Several environmental laws have rather identified climate protection as an objective of the relevant legislation and either aim to reduce greenhouse gas emissions, improve energy efficiency or promote renewable energies to facilitate and protect that objective.

i Climate Action Plan 2050

The Climate Action Plan 2050 defines a number of key areas for specific action (i.e., energy, building, transport, trade and industry, and agriculture and forestry) with both guiding principles until 2050 and milestones and targets for 2030.

For the first time, the Climate Action Plan 2050 sets sectoral targets for emissions reduction that will be monitored and adapted in the future.

The Climate Action Plan 2050 has so far not specified how these aims will be achieved. To this end, the federal government on 6 June 2018 established a commission for growth, structural change and employment (the Coal Commission) to integrate the expertise of the governments of the federal states as well as the municipalities, trade unions, company and industry experts. This commission will develop annual action programmes to specify the milestones and targets of the Climate Action Plan 2050.

In general, the Climate Action Plan 2050 aims to further develop energy standards in both new buildings and existing stock undergoing renovation, as well as the promotion of heating systems based on renewable energy sources. Road transport will have to take electric mobility into account in particular. The German government and businesses must work together regarding research and development programmes to reduce greenhouse gas emissions. Expanding forest areas and improving regulations for fertilisation are further measures. Regarding the energy industry, it remains a goal of the federal government to completely decarbonise electricity production by 2050. Meanwhile, the Coal Commission has suggested starting the decommissioning of the first coal fired power plants between 2019 and 2022.

ii Greenhouse gas emission allowance trading system

The reduction of greenhouse emissions is primarily achieved by means of the TEHG. Under these regulations, an installation emitting greenhouse gases from activities listed in Annex 1 TEHG requires a greenhouse gas emissions permit. This particularly concerns conventional power generation and other industrial activities, such as the production of cement clinker and lime or dolomite in rotary kilns or other furnaces with a certain production amount, but also air traffic. If a permit in terms of the BImSchG has been issued prior to 1 January 2013, this permit also constitutes the required emission permit. Otherwise, a separate emissions permit is required.

Operators of emitting installations have to cover their actual greenhouse gas emissions by emissions certificates. These allowances are issued as tradable rights so that the beneficiary may either sell surplus allowances or obtain additional allowances if required. For the third emissions trading period from 2013 to 2020, the allocation of emissions allowances is subject to the Allocation Ordinance 2020. Compared to the previous two trading periods, this ordinance has reduced the general national cap for emission allowances as well as the number of emission allowances allocated to the operators free of charge; the number of auctioned allowances has generally increased. In the energy sector, all allowances have been auctioned since 2013.

On 4 October 2018, the federal government adopted a bill to align the TEHG with the revised requirements of the EU Emissions Trading Directive for the fourth emissions trading period from 2021 to 2030. The overall number of emission allowances will further decline at an annual rate of 2.2 per cent from 2021 onwards, compared to 1.74 per cent currently.

Emission allowances have to correspond to an annual emission report, which must be submitted by the operators to the competent authority by 31 March of each year. If an operator exceeds the annual volume of emissions contained in the allowances and fails to buy the required additional volume, a fine of €100 per tonne of greenhouse gas emitted will be imposed on him or her and his or her name will be published accordingly.

Part of the efforts to reduce greenhouse gas emissions in the energy sector is also the recently effected transfer of specific lignite power plants into a remunerated reserve position for four years, followed by the final shutdown of operations under the revised EnWG.

iii Promotion of renewable energy sources

Greenhouse gas emissions, in particular in the energy sector, are indirectly being reduced by the promotion of electricity production from renewable energy sources. In recent years, the renewables share within the overall production of electricity in Germany has increased to approximately 33.3 per cent in 2017 and is envisaged to further increase to 40 to 45 per cent in 2025, 55 to 60 per cent in 2035 and at least 80 per cent in 2050.

In Germany, different statutory support mechanisms have been in place since 1991. Since 2000, the applicable regulations have been set out in the EEG. The type and amount of support generally depend on the time the installation first commenced operation and the type of renewable energy. Although the promotion system has been changed constantly, the applicable legal framework for a renewable energy installation is being grandfathered for a period of 20 calendar years plus the year in which the installation was commissioned. By consequence, different promotion systems apply to different installations. However, there are four main types of promotion schemes: fixed feed-in tariffs, voluntary direct marketing with market premium, mandatory direct marketing with market premium and tender procedures with a 'pay-as-bid' remuneration.

