Germany appears unlikely to meet the January 1, 2026 deadline to transpose the European Union’s Renewable Energy Directive III (RED III). The timeframe required for the bill to pass through both parliamentary chambers is now considered too narrow, increasing the likelihood of retroactive enforcement.
Under German legislative procedure, the draft must first be approved by the Bundeskabinett, the federal council of ministers, before being submitted to the Bundestag (lower house) and subsequently to the Bundesrat (upper house). Initially scheduled for discussion in October, the draft has been delayed due to persistent disagreements between involved ministries, particularly on the implementation of biofuel quotas.
Government deadlock and tight parliamentary schedule
The Bundeskabinett meets weekly, but the directive has yet to appear on its agenda. With fewer than four weeks remaining in the year, there is limited opportunity for the Bundestag to conduct the required readings. The Bundesrat has only one more plenary session scheduled before year-end, set for December 19.
According to sources close to the government, the bill is unlikely to be discussed before the second half of December, making it impossible to complete the legal process on time. A retroactive application of the directive is now considered the most probable outcome.
Market response and regulatory uncertainty
The delays have triggered significant concern among biofuel market participants. In the absence of a clear regulatory framework, pricing remains volatile and traders are hesitant to take positions. “These delays make forecasting difficult and make any commercial strategy risky,” said a UK-based trader.
A leaked draft dated October 31 revealed several unexpected policy changes, notably the planned expiry of double-counting incentives for advanced biofuels. The legal status of these incentives at the start of 2026 remains unclear.
Competitive pressure and prolonged uncertainty
Some stakeholders fear losing ground to other EU member states with earlier implementation timelines. The Netherlands, for example, is expected to apply RED III from January 2026, potentially creating market imbalances.
German operators are seeking clarification on whether compliance certificates issued under current rules will remain valid in January. “The question is whether volumes used in January will still be compliant once the law is formally adopted,” said a Germany-based trader.
