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Glossary · Energy industry & energy transition

Decarbonisation

Decarbonization Climate protection CO2 emissions Electrification

Decarbonisation refers to the lasting reduction, and ultimately the largely complete avoidance, of carbon dioxide emissions in a sector, an industry or an entire energy system. In the power system, the term mainly means that fossil power generation from coal, natural gas and oil is replaced by low-emission generation. In addition, there are grids, storage, flexible demand and rules that enable reliable operation without ongoing CO2 emissions. The term therefore does not describe a single technical step. It refers to a restructuring of generation, consumption and institutional governance.

Decarbonisation is usually measured in two ways: through absolute emissions in tonnes of CO2 per year, or through specific emissions, that is, an emission factor such as grams of CO2 per kilowatt-hour of electricity. The two measures answer different questions. The absolute amount shows how much a sector contributes to climate change. The emission factor shows how CO2-intensive the generation of a given quantity of electricity was. A power system can reduce its emission factor significantly and still cause relevant residual emissions if electricity consumption rises sharply. Conversely, falling electricity consumption can reduce emissions without the generation structure having truly been decarbonised.

Putting it in numbers: the German electricity mix

A common indicator is the direct CO2 emission factor of the German electricity mix, which the Federal Environment Agency (Umweltbundesamt, UBA) calculates annually. According to the UBA, each kilowatt-hour of electricity consumed in Germany caused around 765 grams of CO2 in 1990. In 2023 it was 379 grams, and in 2024 it was 353 grams. For 2025, the UBA gives 344 grams based on provisional data. The value has therefore more than halved since 1990. Current values are, however, often revised retrospectively: for 2024, the UBA had initially published 363 grams.

These figures also show why the indicator must be read with caution. Besides the growing share of renewable energy, the UBA cites further reasons for the decline since 2023: lower electricity consumption and a surplus of electricity imports. Part of the reduction is therefore not due to a restructuring of domestic generation. Whether imports are included in the calculation also depends on the accounting method chosen. If upstream emissions are included, for example from the extraction and transport of fuels, the value is higher than with the purely direct factor.

Distinction from similar terms

Decarbonisation is often equated with the expansion of renewable energy. This equation obscures important differences. More wind and solar power reduces fossil generation to the necessary extent only if the renewable electricity can actually be used. This requires grids, storage, dispatchable capacity, suitable market rules and flexible consumption, so that fossil plants run correspondingly less. Installed capacity alone says little about which power plants supply electricity during a low-wind evening hour.

Climate neutrality is also not the same as decarbonisation. The German Federal Climate Change Act understands net greenhouse gas neutrality as a balance between greenhouse gases emitted from sources and the removal of such gases by sinks. Net targets therefore allow residual emissions if they are offset elsewhere. In corporate and product accounting, this is often also done through offset certificates. Decarbonisation, by contrast, aims to actually avoid fossil emissions in the process itself. A company or an electricity tariff can appear climate-neutral in accounting terms even though, in the real power system, fossil power plants continue to cover certain load situations. Climate targets also cover all greenhouse gases, for example methane from leaks in gas supply chains. The term decarbonisation, by contrast, focuses in the narrower sense on CO2.

Decarbonisation must also be distinguished from defossilisation. Defossilisation refers to the phase-out of fossil energy sources, whereas decarbonisation is aimed at carbon emissions. The two terms overlap considerably but are not identical. Biomass is fossil-free but, depending on origin, use and accounting, causes CO2 emissions. Natural gas is a fossil energy source and releases CO2 when burned, albeit significantly less per kilowatt-hour of electricity than coal. A switch from coal to natural gas can therefore reduce emissions in the short term but is not complete decarbonisation.

Electrification is another neighbouring term. It means that applications such as heating, mobility or industrial processes are switched from fossil fuels to electricity. This can accelerate decarbonisation if the additional electricity is generated with low emissions. Electrification can increase electricity demand and still reduce total energy consumption. One example is heat pumps, which provide several kilowatt-hours of heat from one kilowatt-hour of electricity. Rising electricity consumption therefore does not argue against decarbonisation. What matters is which fossil fuels are displaced and how the additional electricity is generated at the relevant times.

Legal target framework in Germany and the EU

In Germany, Section 3 of the Federal Climate Change Act (Bundes-Klimaschutzgesetz, KSG) sets the target path. The base year is 1990: by 2030, greenhouse gas emissions are to fall by at least 65 percent, and by 2040 by at least 88 percent. Net greenhouse gas neutrality is to be achieved by 2045, and after 2050 emissions are to become negative. These targets apply to the economy as a whole and are not formulated as an obligation for individual installations. For power plants and industrial installations, they take effect mainly through instruments such as emissions trading, support and tender rules, or the coal phase-out.

At EU level, the European Climate Law makes climate neutrality by 2050 binding and prescribes a net reduction of at least 55 percent by 2030 compared with 1990. In March 2026, following an agreement with the European Parliament, the Council adopted an amendment. It adds a binding interim target: minus 90 percent net greenhouse gas emissions by 2040. There are flexibilities, including that from 2036 international CO2 credits may be counted to a limited extent. As a regulation, the Climate Law applies directly in all Member States.

