The parties likely to form Germany's next government took a significant step this week to explicitly recognize carbon dioxide removal (CDR) as a necessary component of Germany's climate strategy.

The coalition partners — Christian Democratic Union (CDU); its sister party, the Christian Social Union (CSU); and the Social Democratic Party of Germany (SPD) — presented yesterday a draft agreement that acknowledges emissions reductions alone will not be enough to achieve the country's climate goals. The agreement also enables the use of foreign carbon credits to reach the country's 2040 climate target.

The agreement highlights the need for “permanent and sustainable negative emissions” to address unavoidable residual emissions. This approach is framed as part of meeting the EU's 2040 interim climate target of reducing CO₂ emissions by 90 percent compared to 1990 levels. The coalition agreement allows for up to three percentage points of this target to be met through high-quality carbon removal projects in non-European partner countries, although domestic emissions reductions remain the priority.

"Including carbon removals in the coalition agreement is a strong signal. Germany is acknowledging that true net zero is not possible without CDR,” says Magnus Drewelies, CEO of CEEZER. “Now is the time to turn our attention to combining speed, quality, and market-based mechanisms to position Europe as a leading hub for CO₂ removal.”

The agreement’s timing is especially welcomed at a time when other markets are pulling back, “Germany has the chance to take the lead both economically and in terms of climate policy,” says Drewelies, noting that the agreement creates a foundation for greater accountability, improved market conditions, and stronger investment incentives for carbon removal solutions — both nationally and across Europe.

Key climate strategy mechanisms in the coalition agreement

The coalition agreement explicitly recognizes that a portion of Germany's climate targets can be achieved through negative emissions technologies. This recognition comes as part of meeting the EU's 2040 interim climate target of reducing CO₂ emissions by 90 percent compared to 1990 levels.

As a decisive shift, the parties have explicitly agreed to work for an integration of CDR into the EU Emissions Trading System (ETS), a move that will create secured demand for carbon removal across Europe while ensuring permanent, high-quality removal credits are prioritized. While this has been on the EU policy roadmap for a while, the commitment by Europe’s largest economy is a catalytic signal.

In addition, another mechanism has potential for European buyers and global project developers: The agreement allows for up to three percentage points of the EU's 2040 target to be met through high-quality carbon removal projects in non-European partner countries, although domestic emissions reductions remain the priority. It seems most likely that VCM projects that are also certified under Article 6 under the Paris Agreement will be recognized as a complementary tool to reach climate targets, underscoring the increasingly global nature of carbon markets and climate policy.

The agreement also addresses enabling infrastructure, pledging to “immediately” adopt legislation for carbon capture, transport, use and storage (CCU/CCS), particularly for hard-to-abate sectors. Additionally, a “smooth transition" is planned between Germany's national emissions trading system and the EU's ETS2, scheduled to take effect in 2027, with instruments to avoid cost jumps for both citizens and companies.

“We want to remain an industrialised country and become climate neutral," the treaty states, emphasizing the commitment to "combining climate action, economic competitiveness and social balance, and focusing on innovation.”

Economic opportunity in climate leadership

As the U.S. shifts its climate policy focus, Germany and Europe have a strong economic opportunity to lead in carbon removal technology and implementation. (Learn more here.) 

“The key now is to align quality, scale, and market mechanisms while capturing the economic opportunity this presents for European leadership,” notes Drewelies. “Germany can position itself at the forefront of this emerging sector, creating new industries and expertise in carbon management technologies.”

While the agreement makes important strides, several opportunities remain for strengthening Germany's climate approach:

• Development of concrete support mechanisms for high-quality CDR solutions.
• Rapid implementation of Germany's announced CDR strategy.
• Technology-neutral support to build a diverse portfolio of carbon removal approaches.
• Establishment of clear standards and transparent approval procedures for CCS projects.

Learn how CEEZER can help your company integrate carbon removal into your holistic net zero strategy. Schedule call with our Solutions Team today.