Germany’s Climate Strategy in the Power Sector
Germany has long sought to lead international climate policy, championing the Kyoto Protocol and setting 1990 emissions targets. Despite setbacks in the 1990s and 2000s, Germany supported the European Union’s (EU) emissions trading system (ETS) and, following the Paris Agreement, the EU Green Deal for climate neutrality by 2050. Under Germany’s 2020 EU presidency, the 2030 emissions reduction target was raised to at least 55% below 1990 levels. Domestically, Germany’s revised climate law aims for a 65% reduction by 2030 and climate neutrality by 2045. However, current efforts may fall short of 2030 goals.
Germany’s Climate Foreign Policy Strategy, unveiled in December 2023, outlines a multifaceted approach to emissions mitigation in the power sector. The country aims to transition from fossil fuels to renewable energy and electrification. Key initiatives like the Energiewende policy focus on increasing renewable energy capacity and phasing out coal by 2038. To ensure stable domestic energy supplies and reduce dependency on Russian gas amid geopolitical tensions, Germany is focusing on importing Liquified Natural Gas (LNG) and hydrogen.
The strategy also involves building decarbonised trade relationships and supply chains. This includes promoting the export of green technologies and expertise and positioning Germany as a leader in the global green economy. The plan supports innovation in clean energy technologies and creates partnerships to open new markets for German firms, especially in emerging economies transitioning to sustainable energy systems.
A key priority is promoting inclusive sustainability transitions globally, ensuring the involvement of all stakeholders, including marginalised groups. Aligned with Germany’s values-based foreign policy, the strategy commits to human rights and social equity, supporting policies and initiatives that ensure fair labour practices, community involvement, and equitable access to the benefits of the green transition.
India’s Climate Diplomacy and Power Sector Development
India’s historical emissions are low, contributing about 4% of global emissions since the Industrial Revolution. However, as the fastest-growing large economy, India’s emissions are rising, with the International Energy Agency (IEA) estimating a 30% increase in energy demand and emissions by 2030. Despite this, India’s per capita emissions remain below the global average. Since the 1990s, India has increasingly committed to international emissions mitigation, recognizing the urgent need due to climate change vulnerabilities, technological advancements in green energy, and economic co-benefits like reduced energy dependence. Climate finance is now seen as an additional financial inflow rather than a diversion from development funds. India also aims for greater global influence through a proactive climate stance.
India’s climate priorities include ensuring affordable and reliable energy access while setting ambitious clean energy targets, aiming for renewable energy to account for 62.4% of installed capacity by 2030. The country also focuses on green industrialization, supported by performance-linked incentive (PLI) schemes for products like electric vehicles (EVs) and solar modules, along with fostering a skilled workforce for a just transition. Additionally, India relies on international private capital for clean energy infrastructure, emphasizing the reduction of green capital costs through improved risk assessments and public finance.
India’s climate diplomacy has evolved from prioritizing poverty eradication and economic development to embracing emissions reduction commitments. Initially, India opposed binding commitments for developing countries but shifted towards proactive climate action with the National Action Plan on Climate Change (NAPCC) in 2008 and a goal to reduce emission intensity by 20-25% by 2020. At the 26th United Nations Climate Change Conference of the Parties (COP26), India set a net-zero emissions target by 2070 and committed to achieving 500 gigawatts (GW) of installed renewable energy capacity by 2030. India’s per capita emissions remain low compared to other major emerging economies, with significant domestic carbon inequality.
Collaborative Initiatives
Germany and India have a long history of intergovernmental and economic relations, with India being one of the first countries to establish diplomatic ties with Germany after World War II. Key milestones include the strategic partnership agreement in 2000, the launch of Inter-Governmental Consultations (IGC) in 2011, and the Partnership for Green and Sustainable Development in 2022.
The Indo-German Energy Forum (IGEF), established in 2006, has made India one of Germany’s longest-standing partners in climate action and energy transitions, with cooperation facilitated through Germany’s International Climate Initiative (IKI). The 2015 Indo-German Solar Energy Partnership (IGSP), valued at EUR 1 billion, aims to boost solar energy, a significant component of India’s goal to install 500 gigawatts (GW) of non-fossil energy by 2030.
In 2022, the two countries signed 14 agreements, including the Indo-German Renewable Energy Partnership, aiming for 50% and 80% non-fossil electricity by 2030. The Indo-German Green Hydrogen Task Force promotes green hydrogen development. In February 2023, they launched the “India-Germany Vision to Enhance Cooperation in Innovation and Technology,” with a focus on green hydrogen and clean energy, supported by a collaboration between India’s Department of Science and Technology (DST) and Germany’s Fraunhofer Institute for Solar Energy Systems (Fraunhofer ISE).
Germany and India’s climate and energy priorities are reflected in their partnerships across four key themes: decarbonization, green economy, hydrogen, and climate finance.
Decarbonization and Energy Access:
Both countries emphasize decarbonization, with Germany’s focus on green industrial policy complementing India’s push for green industrialization. Their agreements stress the urgency of expanding renewable energy and improving energy efficiency. The IGEF addresses decarbonization through renewable energy, energy efficiency, and grid integration. The 2022 Partnership for Green and Sustainable Development aims to bolster renewable energy and green mobility, supported by technology innovation and capacity building. Germany’s KfW development bank has committed significant funds to energy generation and efficiency in India.
Hydrogen:
Both countries are advancing green hydrogen. The IGEF supports technical cooperation and capacity building for hydrogen supply chains. Germany aims to secure hydrogen for heavy industry, while India targets economic growth through hydrogen production.
Transition and Energy Access:
Emphasizing just transitions and energy access, Germany funds green energy corridors in India and commits additional resources for solar energy and public transport. The 2019 Partnership for Green Urban Mobility and the 2022 Partnership for Green and Sustainable Development focus on inclusive energy access. Future efforts may include rooftop solar, grid stability, and battery storage.
Climate Finance:
Germany’s climate finance commitments align with India’s needs. The 2022 Partnership for Green and Sustainable Development includes a EUR 10 billion commitment, while the 2015 Solar Energy Partnership provided EUR 1 billion in concessional loans. Both countries should explore innovative financing models, such as blended finance and debt-to-climate swaps, to enhance private capital flows and support climate action.
Germany and India need to focus on several key areas:
collaborating on green technology, aligning industrial policies, and supporting climate mitigation in third countries. They need to establish common hydrogen standards, create a collaboration platform for technology and trade, and consider a German H2-diplo office in India. For decarbonization, they need to prioritize rooftop solar, grid stability, and battery storage, developing programs for small consumers and advancing research and development (R&D). In climate finance, they need to explore innovative financing methods like guarantees, blended finance, and debt-to-climate swaps while working to reform the international financial system.
For further reading, refer to the original source: Toward an Indo-German Green Strategic Partnership by the German Council on Foreign Relations.