Policy Overview
Germany has unveiled draft legislation that would cut greenhouse gas intensity of transport fuels by fifty nine percent by 2040, marking one of the most progressive roadmaps in Europe. The proposal aligns national policy with the European Renewable Energy Directive and provides investors with a transparent timeline stretching well beyond the decade.
Starting in 2026 suppliers must achieve a twelve percent reduction, rising to twenty five percent by 2030 and thirty six percent by 2035. The steep but predictable gradient enables gradual capital planning for biofuel, green hydrogen and e fuel projects across refineries and distribution infrastructure.
Legislative Highlights
- Elimination of double counting credits ensures every litre of advanced biofuel delivers measurable physical emissions savings.
- Palm oil derived fuels will be excluded from quota eligibility after 2026, stimulating demand for local low impact feedstocks.
- A dedicated sub quota for renewable fuels of non biological origin reaches eight percent by 2040, accelerating hydrogen investment.
Beyond climate benefits, the package strengthens market integrity through on-site audit rights for foreign plants. This measure rewards producers who welcome transparency and discourage fraudulent exports. Energy traders foresee a tighter supply of preferred feedstocks, which can translate into higher margins for efficient processing facilities within Europe.
A less obvious implication lies in the multiplier that gradually declines to one by 2040 for renewable hydrogen. Developers that commission electrolyzers early will benefit from higher credit factors during the initial years, improving project payback and creating competitive first mover advantages for German airports and trucking corridors.
Conclusion
By combining ambitious targets, strict oversight and clear incentives, Germany is positioning its mobility sector to thrive in a carbon constrained world. The draft law delivers the policy certainty needed for significant private investment in cleaner fuels and supporting infrastructure.