Germany’s national Power-to-Liquid quotas

Germany’s national Power-to-Liquid quotas

As part of my research, I closely follow recent developments regarding Germany’s national Power-to-Liquid (PtL) quotas for aviation and would like to share the key updates with you.

🔹 What do PtL quotas mean?

Power-to-Liquids (PtL) refers to liquid hydrocarbons produced using electricity, water, and CO₂ as inputs. Based on these characteristics, PtL quotas cover targets and obligations for hydrogen-based fuels, such as e-SAF for aviation.

🔹 What happened in Germany?

  • In September 2021, Germany adopted ambitious PtL quotas for aviation through amendments to the Federal Immission Control Act (BImSchG).
  • These mandatory national quotas required a minimum share of RFNBOs in aviation fuel of:
    • 0.5% in 2026
    • 1% in 2028
    • 2% in 2030.
  • The basis for adopting such ambitious quotas was the German PtL roadmap for aviation fuels, published in April 2021.
  • However, these national PtL quotas were more ambitious than those established under the ReFuelEU Aviation Regulation, which introduces a minimum PtL sub-quota only from 2030 onwards.
  • As a result, the European Commission opposed the German national quotas, emphasizing the binding nature of ReFuelEU Aviation as an EU regulation that replaces national PtL quotas for aviation.

🔹 How was this PtL quota issue resolved?

  • In October 2024, the German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) announced revisions to the national PtL quotas for aviation.
  • In June 2025, BMUV published the Draft Law for a Second Law on the Further Development of the GHG Reduction Quota (the Draft Law on the GHG Reduction Quota), proposing the removal of national PtL quotas for aviation from the BImSchG.
  • In December 2025, the national PtL quotas for aviation were formally abolished through the Draft Law on Accelerating the Expansion of Geothermal Energy Plants, Heat Pumps and Heat Storage Facilities, and on Amending Other Legal Framework Conditions for the Climate-Neutral Expansion of Heat Supply.

➡️ The German PtL quota will expire on January 1, 2026.

✅ What’s next?

The PtL quotas for aviation are included in the Draft Law on the GHG Reduction Quota and will be based on the minimum share of e-SAF set out in the ReFuelEU Aviation Regulation.

If you have any questions about PtL quotas, I’d be happy to discuss them.

🔗 The Draft Law: Gesetz zur Beschleunigung des Ausbaus von Geothermieanlagen, Wärmepumpen und Wärmespeichern und zur Änderung weiterer rechtlicher Rahmenbedingungen für den klimaneutralen Ausbau der Wärmeversorgung sowie zur Änderung des Baugesetzbuchs und zur Änderung des BundesImmissionsschutzgesetzes

🔗 Source: Bundesrat beschließt Abschaffung der nationalen PtL-Quote

Modernisation Fund

On 17 December 2025, the European Commission and the European Investment Bank announced the disbursement of €1.8 billion from the Modernisation Fund to support 45 clean energy-related investments in 12 different Member States, including Portugal, which became a beneficiary Member State in 2024.

Financed by revenues from the EU Emissions Trading System (EU ETS), this brings total Modernisation Fund support to €20.7 billion for 294 investments since 2021. In 2025 alone, €5.46 billion has been disbursed to 79 projects, following an earlier allocation of €3.66 billion in July.

✅ What is the Modernisation Fund?

📌 The Modernisation Fund, funded by revenues from the auctioning of emission allowances under the EU ETS, aims to support 13 lower-income EU countries in their transition to climate neutrality.

📌 The beneficiary Member States are Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia, as well as Greece, Portugal and Slovenia which became eligible for support as of January 2024, under the revised EU ETS Directive.

📌 The Modernisation Fund supports investments in the generation and use of energy from renewable sources, energy efficiency, energy storage, modernisation of energy networks, including district heating, grids, and just transition in carbon-dependent regions.

📌 It operates under the responsibility of the beneficiary countries in close cooperation with the European Commission and the European Investment Bank.

📅 Next deadlines

The next deadlines for beneficiary Member States to submit investment proposals under the Modernisation Fund are:

  • 15 January 2026 for non-priority proposals
  • 12 February 2026 for priority proposals.

➡️ Source: Joint press release: Modernisation Fund announces €1.8 billion in new clean energy investments, bringing 5-year total to over €20 billion

Innovation Fund in Transport Sector

How the Innovation Fund Supports the Decarbonisation of the EU Transport Sector

In a recent publication, the European Commission presented a factsheet on projects supported by the Innovation Fund, with total funding exceeding €4.8 billion.

✅ What is the Innovation Fund?

