On 24 April 2026, the Bundestag approved the Second Act to Further Develop the Greenhouse Gas Reduction Quota (Zweites Gesetz zur Weiterentwicklung der Treibhausgasminderungsquote). The new Act transposes the requirements of the revised European Renewable Energy Directive (“RED III”) and introduces significant changes to the current legal framework. Core elements of the Act include revisions to and increases in the greenhouse gas reduction quota as well as heightened quota compliance obligations. The Bundestag has tightened the initial bill in key respects, with the new Act now setting a significantly more ambitious greenhouse gas reduction trajectory, including increases in the reduction quota to 65% by 2040 and a stricter minimum quota for renewable fuels of non-biological origin (“RNFBO”). However, it also includes new ways of meeting the greenhouse gas reduction quota.
Background and objective
The Bundestag approved the Second Act to Further Develop the Greenhouse Gas Reduction Quota on 24 April 2026. The Act implements the requirements of Directive (EU) 2023/2413 of the European Parliament and of the Council of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources and repealing Council Directive (EU) 2015/652) (“RED III”), and of Regulation (EU) 2023/2405 of the European Parliament and of the Council of 18 October 2023 on ensuring a level playing field for sustainable air transport (“ReFuelEU Aviation”). The new legislation goes beyond merely implementing the EU minimum requirements under RED III, particularly in its revisions to the greenhouse gas reduction quota. It also focuses on measures to scale up Germany’s hydrogen economy and prevent fraud (evident in upstream emission reduction projects) when renewable fuels are counted towards the greenhouse gas reduction quota. The Act accordingly provides for amendment of the relevant provisions of the Federal Emissions Control Act (Bundes-Immissionsschutzgesetz, “BImSchG”) and its 37th and 38th implementing ordinances (Verordnung zur Durchführung des Bundes-Immissionsschutzgesetzes, “BImSchV”).
The version of the Act adopted by the Bundestag incorporates the recommendations made by the Environment, Climate Action, Nature Conservation and Nuclear Safety Committee on 22 April 2026. Developed through numerous ministerial drafts and government amendments (see Significant changes during the legislative process: German cabinet approves draft Second Act to Further Develop the Greenhouse Gas Reduction Quota | Gleiss Lutz; Implementing the RED III Directive – German Government drafts second greenhouse gas reduction quota bill | Gleiss Lutz; Revised draft bill shifts the goalposts for the greenhouse gas reduction quota | Gleiss Lutz) it remains broadly consistent with the final bill but introduces stricter provisions in several key areas.
These include a significantly steeper greenhouse gas reduction trajectory from 2027, a near doubling of the RFNBO sub-quota and an earlier phase-out of the multiplier for counting charging electricity towards the greenhouse gas reduction quota. At the same time, however, the recognition of recycled carbon fuels (“RCFs”) as eligible for counting gives companies additional compliance options. Below we outline the key differences between the Act and the bill (re the latter see: Significant changes during the legislative process: German cabinet approves draft Second Act to Further Develop the Greenhouse Gas Reduction Quota | Gleiss Lutz).
Key differences compared to the bill
The greenhouse gas reduction quota is the primary climate-policy steering instrument in the transport sector. Pursuant to section 37a et seq. BImSchG, fuel suppliers are obliged to cut the greenhouse gas emissions of their fuels by a given percentage per compliance year. Sustainable biofuels, electricity-based fuels produced from green hydrogen, and the direct use of electricity in road vehicles with electric powertrains can be credited towards meeting the greenhouse gas reduction quota. Compared to the bill, the new Act makes more far-reaching changes to the greenhouse gas reduction quota and to the mechanisms for meeting it, notably through the following:
Revised and stricter mandatory greenhouse gas reduction quota targets in the period up to 2040: Starting from the 2027 compliance year, the new Act significantly increases the greenhouse gas reduction quota compared to the bill. The increases range between 1.5% (2027 to 2030) and 6% (from 2036 onwards). Particularly in the 2030s, the markedly steeper reduction trajectory significantly increases the need for alternative compliance options for obligated parties. The new Act contains the following quotas:
2027: 17.5% (bill: 16%)
2028: 19.5% (bill: 18%)
2029: 22.5% (bill: 21%)
2030: 26.5% (bill: 25%)
2031: 30% (bill: 28.5%)
2032: 33% (bill: 31.5%)
2033: 36% (bill: 33%)
2034: 38% (bill: 35%)
2035: 41% (bill: 36%)
2036: 46% (bill: 40.5%)
2037: 51% (bill: 45%)
2038: 56% (bill: 49%)
2039: 61% (bill: 54%)
2040: 65% (bill: 59%)
RCFs as a new compliance option: Pursuant to section 37a(5), no. 9 BImSchG (new version), starting from the 2027 compliance year, RCFs will also count for the purposes of the greenhouse gas reduction quota provided that the detailed requirements have been specified in a statutory ordinance under section 37d(2), sentence 1, no. 13 BImSchG (new version) (also newly introduced by the Act). This integrates a further category of fuels into the greenhouse gas reduction quota system, with potential to create additional flexibility for those with obligations under it.
Double counting of biogenic hydrogen: To promote the development of technologies for producing hydrogen from advanced biogenic residues, section 13(4) and (5) 37th BImSchV (new version) allows for biogenic hydrogen to count twice towards the greenhouse gas reduction quota.
