The CDU/CSU and the SPD have finalised their coalition agreement. On 9 April 2025, the future coalition partners presented a political declaration of intent spanning over 100 pages. The product of intensive negotiations, the document sets out key policy goals for the next legislative term, covering issues ranging from climate action to digitalisation. This article summarises the coalition’s plans for the infrastructure and energy sectors over the next four years.
A. Introduction
After weeks of negotiations, the CDU/CSU and SPD have reached a new coalition agreement that will shape Germany’s political course in the years to come. The agreement focuses on two key priorities: modernising infrastructure and overhauling energy supply.
Germany faces major challenges calling for decisive political action: poorly maintained roads, slow broadband rollout and a shifting energy landscape. The coalition has set clear priorities, including investments in rail and road networks, new stimuli for housing construction and a faster expansion of renewable energies. The new government also aims to simplify approval procedures, accelerate planning and ensure that the switch to a more climate-friendly energy supply occurs in a socially equitable manner. These plans warrant a closer look at what exactly the coalition intends for the infrastructure and energy sectors.
B. Infrastructure
Accelerated planning and approvals: The coalition intends to make sweeping changes to planning, construction, environmental, procurement and (administrative) procedural law. Building on the national “Pact for Accelerating Planning, Approval and Implementation”, concluded with the federal states in November 2023, the new government also plans to launch a European initiative to speed up planning and approval. A key aim is to have federal spatial planning law recognised as being in the overriding public interest in order to help speed up infrastructure projects.
The coalition also seeks to introduce standardised procedural law (“one for many”) for infrastructure projects, making the process more flexible and reducing procedural steps. Public hearings may become optional, and plan approval (Plangenehmigung) is to be become the standard default procedure. Replacement constructions would generally be exempt from this requirement. Planning and approval processes will be fully digitalised and regulatory requirements simplified.
The CDU/CSU’s proposal to limit representative actions, which was included in the exploratory paper, was dropped from the final agreement.
Housing construction: In the housing construction sector, the coalition has announced plans to revise the Building Code (Baugsetzbuch, “BauGB”) in two stages. In the first step, noise control regulations will be simplified while conversion protecton under section 250 BauGB and the designation of areas with a tight housing market will be extended by five years (“turbo-charged housing construction”). The second phase will involve a broader reform aimed at speeding up construction. This entails revising the Technical Instructions on Noise Abatement (TA Lärm), construction planning law and the Technical Instructions on Air Quality Control (TA Luft). Building standards will be simplified and the binding nature of standards set by self-governing bodies will be reduced to essential safety-related requirements.
The current Buildings Energy Act (Gebäudeenergiegesetz) adopted by the previous coalition will be replaced by a new, technology-neutral version. Additional measures include an end-of-waste regulation in the Ordinance on Substitute Building Materials (Ersatzbaustoff-VO) and an action plan for bio-based and energy-intensive building materials.
- Road transport: The coalition plans to use financial resources from the special infrastructure fund to tackle the backlog in road maintenance, focusing on bridges and tunnels. To address the shortage of drivers, professional driver qualifications are to be reformed and infrastructure conditions improved. Licensing for heavy haulage and abnormal loads will be streamlined. Efforts to expand the nationwide charging inetwork will be intensified. Germany is also to become a leading market for autonomous driving, with model regions developed with and co-financed by the federal states.
- Rail transport: The coalition is committed to increasing investment in the German rail network, drawing on the special infrastructure fund, the federal budget and track–access charges. A new, statutory “infraplan” will govern planning processes and include a binding financing commitment (“rail infrastructure fund”). The overhaul of the high-performance corridors will continue, financed from the special infrastructure fund. A digitalisation offensive is also planned, focusing on digital control centres and full rollout of European Train Control System (ETCS) equipment. The climate transformation fund (CTF) will support accelerated electrification of the network. Cross-border links to Poland and Czechia will be expanded and rail infrastructure developed to implement the Deutschlandtakt – Germany’s integrated rail timetable.
Waterway and air transport: Waterways, locks and sea and inland ports will be modernised and expanded, with additional financing allocated under the principle of “maintenance before new construction”.