The Innovation Fund:

  • is one of the EU’s key financial instruments for deploying net-zero and innovative technologies.
  • is funded by revenues from the EU Emissions Trading System (EU ETS) and supports the decarbonisation of hard-to-abate sectors.
  • provides grants to breakthrough projects across a wide range of sectors in the European Economic Area (EEA).

☑️ What technologies in the transport sector does the Innovation Fund support?

  • the production and use of sustainable fuels
  • the electrification of transport systems
  • the manufacturing and recycling of batteries for electric vehicles (EVs)
  • the construction and retrofitting of low- and zero-carbon ships, aircraft, and heavy-duty vehicles

✅ Key Takeaways:

📌 Out of 272 ongoing and awarded projects, more than one-third focus on transport decarbonisation, receiving around one-third of total grants (€4.8 billion).

📌 Transport-related projects are expected to deliver approximately 29% of the Innovation Fund’s total emission reductions during their first ten years of operation, cutting 334 million tonnes of CO2.

📌 The largest share of mobility projects in the Innovation Fund portfolio relates to fuel production (47 projects). More than 45% of these projects are expected to supply their output exclusively to the transport sector, while the remainder plan to serve multiple off-takers, with transport among the key beneficiaries.

➡️ Source: Driving decarbonisation in mobility through the innovation fund

Updates about RED III and ReFuelEU Aviation in Germany

Updates about Transposition of RED III and ReFuelEU Aviation in Germany

On 10 December, the German Federal Cabinet approved the draft of a Second Law on the Further Development of the Greenhouse Gas Reduction Quota.

This quota, as the central legal instrument for reducing greenhouse gas (GHG) emissions from fuels, shall gradually make refueling more climate-friendly. It specifies the extent to which fuel suppliers must reduce CO2 emissions by using sustainable biofuels, renewable hydrogen-based fuels, or electricity for electric vehicles.

➡️ The Draft of Law is available via this link: Entwurf eines Zweiten Gesetzes zur Weiterentwicklung der Treibhausgasminderungs-Quote

✅ Key Points of the Draft Law:

📌 The draft law implements the amendments to the Renewable Energy Directive (RED III), whose targets must be achieved by 2030. To provide greater investment security, the German government extends the timeline to 2040, going beyond the RED III, to support long-term corporate investment planning.

📌 The law serves to implement the ReFuelEU Aviation Regulation at the national level with regard to fuels.

📌 The draft law includes amendments to the Federal Immission Control Act (BImSchG) and the Regulation on the crediting of electricity-based fuels and co-processed biogenic oils towards the greenhouse gas quota (37th BImSchV).

📌 It introduces definitions of aviation fuel suppliers and distributors, as well as penalties for aviation fuel suppliers that fail to comply with their obligations under the ReFuelEU Aviation Regulation with regard to the share of sustainable aviation fuel (SAF):

  • EUR 4,700 per tonne for SAF
  • EUR 17,000 per tonne for synthetic aviation fuels or e-SAF.

📌 It defines the eligibility criteria for e-SAF and renewable hydrogen for aviation.

📌 It establishes minimum shares of RFNBOs for fuel suppliers (excluding aviation fuel suppliers):

  • 0.1% from 2026
  • 0.5% from 2028
  • 1.2% from 2030
  • 1.5% from 2032
  • 2.5% from 2034
  • 4.0% from 2036
  • 5.0% from 2037
  • 6.0% from 2038
  • 7.0% from 2039
  • 8.0% from 2040

☑️ Next Steps:

  • The law will enter into force on the second day after its publication in the Federal Law Gazette.
  • The Draft Law must now be submitted to the Federal Council (Bundesrat) and the German Bundestag for debate. Approval by the Federal Council is not required. However, the Bundestag may still introduce amendments.
  • After adoption by the Bundestag, the law can be submitted to the Federal President for signature and then published.
  • The legislative process is expected to be completed in the first quarter of 2026.

🔗 Source: Klimafreundlicher tanken, neue Nachfrage für grünen Wasserstoff: Bundesregierung beschließt Gesetzesnovelle zur Treibhausgasminderungs-Quote

2025 Carbon Market Report

2025 Carbon Market Report on the functioning of the European carbon market in 2024

On 3 December 2025, the European Commission published the 2025 Carbon Market Report, confirming that the EU Emissions Trading System (EU ETS) continues to function effectively and remains a key pillar of Europe’s climate policy.

As part of the State of the Energy Union Report, the assessment:

▪️ Reviews EU ETS performance in 2024 and early 2025
▪️ Confirms the continued decline in emissions across power and industry.

