Germany announces climate protection package

Germany announces climate protection package

23 September 2019

The German Government's Climate Cabinet has announced a climate protection package that includes a further reduction in the company car tax rate and increased ′environment bonus' incentives for electric vehicles (EVs) as well as the expansion of the charging infrastructure.

The new climate protection package maintains the previously announced target of at least seven million EVs registered on German roads by 2030.

In order to further EV uptake, the proposed extension beyond the end of 2021 to the year 2030 of the tax incentive for EVs that are registered as company cars has been ratified. An employee in Germany who uses his company car privately was previously taxed 1% of the list price but this has been halved to 0.5% for electric vehicles (EVs) purchased or leased since 1 January 2019.

The company car tax rate will be further reduced to 0.25% for EVs costing less then €40,000. However, the exemption from motor vehicle tax will only be extended until 31 December 2025, and the 10-year tax exemption will be limited until the end of 2030.

Similarly, the Umweltprämie (environmental bonus) for the purchase of battery electric vehicles (BEVs), plug-in hybrids (PHEVs) and fuel-cell vehicles (FCVs) will also be extended beyond 2021 and, from 2023, will increase for EVs costing less than €40,000. The climate package does not specify a figure but the Transport Ministry has been considering a purchase incentive of up to €4,000 for EVs. Electric taxis could benefit from an €8,000 subsidy and used electric cars could receive €500.

Aside from incentivising EVs, the German Government is also considering a reform of car taxation, which would focus more on CO2 emissions. Registration taxes for new cars increase for each gram of CO2 above 95 grams per kilometre but the cost implications are negligible.

Charging infrastructure

Although there have been discussions around establishing one million charging stations in Germany, the climate protection package discusses a figure of one million charging points. This subtle semantic difference is crucial as charging stations typically offer at least two charging points and often feature multi-chargers.

The German Government intends to present a ′Master Plan Charging Column Infrastructure' this year and ′will make binding provisions that charging points will be offered at all petrol stations in Germany and set up in customer parking spaces,' according to an official statement.

However, the Government recognises that most charging takes place at home or at work and so the private and commercial charging infrastructure will also benefit from subsidies, although figures have not been provided. The regulations surrounding the establishment of private and commercial charging stations have also been simplified in the Housing Property Act (WEG) and in tenancy law, whereby ′landlords are required to tolerate the installation of charging infrastructure.'

Public transport initiatives

Funding for public transport will be increased to €1 billion annually from 2021 and to €2 billion from 2025. This is intended to expand the public transport network and to switch bus fleets over to alternative powertrains including electric, hydrogen and biogas.

The Passenger Transport Act is also to be amended so that the German states and municipalities can set their own emission requirements for buses, taxis and rental cars. This could ultimately lead to cities only issuing operating permits for clean vehicles.

By 2030, the Government and Deutsche Bahn plan to invest a total of €86 billion in the rail network. From 2020 to 2030, the railways will receive €1 billion annually to modernise, expand and electrify the rail network. Freight transport is a key area of focus, with the modernisation intended to increase the transport of goods on the rail network, reducing road transport and emissions in the process.