Why the power system plays a key role

The power sector is particularly important for decarbonisation: electricity can be generated directly with low emissions and at the same time helps to decarbonise other sectors. If transport, buildings and parts of industry rely more on electricity, their CO2 footprint depends on the CO2 intensity of that electricity. An electric car, a heat pump or an electrolyser does not reduce emissions merely by being purchased. What matters is its operation in interaction with the power plant fleet and the grid.

This creates new requirements for grid operation. Wind and solar plants generate depending on the weather. Their output can be forecast well, but cannot be called up at will. In hours with a lot of renewable feed-in, grids must be able to transport the electricity or consumers must be able to use it. In hours with little feed-in, the system needs other sources: storage, flexible loads, imports, hydropower, biomass, firm power plants or, in future, hydrogen power plants. Decarbonisation in the power system therefore also means replacing fossil flexibility with low-emission flexibility.

Closely linked to this is the residual load. It describes the electricity demand that still has to be met after deducting feed-in from wind and sun. For the CO2 balance, it is not only the annual quantity of renewable generation that counts. It is also important which plants cover the residual load in individual hours. A high share of renewable energy on an annual average can still go hand in hand with fossil peaking and backup power plants if no other flexibility options are available.

Average, marginal electricity and accounting

A common misunderstanding arises in the handling of average values. The average emission factor of the electricity mix shows how much CO2 was emitted per kilowatt-hour on average. For some questions this measure is sufficient, for example for the long-term development of a national power system. For operational decisions, however, marginal electricity can be more important: which plant changes its output when an additional kilowatt-hour is consumed or saved? Additional consumption in a midday hour with a lot of solar power has a different effect than in an hour in which gas-fired power plants supply the last required output.

Guarantees of origin are also often overrated. They prove that a certain quantity of renewable electricity was generated in accounting terms. They do not, however, guarantee that physically renewable electricity was available for the specific consumption at every point in time. Such certificates are important for procurement, corporate accounting and electricity tariffs. For the real operation of a decarbonised power system, however, annual volume balances are not sufficient. The further fossil residual emissions are to fall, the more important become temporal resolution, location, grid bottlenecks and the actual displacement of fossil generation.

Economic and institutional conditions

Decarbonisation does not arise automatically from technical possibilities. It depends on rules, prices and responsibilities. A CO2 price in emissions trading makes fossil power generation more expensive and changes the order in which power plants are dispatched. Support mechanisms such as tenders for renewable energy reduce investment risks. Network charges, connection rules, permitting procedures, balancing group rules and market design influence whether flexible consumers, storage and controllable generation can be operated economically.

The costs of decarbonisation are therefore not the same as the costs of individual wind turbines, solar modules or batteries. Added to these are grid expansion, redispatch, reserve capacity, system services, digital metering and control technology, and securing against longer periods of low wind and sun (Dunkelflauten). These costs do not disrupt an otherwise simple switch. They are part of the transformation from a fuel-based to a capital- and coordination-intensive power system. At the same time, fuel costs and some of the risks arising from dependence on fossil imports fall away. A sound assessment must take both sides into account.

Institutionally, decarbonisation is demanding because responsibilities are distributed. Power plant investments follow market prices and policy frameworks. Grid operators plan infrastructure according to regulatory requirements. Consumers respond to end-customer prices, which include taxes, levies, network charges and procurement costs. Industrial companies weigh security of supply, electricity prices and CO2 costs together. Conflicts arise where technical possibility, market rule and political responsibility diverge. A storage unit can benefit the system and still be economically disadvantaged by unfavourable charges. A flexible consumer can reduce emissions if it is allowed to respond to price signals. If metering, a suitable tariff and process control are lacking, it remains ineffective.

What the term achieves and what it does not explain

Decarbonisation makes visible whether the emission source itself is being changed or whether emissions are merely being shifted in accounting terms. The term forces one to disclose the system boundary under consideration: is it about a power plant, an electricity tariff, a corporate group, the German electricity mix or the European interconnected system? Without this boundary, statements such as “CO2-free electricity” remain imprecise. Electricity from a single photovoltaic plant causes no CO2 in operation. A consumer on the grid, however, always uses a shared supply system in which generation, demand and grid constraints interact.

The term does not, however, explain on its own how security of supply is ensured. A decarbonised power system needs enough energy over the year, enough power in every hour and technical stability in the grid. Frequency control, voltage control, short-circuit power, black-start capability and congestion management must also work when conventional power plants run less often or are decommissioned. Decarbonisation is compatible with security of supply but requires different means than a fossil power plant system.

Nor does the term automatically answer distributional questions. CO2 reduction can make sense for the economy as a whole and at the same time burden individual households, regions or companies to different degrees. Electricity prices, network charges, support costs, investment aid and transitional rules decide who bears the costs and who benefits from new value chains. A precise debate therefore separates emission impact, security of supply and cost distribution, without losing sight of the connections between them.

In short: decarbonisation in the power system means gradually removing fossil CO2 emissions from generation and operation. The mere addition of low-emission plants or a favourable-sounding balance is not sufficient for this. The term becomes meaningful only when emission quantity, time reference, system boundary, flexibility and institutional rules are considered together. It then shows which technical changes actually avoid CO2 and which measures relieve mainly on paper or in communication.

Sources

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Edited by eCMS on 11.11.2026 18:46

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