Clifford Chance

In a ruling published on 29 April 2021 ("Ruling") the Federal Constitutional Court ("Constitutional Court" or "Court") held that the provisions of the German Federal Climate Change Act of 12 December 2019 (Bundes-Klimaschutzgesetz) ("Climate Change Act") governing national climate change targets and annual emission budgets until 2030, are incompatible with fundamental constitutional rights, since they lack sufficient specifications for further emission reductions from 2031 onwards. This article analyzes the key aspects of the Ruling and highlights its potential legal and practical consequences.

On 29 April 2021, the Constitutional Court published its Ruling on four complaints against the Climate Change Act. The Court found that reduction targets provided for in the Climate Change Act are imbalanced, as they shift major reduction burdens to the future, which could result in a considerable limitation on the freedom of coming generations.

The German Climate Change Act

The Climate Change Act is part of the Federal Government's 2019 "climate package". It aims at mitigating the effects of climate change by ensuring compliance with national and European climate targets. The Climate Change Act also reflects Germany's obligations arising from international agreements including the Paris Climate Agreement as well as its commitments at the UN Climate Action Summit in New York on 23 September 2019 to limit the increase in the global average temperature to well below 2 degrees Celsius and to achieve greenhouse gas neutrality by 2050.

The Climate Change Act establishes that greenhouse gas emissions shall be gradually reduced by at least 55 percent by the year 2030 in comparison with emission levels from the year 1990. In this regard, Annex 2 to the Climate Change Act defines annual reduction targets for specific sectors such as energy, industry, transport, buildings, agriculture and waste. The Climate Change Act further provides that in the year 2025, the Federal Government shall set annually decreasing emission budgets for further periods after the year 2030.

The plaintiffs and their essential arguments

The constitutional complaint against the Climate Change Act was brought by a group of plaintiffs backed by several environmental NGOs, including Greenpeace and Germanwatch. The plaintiffs comprised German citizens, including activists from the global movement "Fridays for Future" and islanders who fear to be directly affected by climate change due to rising sea levels, as well as citizens of Bangladesh and Nepal.

The plaintiffs invoked the "Right to a Future" and essentially argued that the reduction target of 55 percent is far too low to achieve the long-term targets underlying the Climate Change Act. According to the plaintiffs, the insufficient reduction target allows a significant amount of greenhouse gases to be emitted until 2030, the effect of which on climate change is irreversible and will deprive the young plaintiffs of the ability to take free decisions on their future.

The Ruling of the Constitutional Court

The Constitutional Court found that Article 20a of the German Constitution obliges the German state to protect the climate. Recognizing that global warming is caused by anthropogenic emissions and that average temperature is the guiding parameter for the climatic state of the Earth system, the Court held that the constitutional imperative of climate protection mandates compliance with a temperature threshold. Accordingly, the state must prevent the atmospheric accumulation of further greenhouse gas emissions above the relevant threshold. This in turn requires that greenhouse gas emissions are reduced to a level which is neutral for the concentration of greenhouse gases in the Earth's atmosphere, once the constitutionally relevant limits of global warming have been reached. The Court concludes on this basis that the goal of climate protection acts as an upper limit on the exercise of any constitutional freedom which is directly or indirectly linked to emitting greenhouse gases.

While the Constitutional Court recognized that the climate change crisis cannot be solved by the contributions of a single state, it took the view that the obligation of climate protection under Article 20a of the Constitution has a special international dimension. The German state is therefore compelled to seek a solution on the supranational level and cannot deny or downplay its responsibility for climate protection by simply referring to greenhouse gas emissions produced by other states.

With regard to the specific targets set in the Climate Change Act, the Constitutional Court held that it could not at present ascertain whether the reduction target of 55 percent by 2030, as well as the sector-specific annual emission budgets in Annex 2, violated the Government's constitutional obligation to protect the rights to health and property and to take action against climate change. The Court considered that the temperature threshold of 2 degrees Celsius could in principle be converted into a remaining global emissions budget, which in turn could be allocated to states. The Intergovernmental Panel on Climate Change (IPCC) has defined specific remaining global emissions budgets for various temperature thresholds in various scenarios. On this basis, the German Advisory Council on the Environment has calculated a specific remaining national budget for Germany from 2020 onwards that would be compatible with the goals of the Paris Agreement. Against this background, the Constitutional Court acknowledged that on the basis of the emission budgets stipulated in the Climate Change Act, the remaining budget calculated by the German Advisory Council on Environment would be largely used up by the year 2030. Nonetheless, the Court concluded that due to the uncertainties and assumptions involved in making these calculations, the projected national budget could not serve as an exact numerical benchmark for a constitutional assessment.

The Constitutional Court did, however, take the view that the reduction target of 55 percent by 2030, including the annual emission budgets in Annex 2, violated the principle of proportionality. This principle essentially requires that the targeted reduction in greenhouse gas emissions to the point of climate neutrality is distributed over time in a prospective manner which safeguards constitutional rights. According to the Constitutional Court, this was not the case as the regulation would lead to an unequal distribution of the reduction burden between present and future generations.

Stated differently, the Constitution provides that one generation may not be allowed to consume large portions of the greenhouse gas budgets while bearing a relatively minor share of the reduction effort if this would leave future generations with a drastic reduction burden and expose their lives to extensive losses of their fundamental rights and freedoms. The Constitutional Court held that the transition to climate neutrality requires that detailed reduction measures are formulated at an early stage for the post-2030 period in order to provide clear orientation for the further implementation process. An obligation to draw up a new plan only in 2025 was insufficient in the Court's view, as it was doubtful that this would leave enough time to achieve climate neutrality by 2050. For these reasons, the Constitutional Court ordered the legislator to enact the necessary amendments of the Climate Change Act by the end of 2022.

Conclusion

The Constitutional Court did not find that the reduction target of 55 percent by 2030 as such violated the Constitution. Instead, it ruled that the German legislator must define a clear path for the post-2030 period, thereby indirectly signaling that the target for 2030 did not need to be revised. Hence, it can be concluded that the reduction target of 55 percent by 2030 is legally permissible and will remain unaffected by the Ruling.

However, taking into consideration that the Constitutional Court criticized the unequal distribution of reduction targets between present and future generations, it may well become necessary for the legislator to revise the current reduction target in order to establish an overall balanced reduction mechanism for the period until 2050. The legislator could then be compelled to introduce even stricter emission targets for the period until 2030. This in turn might necessitate that business sectors adapt their processes to theses stricter requirements and accelerate the transition process.

In addition to the financial consequences, the Ruling will have far-reaching legal implications. It confirms that climate protection and mitigation of the long-term effects of climate change are of high constitutional importance. This finding is expected to further increase the risk of climate change-related lawsuits against companies, as constitutional rights need to be taken into consideration alongside indefinite civil law norms.