Germany's new climate policies fall short of Greens' promises

Climate policies unveiled by Germany's new coalition government underscored the challenges ahead for the Greens, who won the most governing power ever with support from voters demanding more action to slow global warming.

After nearly two months of intense negotiations, Olaf Scholz, the incoming chancellor from the center-left Social Democrats, presented the agreement with the Greens and the pro-business Free Democrats on Wednesday.

The deal ramps up efforts -- already among the most ambitious in the world -- to slash greenhouse gas emissions with a faster coal exit, more renewables and a carbon price floor.

But it's not clear where the new coalition stands on phasing out combustion-engine cars. Leaders avoided setting a hard target for banning polluting vehicles, saying instead that they back the European Union's goal of only selling "carbon-neutral" vehicles in Europe by 2035.

The agreement also vowed to support cars that can run on e-fuels.

The Greens had previously called for banning production of fossil-fuel burning cars by 2030 and reserving use of e-fuels for industrial, transport, ships and planes.

However, neither the SPD nor the FDP was behind such a ban, with the FDP particularly supportive of maintaining investment in e-fuels for passenger vehicles.

The issue of phasing out combustion-engine cars is particularly fraught in Germany, where the auto industry dominates and manufacturers have dragged their feet for years on EVs -- in part because of a strong car culture that favored traditional models. The country did not join a pledge at the COP26 climate talks earlier this month to only sell zero-emissions vehicles by 2035.

Deciding not to ban fossil-fuel cars "sends the wrong signal," said Franca Wolf, senior markets analyst at Verisk Maplecroft. "What is the advantage of having a clean electricity mix, if we still consume lots of fossil fuels for transportation?"

But the new coalition agreement does include an aim to have at least 15 million EVs on the roads by 2030, up from a previous goal of 14 million.

On charging infrastructure, the lack of which is regarded as one of the main obstacles to wider uptake of electric vehicles, the coalition would maintain Germany's current goal of 1 million charging spots by 2030 - up from around 49,000 available today.

It would make provision of funding for expanding infrastructure more effective and efficient and develop accessible stations itself where "competitive solutions" could not be found.

However, the government would ultimately depend on private companies to fund the build-out, the agreement said.

"We will accelerate, optimize, and de-bureaucratize the ongoing build-out of charging infrastructure," it said, but added: "We are relying on the mobilization of private investment."

Bloomberg and Reuters contributed to this article