Gradual abolition of the triple counting of charging electricity: Section 5(3) 38th BImSchV (new version) amends the multipliers for counting charging electricity in road vehicles. In place of the timetable envisaged in the bill (factor of 2.5 from 2032 and of 2 from 2033), the factor of 3 applying since 2024 will only be reduced to 2 from 2035 and then to 1 from 2036. Based on the Committee’s statement of reasons, this is driven by the forthcoming changes to EU fleet emissions targets. Section 7 38th BImSchV (new version) also introduces an increased multiplier for electricity consumed by heavy commercial vehicles such as buses and lorries in order to promote the electrification of these vehicle classes (factor of 4 from the 2027 calendar year onwards, 3.5 from 2035, 3 from 2036, 2.5 from 2037, 2 from 2038, 1.5 from 2039 and 1 from 2040).
Expanded regulatory powers: Compared to the bill, section 37d(2) and (2a) of the new Act grants the Federal Government and individual ministries expanded powers to issue ordinances.
Section 37d(2), no. 21 BImSchG (new version) authorises the Federal Government to limit how far certain biofuels derived from animal fats may count towards the greenhouse gas reduction quota and to regulate the verification procedure.
Notwithstanding sections 37b(5) and 37b(8) BImSchG (new version), section 37d(2), no. 22 BImSchG (new version) empowers the Federal Government to exclude renewable energy carriers used outside land transport from counting towards the greenhouse gas reduction quota in order to avoid negative effects on the greenhouse gas reduction quota market.
In addition, section 37d(2), no. 13 BImSchG (new version) expands the regulatory authority to allow existing compliance options to be specified in line with RED III (see “RCFs as a new compliance option” above).
- Section 37d(2a) BImSchG (new version) also introduces autonomous regulatory powers for the Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety (Bundesministeriums für Umwelt, Klimaschutz, Naturschutz und nukleare Sicherheit), acting in agreement with the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie) and the Federal Ministry of Agriculture, Food and Regional Identity (Bundesministerium für Landwirtschaft, Ernährung und Heimat), to stipulate that biofuels shall only count towards the greenhouse gas reduction quota if the biomass used meets certain ecological and social requirements for sustainable production and the protection of natural habitats, and the biofuel achieves a defined level of greenhouse gas savings.
Higher RFNBO sub-quota: Entities subject to the greenhouse gas reduction quota must place a minimum percentage of RFNBO on the market each year. Compared to the bill, the new Act substantially raises the minimum RFNBO percentages contained in section 3b 37th BImSchV from the 2030 compliance year onwards. The purpose is to boost demand for hydrogen from renewable sources and incentivise the scaling up of the hydrogen economy. The new Act contains the following quotas:
From 2030: 1.5% (bill: 1.2%)
From 2032: 3.0% (bill: 1.5%)
From 2033: 3.5% (bill: 1.5%)
From 2034: 4.0% (bill: 2.5%)
From 2035: 5.0% (bill: 2.5%)
From 2036: 6.0% (bill: 4.0%)
From 2037: 7.0% (bill: 5.0%)
From 2038: 8.0% (bill: 6.0%)
From 2039: 9.0% (bill: 7.0%)
From 2040: 10.0% (bill: 8.0%)
Co-processing for aviation fuels: The new Act extends the scope of the 37th BImSchV to aviation biofuels pursuant to Article 3, point (7), letter (b) Regulation (EU) 2023/2405, insofar as produced by co-processing biological raw materials with mineral oil-based oils. A new section 12(6) has therefore been added to the 37th BImSchV, requiring that the biological share be determined using an authorised main testing method under Delegated Regulation (EU) 2023/1640.
Conclusion and outlook
The amendments to the Federal Government’s bill go beyond the minimum requirements set by RED III. While this may enhance long-term planning and investment certainty, it also poses challenges for entities subject to the greenhouse gas reduction quota. According to the Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety, the greenhouse gas reduction quota is also set to become the strongest driver in scaling-up the hydrogen economy over the next five years. The RFNBO minimum obligation of 1.5% in 2030 is intended to stimulate investment in around two additional gigawatts of electrolyser capacity in this period.
Indications that the regulation of the greenhouse gas reduction quota will continue to evolve over the coming years can be seen in the Bundestag’s requests to the Federal Government, issued alongside the Act’s adoption. These include requests for the Federal Government to consider further anti-fraud measures, such as granting authorities a veto over the appointment of validators and certifiers and introducing criminal sanctions for misconduct by validators and accreditors. The Bundestag has also called for the E5 fuel availability requirement under the 10th BImSchV to be relaxed in the near future so that E5 need not be offered at every filling station and for the 35th BImSchV to be amended to exempt purely electric vehicles from the environmental sticker requirement.
The Federal Council decided on 8 May 2026 not to call on the Mediation Committee, meaning that the Act will enter into force shortly after being signed by the Federal President and published in the Federal Law Gazette. It is therefore anticipated that the implementation deadline of 21 May 2026 will be able to be met. Affected economic operators should also be prepared for the new measures to apply retroactively from the start of the 2026 compliance year since the greenhouse gas reduction quota is calculated on the basis of annual emissions.
Forward
