Germany’s carbon dioxide emissions fell to 640 million tonnes in 2025, a 1.5 percent year-on-year decline that places the country 49 percent below its 1990 baseline. On paper, the national target under the Climate Change Act was met. In practice, the slowdown in emission reductions compared with 2024 signals a more fragile trajectory, driven less by structural decarbonization and more by weak industrial output and favorable solar conditions, according to Agora Energiewende’s annual review of Germany’s energy year.
The composition of the reduction matters. Energy-intensive industrial production declined by 3.2 percent between January and November, reflecting subdued global demand, U.S. tariffs, and persistent overcapacity in steel and chemicals. This contraction alone accounted for an 11 million tonne, or 7.2 percent, emissions drop in industry. While statistically significant, it raises questions about durability. Emissions fell because output did, not because low-carbon processes replaced fossil-based ones at scale.
A similar pattern emerges in the power sector, long the backbone of Germany’s emissions decline. In 2025, emissions from energy generation fell by just 3 million tonnes, or 1.5 percent, markedly less than in prior years. Weather played a role. Weak wind conditions constrained generation growth, limiting the sector’s ability to offset rising emissions elsewhere. Solar, however, compensated more than expected. With around 17.5 gigawatts of new capacity added, solar generation surpassed coal, lignite, and gas for the first time, becoming Germany’s second-largest electricity source after wind. Renewables reached 55.3 percent of gross electricity consumption, a one percentage point increase that underscores progress on the supply side while also highlighting diminishing marginal gains when demand remains flat.
Stagnant electricity consumption is a recurring constraint. Total consumption held at roughly 528 terawatt-hours, virtually unchanged from 2024, despite the expanding renewable fleet. Net electricity imports fell by 28 percent to 3.6 percent of consumption, reflecting higher domestic generation rather than stronger electrification. This stagnation aligns with slower-than-required uptake of electric vehicles and heat pumps, sectors that continue to define Germany’s compliance risk under EU climate law.
Transport and buildings remain the weakest links. Emissions in buildings rose by 3 million tonnes, or 3.2 percent, after a cold start to the year increased oil and gas heating demand. Transport emissions climbed by 2 million tonnes, or 1.4 percent, due to slightly higher fuel consumption. Combined, these sectors pushed Germany about 30 million tonnes over its annual EU Effort Sharing Regulation budget. If trends persist, Agora estimates the country may need to purchase allowances from other Member States worth up to €34 billion by 2030, effectively exporting compliance costs instead of investing domestically.
There are signs of movement, but not yet at scale. Around 300,000 heat pumps were sold in 2025, surpassing gas boiler sales for the first time, and nearly 545,000 electric vehicles were newly registered, bringing EVs close to one fifth of new car sales. Much of this rebound reflects tighter EU fleet emission standards rather than a decisive shift in consumer economics. High upfront costs and grid connection delays continue to slow adoption, limiting the emissions impact relative to what climate targets require.
Price signals offer a mixed picture. Wholesale electricity prices averaged 8.9 euro cents per kilowatt-hour in 2025, about one cent higher than the previous year, largely due to gas setting marginal prices early in the year. At the household level, prices fell to 39.6 cents per kilowatt-hour as suppliers cycled out of expensive fossil-era procurement contracts. While renewables dampened price volatility, electricity remains insufficiently competitive against fossil fuels for heating and mobility without targeted policy support.
Policy reform is therefore central to whether 2025 represents a plateau or a platform. Planned amendments to the Buildings Energy Act and revisions to the Renewable Energy Sources Act in 2026 are positioned as levers to translate supply-side success into demand-side decarbonization. Maintaining planning certainty for renewable heating requirements while shifting parts of renewable financing toward market-based mechanisms could reduce costs per tonne of CO₂ abated. Agora argues that aligning subsidies, grid access, and a credible carbon price path would allow households and industry to use renewable electricity at scale rather than treating electrification as a niche upgrade.
The industrial outlook reinforces the urgency. Although emissions fell sharply in 2025, the driver was economic weakness, not climate-neutral modernization. Without incentives for low-carbon production, including lead markets for green steel and low-emission cement backed by public procurement and infrastructure funds, emissions could rebound with any recovery in output. Short-term measures such as an industrial electricity price only deliver climate value if they accelerate investment in electrified and hydrogen-based processes rather than prolonging fossil dependence.
Germany remains within its national emissions cap for now, but the arithmetic beyond 2025 is unforgiving. Meeting the 2030 target requires average annual reductions of 36 million tonnes of CO₂ from 2026 onward, roughly four times the cut achieved last year. The data from 2025 suggest that renewable expansion alone cannot close this gap. Without faster electrification in buildings and transport and structural decarbonization in industry, Germany’s emissions pathway risks becoming increasingly dependent on economic slowdowns and external allowance purchases rather than domestic transformation.