In aviation, the coalition aims to modernise the sector with a focus on fair competition and decarbonisation. There are also plans to improve international connectivity at German airports to boost economic growth. The 2024 increase in air traffic tax will be reversed, and aviation-specific taxes, fees and charges will be reduced. European airlines are not to be placed at a disadvantage by the Sustainable Aviation Fuel (SAF) quota. Half the revenue from ETS 1 for aviation will be used to promote SAF adoption. Regional airports will continue to receive support, particularly for air traffic control costs.
C. Energy
- Climate protection: The coalition is committed to achieving climate neutrality in Germany by 2045 and to upholding the Paris Agreement on climate change. To achieve these goals, CO2 and other greenhouse gas emissions will be reduced and the European Climate Change Act and the EU Emissions Trading System will be adapted, e.g. to allow negative emissions to be factored in. Germany will support the EU’s interim climate target for 2040 to the extent that Germany does not need to reduce its CO2 emissions more than required by the German interim climate target for 2040. Safeguards against carbon leakage will be implemented to protect industrial value creation.
Emissions trading: The coalition supports further development of the European Green Deal and the Clean Industrial Act. Carbon pricing will remain in place and emissions trading will be expanded internationally as well, with attention to competitiveness and social acceptance. To create a level playing field across Europe, a smooth transition from Germany’s Emissions Trading Act (Brennstoffemissionshandelsgesetz) to the EU’s Trading System 2 (ETS 2), set to take effect in 2027, is planned. Sharp increases in carbon price for consumers will be avoided wherever possible, while carbon revenues are to be returned to citizens. Sectors heavily affected by the transition and facing competitive disadvantages will be compensated.
These measures – returning carbon revenues to the public and compensating impacted sectors – were not included in the exploratory agreement.
- Energy prices: The coalition aims to reduce electricity prices by at least 5 cents per kWh. Measures include reducing the electricity tax to the EU minimum, lowering surcharges and grid charges, introducing a capped industrial electricity price as well prolonging electricity price compensation and extending it to other sectors. The gas storage surcharge will be removed and the government will conclude long-term, more secure and more affordable gas supply contracts.
- Grids: Grid expansion will be prioritised, with upgrades to both transmission and distribution networks. New overhead transmission lines will also be erected where feasible. Critical infrastructure will be made more robust and will be better protected, in line with the NIS 2 Directive. Grid connection costs for existing company sites undergoing transformation will be reduced and approval procedures simplified. The geographic scope for direct physical power supply to industry will be expanded, while maintaining a single electricity bidding zone.
- Flexibilisation: The coalition agreement foresees improved flexible use of renewables across sectors. Energy storage systems will be designated as being in the overriding public interest and given the status of privileged renewable energy generation plants. Support will also go to grid-friendly technologies such as bidirectional charging for electric vehicles and home storage systems.
- Financing: A new energy infrastructure investment fund will be established, combining public guarantees and private capital.
- Renewable energies: The coalition will accelerate the expansion of solar, wind, biomass, hydropower and geothermal energy in a way that supports the power grid. Renewable installations should eventually become self-sustaining on the market. Their expansion will be driven by market-based instruments supported by a secure investment framework aimed at optimising the market integration of renewables.
- Solar energy: The coalition aims to further promote solar energy and its storage with operators of existing PV installations receiving incentives for feeding electricity into the grid in ways that support the grid and system stability. The coalition intends to review the Solar Peak Act (Solarspitzengesetz), particularly its new provisions on tariffs during periods of negative electricity prices and rules for direct marketing. Registration procedures will be simplified through digitalisation and standardisation.
Wind energy: The expansion of wind energy will continue. The interim targets set by of the Wind Energy Area Requirements Act (Windflächenbedarfsgesetz) for 2027 will remain unchanged, while the land-use targets for 2032 are to be evaluated. There are also plans to review the reference yield model with a view to cost efficiency and to cap the rents permitted under the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz) for land used for subsidised wind turbines. To strengthen offshore wind energy and implement the first hybrid offshore grid connection/interconnector, cooperation with other North Sea coastal states is planned. The coalition also intends to adapt the Offshore Wind Energy Act (Windenergie-auf-See-Gesetz) to allow for a hybrid connection (cable and H2 pipeline) of wind farms.
There was still disagreement in the initial exploratory paper on whether to maintain the 2% land-use target for wind energy or to allow this target to be met alternatively through a green electricity target.
- Bioenergy: The flexibility potential of biomass is to be harnessed. To achieve this, while taking cost efficiency and land use into account, the existing caps are to be reviewed and facilitating structures and measures established. The focus is especially on better use of residues.
