The German Bundestag will debate a draft law on Wednesday, February 25, 2026, to further develop the country’s greenhouse gas (GHG) emissions reduction quota, known as the THG-Quote. The proposed “Second Law on the Further Development of the THG-Quote” aims to accelerate emissions reductions in the transportation sector and align German policy with updated European Union directives.
The legislation, currently designated as 21/4083, is scheduled for a first reading with 30 minutes allocated for discussion before being referred to relevant committees, particularly the Committee for the Environment, Climate Protection, Nature Conservation and Nuclear Safety. This move comes as Germany seeks to meet its ambitious climate targets, including achieving net-zero emissions by 2045, as mandated by the Federal Climate Protection Act.
The THG-Quote system, established under the Federal Immission Control Act (BImSchG), obligates fuel suppliers to reduce the greenhouse gas emissions associated with the fuels they provide. This represents achieved through the incorporation of sustainable biofuels, the employ of green hydrogen in refineries and the promotion of electricity for electric vehicles. The initial law, passed on September 24, 2021, set ambitious reduction targets through 2030, implementing the requirements of the EU’s Renewable Energy Directive (RED II).
The recent draft law responds to the significantly increased targets set by the revised RED III directive, part of the European Commission’s “Fit for 55” package. RED III expands the scope of renewable energy targets to encompass all transportation sectors and increases quotas for advanced biofuels derived from waste and residue materials. It also introduces additional obligations for the use of renewable fuels of non-biological origin, such as green hydrogen and renewable synthetic fuels.
Specifically, the proposed law intends to progressively increase the mandatory percentage reduction of greenhouse gas emissions from fuels to 59 percent by 2040. This corresponds to a share of renewable energies in total energy consumption of around 62 percent, calculated according to the RED III methodology. A general quota for renewable fuels not of biological origin will also be introduced, expanding the scope of the THG-Quote system.
The draft legislation also proposes raising the quota for advanced biofuels while eliminating the double-counting mechanism currently in place. The eligibility of renewable fuels for inclusion in the THG-Quote will be contingent upon verifiable on-site controls conducted by state authorities. The inclusion of biofuels derived from palm oil production residues will be discontinued.
The German government also intends to implement the requirements of the EU’s ReFuelEU Aviation regulation, which sets targets for the use of renewable fuels in aviation to ensure fair competition and promote a sustainable aviation sector. The implementation details for this regulation will be integrated into the Federal Immission Control Act.
Currently, the national THG-reduction quota stands at 10.6 percent and is set to increase incrementally until it reaches 59 percent by 2040. The Bundestag’s deliberations on February 25th mark the beginning of the legislative process for this significant update to Germany’s climate policy.
