Dispatch from Germany | July ‘26
*** Our weekly Dispatches provide an overview of the most relevant recent and upcoming developments for the shift to climate neutrality in selected European countries, from policy and diplomacy to society and industry. For a bird's-eye view of the country's climate-friendly transition, read the respective 'Guide to'. ***
17 Jul 2026, 11:45
Sören Amelang, Carolina Kyllmann, Benjamin Wehrmann, Julian Wettengel
Stories to watch in the weeks ahead
- Regional votes – Voters in three German states are heading to the polls in September in what shapes up to be a real stress test for chancellor Friedrich Merz and his government. The real focus will be the election in Saxony-Anhalt on 6 September, where the far-right Alternative for Germany (AfD) has a shot at an absolute majority in parliament, and therefore at leading a regional government for the first time. In Mecklenburg-Western Pomerania and Berlin, current polls for the 20 September elections show Merz’s CDU and coalition partner the SPD losing seats in parliament. The rise in support for right-wing populist parties is set to increase the difficulties of pursuing more ambitious climate action, both in Germany and Europe.
- The clock is ticking on energy policy reforms – The government has yet to agree on major energy policy reforms, which have been delayed for months, and time is running short. EU rules mandate that planned changes to the law governing support for renewables must be in place and approved by the European Commission by the end of the year, or member states would be unable to provide new renewables projects with support. The cabinet is aiming for an agreement in conjunction with a grid reform package, but disputes within the coalition have held up the process. A major point of contention has been the so-called “redispatch provision” proposed by economy minister Katherina Reiche, under which renewable projects in grid bottleneck “hotspots” would only be granted grid connection if they waive compensation for future curtailments. The renewable industry and environmentalists say the reform would undermine investment security and hold up the expansion of wind and solar energy. Tagesspiegel Background reported that a compromise seems close, and cabinet approval is currently scheduled for 22 July. Parliament could then debate it after the summer break. The economy ministry is also drafting a reform of the offshore wind law, eagerly awaited by industry, to get expansion back on track.
- Shaping EU climate policy – As the European Union’s biggest economy, Germany will wield a lot of influence in the negotiations shaping the EU’s post-2030 climate policy. First up is what government advisors call one of the “most important climate policy decisions of this decade”: the reform of the EU Emissions Trading System (EU ETS). The European Commission presented its proposal today (17 July), kicking off months-long talks among member states and with the European Parliament. Behind the scenes, Germany – like other member states – will have already conveyed its position to the Commission. Publicly, it has come out in favour of extending the ETS into the 2040s and changing the rules on free allowances for certain energy-intensive industries to secure competitiveness. It remains to be seen whether the German coalition will manage to speak with one voice in Brussels. Economy minister Reiche’s (CDU) recent move against EU methane emissions rules for oil and gas imports had not been agreed to within the cabinet and was against the will of environment minister Carsten Schneider (SPD), reported Table Briefings.
- Climate fund cuts – Industry and environmental NGOs have said finance minister Lars Klingbeil’s 2027 austerity plans are a missed opportunity for needed energy transition investments. The minister aims to shift 2.7 billion euros in carbon pricing revenues from the government’s key financing tool for many of the country’s energy transition and emission reduction measures – the Climate and Transformation Fund (CTF) – to the core budget. The CTF will also be topped up with money from Germany’s 500 billion euro-special fund for infrastructure and climate neutrality over the next decade, but revenues from the CO2 price remain its main source. A final decision on the budget plans is expected after the parliamentary summer break ends in late August.
The latest from Germany – last month in recap
- Step back on heating decarbonisation? – Parliament has finally adopted the disputed reform of Germany’s rules governing the phaseout of fossil fuels for heating buildings. The changes allow the installation of new oil and gas boilers in the future, but consumers must use an increasing share of green fuels. Critics such as Green Party lawmaker Katharina Dröge said the reform is a step backwards for Germany’s climate ambitions, while the government argued it restores freedom of choice for homeowners. The measure marks an end, for now, to the “heating law” controversy, but it could face challenges in court. Heating is a crucial sector for Germany’s ongoing phase-out of fossil fuels, as more than half of households still use gas boilers for heating and around a fifth heat with oil. Additionally, more than a third of district heating is also fuelled by gas.
- Germany steps on the gas – Lawmakers have given the green light to a law introducing state support for new gas-fired power plants as a backup for renewables to secure electricity supply as the country phases out coal. The first auction for the subsidies is scheduled for 8 September, but the capacity market scheme needs state aid approval from the EU. The first plants are expected to be online by 2031 – many experts believe that market forces will have pushed coal largely out of the market by then. That would be “(just) in time,” said Christoph Müller, CEO of transmission grid operator Amprion, emphasising that 2031 “is basically tomorrow.”
- Global carbon removal leadership? – A major heatwave across much of Europe brought record temperatures to Germany - almost 42°C. Extreme weather events like this will become more intense and frequent as climate change progresses. Scientists are clear that more than emission reductions will be needed as the world is set to overshoot the 1.5°C warming limit set under the Paris Agreement. Removing CO2 from the atmosphere and permanently storing it is set to become an increasingly important part of global climate action efforts. German environment minister Schneider earmarked more than 400 million euros in subsidies to kick-start a market for carbon removal technologies in the hopes the country can become a global leader. Industry players, like direct air capture start-up Phlair, have said they are ready and are calling for the inclusion of permanent removals in the EU ETS.
Julian’s picks - highlights from upcoming events and top reads
- World Cup - Olympic rehearsal in LA’s bid for climate legacy – My colleague Carolina Kyllmann is finally back from her month-long trip to Los Angeles, where she researched how the wildfire-recovering city is getting ready to host mega sporting events, and whether preparations could have lasting climate mitigation and adaptation effects. The World Cup has presented LA with a test run for the much bigger Olympic and Paralympic Games in 2028. Read Caro’s first of many stories to come.
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