✅ Key takeaways:

🔹 Overall progress

  • EU ETS emissions from power and industry are now around 50% below 2005 levels.
  • The system remains on track for the 2030 target: –62% emissions

🔹 Power & Industry

  • 2024 emissions from power installations fell by almost 11% compared to 2023
  • Overall fuel combustion emissions across power + industry declined by 9%

🔹 Aviation

  • EU ETS prices for intra-European aviation increased around 15% in 2024
    • ➡️ Key Drivers: continued growth in aviation emissions and expanded coverage, including flights to the EU’s outermost regions
  • The EU ETS also started rewarding airlines for their use of sustainable aviation fuels (SAF) through additional allowance allocation, and the EU became the first jurisdiction to introduce monitoring and reporting of non-CO2 aviation effects.
  • SAF incentives under EU ETS
    • The ETS carbon price already provides an incentive of around EUR 200 per tonne of SAF used, compared to fossil kerosene.
    • Additional ETS support measures implemented in 2025: €500 – €7,000 per tonne of eligible SAF on ETS routes and applicable since 1 January 2024.
    • For 2024, the incentive from EU ETS was worth around EUR 25 million, supplemented by ETS support of about 1.3 million allowances worth approximately EUR 100 million
  • CORSIA alignment
    • Limited intra-European EU ETS scope extended to end-2026
    • Full application of ICAO CORSIA expected from 2027

🔹 Maritime

  • 2024 marked the inclusion of shipping in the EU ETS
  • Coverage:
    • 100% of emissions between EEA ports & at EEA ports
    • 50% of emissions from voyages to/from non-EEA ports
  • Compliance was high: shipping companies surrendered allowances for more than 99% of their relevant surrendering requirements by the 30 September deadline.
  • In 2025, shipping companies surrendered allowances for 40% of their 2024 emissions

🔹 EU ETS funding the clean transition

  • €38.8 billion raised in 2024
  • Revenues support:
    • National climate action
    • Clean energy investments
    • Innovation Fund
    • Modernisation Fund
    • Recovery & Resilience Facility (REPowerEU)

☑️ Total ETS revenues now exceed €250 billion

➡️ Source: 2025 Carbon Market Report: EU ETS lowers power sector emissions and expands to maritime transport

New EU funding opportunities

🚀 On 4 December 2025, the European Commission has launched three major new funding opportunities under the EU Innovation Fund, mobilising €5.2 billion from EU ETS revenues to support the scale-up of net-zero technologies, clean hydrogen production, and industrial heat decarbonisation.

✅ Main Funding Opportunities:

🔹 IF25 Net-Zero Technologies Call – €2.9 billion

📌 Supporting innovative, mature decarbonisation projects across various scales, including manufacturing of components for:

  • Renewables & energy storage
  • Heat pumps
  • Hydrogen production
  • EV batteries

📌 Projects are assessed on GHG reduction potential, innovation, maturity, replicability, and cost efficiency.

📌 A new bonus point is introduced for projects led exclusively by SMEs, recognising their role in driving innovation.

📅 Info Day: 16 December 2025

🔹 3rd Auction of the European Hydrogen Bank – €1.3 billion

📌 Scaling up production of RFNBO hydrogen and electrolytic low-carbon hydrogen, including a new topic for aviation and maritime off-takers.

📌 Support is provided via a fixed premium per kg of verified hydrogen produced for up to 10 years, increasing price certainty and bankability for projects.

📅 Info Day: 10 December 2025

🔹 1st Auction for Decarbonising Industrial Process Heat – €1 billion

📌 The auction dedicated to industrial process heat, targeting one of Europe’s largest unaddressed emissions sources.

📌 Supported technologies include:

  • Heat pumps & electric boilers
  • Resistance & induction heating
  • Solar thermal & geothermal heat
  • Hybrid solutions

📌 Funding is granted as a fixed premium per unit of verified decarbonised heat for up to 5 years, awarded to the most cost-effective CO₂ abatement projects.

📅 Info Day: 16 December 2025

Member States can complement EU funding for high-scoring projects that miss out due to budget limits:

📌 Germany: additional €1.3 billion for RFNBO hydrogen projects

📌 Spain: €465 million total:

  • €415 million for hydrogen
  • €50 million for industrial heat decarbonisation

☑️ What’s next?

📌 Applicants are strongly encouraged to attend the Info Day.

📌 Signing of grant agreements:

  • NZT projects – expected Q1 2027
  • Auction projects – within 9 months of call closure.

