Germany’s Coalition Agreement Threatens to Break International Fossil Fuel Finance Commitments

Following several weeks of negotiations, the incoming German government has presented a draft coalition agreement outlining its plans for the coming years. 

While the agreement still requires parliamentary approval, it is already drawing controversy and raising concerns about Germany’s commitment to ending fossil fuel finance. Key proposals include the withdrawal of the so-called “heating law,” which was intended to phase out fossil fuel-based heating systems, and replace it by a new Building Energy Act, which the government says will be more technology-neutral, flexible, and simplified.

Many see these shifts—particularly the increased reliance on gas and carbon capture and storage (CCS)—as a worrying step back from Germany’s climate and fossil fuel phase-out commitments.

Germany is breaking its climate promise. Despite committing in 2021 to end international public finance for fossil fuels under the Clean Energy Transition Partnership (CETP), Germany is now the leading violator of that agreement. Since the end of 2022, it has approved $1.5 billion in fossil fuel finance across 11 projects, more than any other signatory. 

This blatant backslide undermines international trust and weakens global efforts to phase out fossil fuels. 

In response: 

Maria Alejandra Vesga, Legal Officer at Oil Change International, said:

“The CETP has been a game-changer in curbing fossil fuel finance. At Oil Change International we’re committed to making sure governments keep their promises. Signatories like Germany must stay on track. International fossil fuel finance drives the climate crisis, deepens global inequality, and delays the clean energy transition. By continuing to back fossil projects, especially in developing countries, German institutions are locking in carbon-heavy infrastructure and reinforcing a debt-fossil fuel trap that worsens environmental and social harms.”

Regine Richter, Energy and Finance Campaigner at Urgewald said: 

“The German government seems to listen only to short term industry interests to export equipment for fossil fuel projects. This is very short-sighted in the light of climate catastrophe. The announced ‘flexibilisation’ of climate guidelines must not mean allowing even more fossil exports.”

Sources: 

• https://www.deutschland.de/en/topic/business/transforming-industry-in-germany 
• https://www.deutschland.de/en/topic/politics/coalition-treaty-new-federal-government-germany-overview 
• https://www.dw.com/en/germany-cdu-csu-and-spd-announce-coalition-government-deal/live-72180120 
• https://www.cleanenergywire.org/factsheets/what-germanys-aspiring-coalition-government-agreement-means-climate-and-energy
• https://www.politico.eu/article/germany-coalition-deal-eu-90-percent-climate-target-carbon-credits-emissions/