- Hydropower: Existing potential in both small-scale and large-scale hydropower, as well as in pumped storage power plants, is to be fully utilised.
- Geothermal energy: The coalition plans to swiftly introduce an improved Geothermal Energy Acceleration Act (Geothermie-Beschleunigungsgesetz) and to establish suitable instruments to mitigate exploration risks.
- Power plant strategy: The coalition agreement provides for up to 20 GW of gas-fired power generation capacity to be built by 2030. Reserve power plants are to be used not only to avoid supply bottlenecks, but also to stabilise electricity prices.
- CCS/CCU: A legislative package is to be adopted without delay to enable the capture, transport, use and storage of carbon dioxide, in particular for hard-to-abate emissions in the industrial sector and from gas-fired power stations. Carbon capture and storage (CCS) and carbon capture and usage (CCU) facilities and pipelines are to built and designated as being of overriding public interest. In this context, the coalition considers ratification of the London Protocol and the creation of bilateral agreements with neighbouring countries to be a top priority. Both off- and onshore storage of CO2 are to be made possible, including the introduction of a clause allowing Germany’s federal states to set their own statutory rules. Direct air capture is viewed as a technology for the future that will boost negative emissions.
- Hydrogen: The coalition wants to speed up the development of a hydrogen economy using climate-friendly hydrogen from a variety of sources. The long-term goal is a switch to climate-neutral hydrogen, with more reliance on renewables from both Germany and abroad. This is to be backed up by an EU hydrogen strategy, with efforts made to have this implemented as soon as possible. The coalition envisages a Germany-led European hydrogen initiative that will require a less bureaucratic certification scheme for climate-friendly energy sources. It also envisages a hydrogen core network that connects industrial centres across the country, including eastern and southern Germany. The plan will include hydrogen storage facilities.
- Coal: The plan is still for Germany to phase out fossil fuels by no later than 2038. The timetable for taking coal-fired power plants off the grid or into reserve will depend on how quickly the number of dispatchable gas-fired power stations can be increased.
- Nuclear energy: Following discussions, the coalition agreement does not provide for the nuclear power plants most recently shut down to be recommissioned.
- Combined heat and power: The coalition wants to modify the Combined Heat and Power Act (Kraft-Wärme-Kopplungsgesetz), before the end of 2025, to meet the challenges of climate-neutral heat supply, harness flexibilities and introduce a capacity mechanism.
- Energy efficiency: The coalition plans to amend and streamline the Energy Efficiency Act (Energieeffizienzgesetz) and the Energy Services Act (Energiedienstleistungsgesetz), bringing them in line with EU law.
There had been disagreement on whether to harmonise them with EU regulations or retain Germany’s stricter legal provisions.
- Heating: The coalition plans to retain the gas networks required to meet Germany’s heat supply needs and to rapidly transpose the EU Internal Gas Market Directive into German law. The necessary investments will be financed from both public and private sources. Federal funding for efficient heating networks (Bundesförderung für effiziente Wärmenetze) will be put on a statutory footing. Increased funding will also be required to support the construction of local and district heating networks. Two further statutes will be revised and brought up to date as soon as possible, namely the Ordinance on the General Terms and Conditions for the Supply of District Heating (AVBFernwärme-Verordnung) and the Ordinance on Heat Supply (Wärmelieferverordnung). The coalition agreement also calls for an increase in price supervision and the setting up of an unbureaucratic dispute resolution body.
- State shareholdings: The coalition plans to review public investment in the energy sector, with the goal of reducing the shareholdings acquired by the state during the gas crisis to strategic shareholdings.
D. Conclusion
The coalition agreement signed by the CDU/CSU and SPD aims to modernise Germany’s infrastructure and restructure the country’s energy supply.
As regards infrastructure, it prioritises the acceleration of planning and approval procedures as well as the expansion of rail, road and housing. Particularly noteworthy are the steps towards digitalisation and the planned streamlining of procedures, which will allow projects to be implemented more quickly. Nevertheless, it remains to be seen how quickly and effectively the planned reforms will be realised in practice.
In the energy sector, the new coalition is focused on expanding renewable energies and creating a flexible, efficient energy market. Introducing an investment fund for energy infrastructure and continuing to develop emissions trading will open up opportunities for a sustainable and market-based transformation.
Forward