➡️ Source: €5.2 billion of EU Emissions Trading revenues earmarked for clean transition technologies under the Innovation Fund

ACER’s European hydrogen markets 2025 Monitoring Report

The ACER’s European hydrogen markets provides 2025 Monitoring Report a realistic snapshot of the current state of development of the European hydrogen market.

✅ Key Takeaways:

📌 As of October 2025, only two Member States, Denmark and Ireland, have notified the Commission of the completion of RED III transposition.

📌 Despite a strong 51% annual increase in installed electrolyser capacity in the EU in 2024, the installed capacity of 308 MW (2024) and the 1.8 GW capacity under construction still fall well short of a realistic trajectory toward the 2030 EU (40 GW) and Member States (48-54 GW) targets.

📌 At around 8 EUR/kgH2, the average cost of RFNBO hydrogen in the EU currently remains four times higher than that of conventional hydrogen from natural gas (just over 2 EUR/kg).

📌 Electricity supply costs, excluding grid tariffs, may account for up to 50% of the levelised cost of renewable hydrogen, depending on the electricity supply mix, with substantial regional variations across the EU.

📌 Uncertain future demand for renewable hydrogen, driven by the current cost, makes it difficult for hydrogen network operators (HNOs) to align network development with demand evolution, increasing the financial risks associated with this uncertainty. Adaptive network planning, reflecting the latest market trends, is essential to ensure efficient investment and cost control.

📌 Low-carbon hydrogen produced from natural gas with carbon capture and storage (CCS) could support market development and accelerate decarbonisation in some sectors. With current production cost estimates at just below 3 EUR/kg, low-carbon hydrogen with CCS is more competitive than renewable hydrogen.

📌 Funding availability is increasing, but implementation remains slow. The European Commission has allocated more than €20 billion through various hydrogen-related programmes, including auctions under the European Hydrogen Bank. In addition, the EU Hydrogen Mechanism has been launched to facilitate supply–demand matching and accelerate hydrogen market creation.

➡️ Source: The European Union Agency for the Cooperation of Energy Regulators. European hydrogen markets 2025 Monitoring Report

Small Modular Reactors – Future Development and Deployment in Europe

Public consultation. Small Modular Reactors. Future development and deployment in Europe

📢 Call for Evidence: “Small Modular Reactors – Future Development and Deployment in Europe”

On 6 November, the European Commission launched a public consultation to help shape the upcoming EU Strategy on Small Modular Reactors (SMRs).

🗓️ Open until: 4 December 2025

➡️ Participate here: Small modular reactors – future development and deployment in Europe

✅ What is this initiative about?

📌 The Commission plans to adopt an SMR Strategy in Q1 2026 (via a Commission Communication) aimed at creating a supportive industrial, economic, and policy framework to accelerate SMR deployment across Europe with first projects expected in the early 2030s.

📌 The strategy seeks to:

  • Strengthen the competitiveness of the EU industry;
  • Foster innovation in nuclear technologies;
  • Provide a coherent EU approach, complementing national initiatives.

☑️ Why does it matter?

📌 More than 10 EU Member States have already expressed interest in deploying SMRs as part of their national energy and climate plans.

📌 SMRs are seen as a potential source of clean, flexible electricity and heat for residential and industrial use, including low-carbon hydrogen and efuel production.

📌 Key advantages include simplified design, enhanced safety features, factory production, reduced construction and operational costs, flexibility for multiple energy uses, and contributions to grid stability.

✅ Strategy objectives:

Building on the work of the European Industrial Alliance on SMRs, the upcoming Communication will focus on:

  • Strengthening collaboration to develop a robust EU supply chain
  • Enhancing regulatory cooperation and streamlining licensing processes
  • Reinforcing EU leadership in research and innovation, including start-up and scale-up partnerships
  • Securing a reliable nuclear fuel cycle
  • Preserving and developing skills and expertise across Europe
  • Addressing investment barriers
  • Supporting public engagement and trust-building initiatives

Climate Change Performance Index 2026

📢 The Climate Change Performance Index 2026 illustrates how the regulatory framework influences the achievement of climate targets.

The Climate Change Performance Index (CCPI) is an independent monitoring tool for the climate mitigation performance of 63 countries and the EU.

✅ Key Takeaways:

📌 No country is strong enough in all categories to achieve an overall very high rating. Therefore, the top three places continue to be vacant.

📌 Denmark remains the top-ranked country but falls short of earning an overall very high rating.

📌 Overall, the EU falls three spots, to 20th, and has a medium overall ranking.

📌 Eight EU countries are among the high performers, with Denmark (4th) and Luxembourg (8th) upfront.

