Germany has unveiled a draft legislation that would make green hydrogen and synthetic fuels a central part of the country’s transport decarbonisation strategy. The initiative introduces binding greenhouse gas (GHG) reduction targets aligned with the European Union’s (EU) Renewable Energy Directive (RED III) and ReFuelEU Aviation regulations.

The proposed law sets a national goal of reducing transport fuel emissions by 53% by 2040, equivalent to achieving over 77% renewable energy use in the sector. For the first time, the targets will apply across all modes of transport, including road, shipping, and aviation. A binding quota for renewable fuels of non-biological origin (RFNBOs), such as green hydrogen and e-fuels, would begin at 0.1% in 2026 and rise to 12% by 2040—far exceeding the EU’s 2030 minimum of 1%.

Key provisions of the draft include a phase-out of food-based biofuels, a ban on soy- and palm-derived fuels, and enhanced sustainability verification. Only fuels verified through government on-site inspections will count toward quota compliance, marking a shift toward stricter traceability in the sector.

The legislation comes in response to the EU’s May 2025 deadline for member states to adopt RED III, with the European Commission threatening legal action against countries that fail to comply. Germany’s proposal is seen as proactive, with final approval anticipated later in 2025 and implementation beginning in 2026.

If passed, the law will cement green hydrogen’s role in decarbonizing heavy transport and reinforce Germany’s commitment to reaching net-zero emissions by 2045, while providing clearer market signals to investors and technology providers in the renewable fuels sector.