GERMANY Law and Practice Contributed by: Friedrich Gebert, Hannah Düwel, Bernhard Gröhe and Clara Schmidt, ARQIS Partnerschaftsgesellschaft mbB
tainable projects and activities. Under the Taxonomy Regulations, companies need to report – in addition to their financial reporting obligations – on how their activities affect or contribute to environmental goals pursuant to the Regulation, such as climate protec - tion, adaptation to climate change and, since 2023, the circular economy and biodiversity. The report also indicates sales, Capital Expenditures (CapEx) and Operating Expenditures (OpEx). While the Regulation itself does not apply to individual transactions, these reports become more relevant for buyers or investors in order to determine if a company is acting in compliance with the Regulation. Hence, the due diligence usually looks at sales, CapEx and OpEx and their compliance with the Regulation. Busi - nesses with many Taxonomy-activities are considered more attractive for ESG-oriented investors. With the new Omnibus Package, the Taxonomy Regu - lation was amended and now only applies to busi - nesses with more than 1,000 employees and a net turnover exceeding EUR450 million. 6. Climate-Friendly Investment Support 6.1 Renewable Energy Germany supports the expansion of renewable ener - gies through various instruments. Under the Renewable Energy Sources Act ( Erneu- erbare - Energien - Gesetz – EEG), different renewable energy projects are eligible for subsidies. Renewable energies covered under this Act include hydropower, wind and solar energy, geothermal energy and bio - mass. With the amendment of 2023, Section 2, EEG declares the expansion of renewable energies in the “overriding public interest” until electricity generation in Germany is greenhouse gas neutral. This results in a change in administrative decisions due to the increased priority of renewable energies over other interests, especially when it comes to permits. In addi - tion, the EEG contains fixed expansion targets for 2030 and 2045 specifically for solar and wind energy. Along with other measures to facilitate the issuing of permits for renewable energy plants, the number of
permits granted has increased significantly. For exam - ple, 90% more permits for onshore wind energy were issued in 2024 compared to 2023. This was followed by a further 48% increase in permits in 2025 com - pared to 2024. The EEG has two main mechanisms which are meant to encourage investment and, in doing so, promote the expansion of renewable energy. • The principle of priority, meaning that renewable energy sources must be granted priority access to the grid, and their energy must be accepted and fed into the grid before that of other, fossil-based energy sources. • Operators of renewable energy installations receive a guaranteed payment for every kilowatt-hour of electricity they feed into the public grid – either as a fixed feed-in tariff (for small installations, typically up to 100 kW) or as a “market premium” that tops up the wholesale market price to a pre-determined level (for larger installations selected through com - petitive auctions). Both support forms are guaran - teed for 20 years from the date of commissioning, providing long-term revenue certainty that reduces investment risk and encourages the deployment of renewable energy capacity. In construction, private individuals and companies can obtain grants and loans for heat pumps, biomass heating systems, and solar thermal energy through the Federal Subsidy for Efficient Buildings ( Bundes- förderung für effiziente Gebäude – BEG), among other programmes. Moreover, the KfW Bank ( Kreditanstalt für Wiederaufbau ) offers low-interest loans and repay - ment subsidies for photovoltaic (solar), wind, hydro - electric, and biomass systems. The Federal Office of Economics and Export Control ( Bundesamt für Wirtschaft und Ausfuhrkontrolle – BAFA) provides subsidies specifically for solar thermal, biomass, and heat-pump heating systems. There are also indirect tax incentives: private individu - als, for example, benefit from energy-efficient renova - tion (Section 35c of the Income Tax Act ( Einkommen- steuergesetz (EStG)), which allows a tax reduction of 20% of the costs – up to EUR40,000 per property.
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