📌 No EU country receives an overall very low rating. Bulgaria, at 51st, is still the worst-performing EU country, as nine other EU countries receive an overall low ranking.

📌 The European Union (EU):

  • It ranks 20th in this year’s CCPI, down three spots from last year and receives medium ratings across the board in: GHG Emissions, Renewable Energy, Energy Use, and Climate Policy;
  • The CCPI experts question the likelihood of member states’ full implementation of the revised National Energy and Climate Plans (NECP) regarding the 2030 target published in May 2025
  • RED III provides a policy framework with an overall EU minimum binding target of 42.5%, although the experts criticise the lack of national binding targets and weak enforcement.
  • Implementation remains a major gap, with the European Commission having launched infringement procedures against 26 member states for non-compliance.

📌 Germany

  • Germany drops six places to 22nd in this year’s CCPI;
  • Planned gas power capacity risks a fossil fuel lock-in;
  • The overall ranking decline can be attributed to its announcements to weaken existing climate legislation and unnecessarily expand gas power plants.
  • Hydrogen ramp-up and the development of a capacity market, for when RE does not generate sufficient power, are also moving too slowly. Offshore and onshore wind expansion remain below what is needed.

📌 The United States:

  • The United States falls eight spots from 57th to 65th and remains a very low performing country.
  • Key policies supporting renewable energy build-up and GHG emissions reduction have been revoked alongside promotion of fossil fuel expansion.
  • Key support schemes from the Inflation Reduction Act, such as the Environmental  Protection Agency’s Solar for All program and clean energy tax credits, have been rescinded or weakened.
  • Some states, such as New York and California, still have policies in place to combat climate change and legislators strive to protect these from national-level policies and decrees through the U.S. Climate Alliance.

➡️ Source: Climate Change Performance Index. Ranking

New Technologies in the Energy Sector

In October 2025, the U.S. Department of Energy (DOE) released its Fusion Science and Technology Roadmap

In October 2025, the U.S. Department of Energy (DOE) released its Fusion Science and Technology Roadmap, a national strategy to accelerate the development and commercialization of fusion energy on the most rapid, responsible timeline in history.

➡️ Source: Energy Department Announces Fusion Science and Technology Roadmap to Accelerate Commercial Fusion Power

✅ What is Nuclear Fusion?

  • Nuclear fusion is the process where two light atomic nuclei combine to form a heavier one, releasing massive amounts of energy.
  • Fusion reactions occur in plasma, a hot, charged gas of ions and free electrons with properties distinct from solids, liquids, or gases.
  • The Sun and all stars are powered by this reaction.

➡️ Source: What is Nuclear Fusion?

☑️ Key Takeaways:

📌 The Roadmap guides the emerging U.S. fusion private sector toward maturity, targeting actions and milestones through the mid-2030s.

📌 Build-Innovate-Grow is DOE’s new strategy to support fusion energy commercialization in the U.S. and its tool is the Roadmap.

📌 The Roadmap defines a new era of U.S. fusion energy leadership by setting ambitious goals to deliver fusion power on an aggressive timeline, accelerated by the revolutionary potential of Artificial Intelligence (AI)-Fusion convergence.

📌 The Roadmap defines Key Actions to be executed in the near-term (next 2-3 years), mid-term (3-5 years) and long-term (5-10 years), aligned to the Build-Innovate-Grow strategy. DOE will build Fusion Science & Technology infrastructure and the AI-Fusion digital convergence platform.

✅ Is this A New Era of U.S. Fusion Energy Leadership?

📌 The U.S. has led innovation in nuclear fusion since the 1940s with significant fusion research carried out during the Manhattan Project.

📌 In the 1950s, the U.S. launched Project Matterhorn under the Atomic Energy Commission (AEC), an effort that later became part of the DOE fusion program.

📌 The theoretical framework for compressing and heating fusion fuel using powerful energy drivers was also established through early work in the 1960s and 1970s.

📌 Since the early 1990s, the U.S. developed some of the world’s most sophisticated multi-physics computational codes validated with world-leading diagnostic tools on world-class domestic facilities.

📌 In the 2000s, fusion technology activity began to grow modestly in the U.S. under the APEX and ALPS programs.

📌 In the 2010s the advent of high-performance computing and the understanding of burning plasma physics ushered in a predictive capability that has brought forth confidence in a path forward to the commercialization of fusion energy.

📌 Today, the U.S. hosts the fastest-growing private fusion sector, attracting $9B+ in private investment and home to 29 fusion companies, the largest globally, including three with over $1B each.