Until 2012, fixed feed-in tariffs were the only applicable statutory support scheme. These tariffs are paid to the operators of the installation by the connecting grid operators and ultimately charged to the end customers in form of the EEG levy. Beginning with the EEG 2012, operators of RES installations can also opt to sell their electricity directly to third parties. Any shortfall of the technology specific market values compared to the statutory feed-in tariffs is compensated through a market premium. While direct marketing was optional under the EEG 2012 and remains optional for existing installations, it became mandatory for most new installations under the EEG 2014 in order to facilitate further integration of renewable energies into the electricity market. Finally, under the EEG 2017, funding for certain installations is no longer based on fixed statutory tariffs since 1 January 2017, but rather subject to an auctioning system resulting in a 'pay-as-bid' remuneration. The federal government recently decided to publish additional invitations for tenders amounting to 4 gigawatts of solar energy systems and 4 gigawatts for onshore wind installations up to the end of 2021.

The promotion of offshore wind installations is regulated separately in the Wind Offshore Act, which prescribes two auction procedures in 2017/2018 for an interim period for installations commencing operation between 2021 and 2025. Each auction covers capacities of 1550MW. As of 2021, annual auctions will be held for projects commencing operations from 2026 onwards. In this Danish model, the competent authority will determine and pre-evaluate specific areas for offshore wind farms, and bidders will compete in the auction for the right to construct an offshore wind farm in the designated areas.

In addition to the EEG, the Act on the Promotion of Renewable Energies in the Heat Sector promotes the use of renewable energy sources for the production of heat also with the aim of reducing the use of fossil fuels. The promotion is mainly in the form of obligations to use renewable energy sources in new houses and – depending on the laws of the federal states – also in existing buildings. Such use is also partly state funded.

In the transport fuel sector, the use of renewable energy in the form of biofuels is promoted by tax allowances and a mandatory marketing quota of biofuels for oil companies under the BImSchG.

iv Energy efficiency regulations

Energy efficiency is another way of indirectly reducing greenhouse gas emissions. An important part of energy efficiency is the utilisation of heat generated in the regular process of electricity production via the promotion of CHP installations. Whereas CHP based on renewable energies is promoted under the EEG, CHP based on fossil fuels is promoted by the KWKG. Operators of CHP plants receive a bonus on their electricity production per kWh, which is ultimately charged to the end customers in form of the KWKG levy.

Under a recently published new bill, the promotion for CHP is going to decrease in the future. Existing CHP plants with an electrical power of more than 300MW will not receive any more funding from the year 2018 onwards. Existing installations with electrical power exceeding 50 MW will receive lower funding compared to the 1.5 ct/kWh currently applicable under the KWKG.

The Act on Economisation of Energy and the Ordinance on Economisation of Energy prescribe energy-saving construction of buildings and energy-saving operations. The Act on Energy Efficiency Labelling and the Ordinance on Energy Efficiency Labelling require information on the energy consumption of the specific product. The Energy-related Products Act prescribes an eco-friendly design for energy-using products as well as products influencing the energy use of other products. The federal government is currently preparing a bill on 'building energy'. The bill requires all publicly owned and used (non-resident) buildings to be constructed as nearly zero-energy buildings from 1 January 2019. This requirement will apply to all newly constructed buildings as of 1 January 2021.

v Climate protection on the level of the federal states

Based on the international, European and national regulations regarding climate protection, several of the German federal states have adopted climate protection plans and some have also adopted climate protection acts, such as the Climate Protection Act North Rhine-Westphalia. Under this Act, greenhouse gas emissions in North Rhine-Westphalia shall be reduced by at least 80 per cent until 2050 compared to the year 1990. The related climate protection plan of North Rhine-Westphalia includes 220 specific measures to implement this goal.

VIII OUTLOOK AND CONCLUSIONS

Germany has always considered itself a frontrunner for climate protection. However, the latest climate protection report shows that – if nothing were to change – Germany will miss its aim to reduce the annual greenhouse gas emissions. Instead of a reduction of 40 per cent by 2020 compared to 1990, Germany would only be able to reduce greenhouse gas emissions by 32 per cent. This is due to significantly higher economic and population growth rates in addition to lower prices for oil, coal and gas than expected. Whereas emission reductions in the industry and energy sector are expected to just fall a little short of the 40 per cent mark, hardly any reductions are expected in the transport sector.

The federal government has declared its intent to reach its climate target as soon as possible and confirmed its aim to reduce greenhouse gas emissions by 55 per cent by the year 2030. Further, the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety is currently preparing a climate protection act, which is supposed to enter into force in 2019 and assign specific reduction targets, in particular for the economy, transportation and the agricultural sector.


Footnotes

1 Dirk Uwer is a partner and Moritz Rademacher is a senior associate at Hengeler Mueller Partnerschaft von Rechtsanwälten mbB.