Chancellor Angela Merkel's ruling coalition agreed on a landmark package totaling about 54 billion euros ($60 billion) by setting a price on carbon-dioxide emissions for transport and providing incentives for cleaner technologies.
Her goal is to get Germany’s climate policies back on track, easing mounting pressure at home and giving her something to showcase at a UN conference next week.
Merkel said Germany has learned from its struggles to lower emissions in recent years and will continue to evaluate the program to ensure the country meets its targets to reduce carbon-dioxide emissions.
"We've created numerous incentives, so that people can behave in a more environmentally responsible way," said Merkel. "We believe we can reach these targets."
Germany doesn't expect the plan to require the government to raise more debt. The costs for incentives such as promoting electric vehicles and upgrading older furnaces will be balanced by income from carbon-dioxide certificates. The deal was reached after more than 16 hours of overnight negotiations that began Thursday evening in Berlin.
Germany's leaders were under pressure to seal a deal, with the country falling far short of its climate goals. Tens of thousands of demonstrators gathered to march in Berlin, Hamburg, Munich and around 500 other locations across Germany as part of the Fridays for Future movement. Finance Minister Olaf Scholz said the demonstrations have been a "wake-up call."
Merkel has faced a series of protests this year demanding action to stem emissions, and the Green party has surged in the polls as the impact of global warming becomes increasingly tangible, with forests fires more frequent and droughts causing the Rhine river to recede.
Some of the SPD leaders had indicated they would push for the party to leave Merkel's coalition if the government didn't agree on substantial climate measures.