BELIN - The German government has unveiled a comprehensive €54 billion (S$81.6 billion) package of measures to fight global warming just days before the start of the United Nations Climate Action Summit in New York.
After a long night of negotiations, the coalition of conservatives and Social Democrats agreed as a key element to introduce a system to allow the trading of emission certificates for transport and heating - two sectors that make up one third of all Germany's greenhouse gas emissions.
The existing European Union trading system so far concentrates on industrial outputs only.
The fight over how to put a price tag on emissions from heating and transport had been a sticking point for long between the two political parties.
While the Social Democrats, junior partner in the coalition, were asking for a general CO2-tax, conservatives were favouring a market-oriented solution that builds on expanding the trading system.
While this is a centre part of the plan, many other measures will be put in place to allow Germany to reach emission targets by 2030. By that time greenhouse gas emissions will be cut by 55 per cent from 1990 levels.
Germany is set to miss its own emissions goals for 2020, a huge backlash for a country that was once the forerunner in fighting climate change.
The plan is a clear compromise of conflicting goals. Under pressure from more than 100,000 protesters in Berlin last Friday demanding a more aggressive fight against climate change, the government was also wary that imposing too high a financial burden could spark a similar movement as in France.
The so-called Yellow Vests protest began after French President Emmanuel Macron raised fuel prices to decrease traffic. Although fuel costs will also rise under the German proposal, they will come more gradually and probably at a time when switching to electric cars will be easier.
Besides the introduction of a trading system for heating and transport, the government's plan includes measures from extending grants for electric car buyers to building a network of charging stations, raising road taxes for polluting vehicles, improving heating systems for buildings and raising a green surcharge for plane tickets.
"Politics is what is possible," Chancellor Angela Merkel told a briefing after the 19-hour marathon talks.
Shortly before the compromise was found Dr Merkel described the dilemma in her weekly podcast: "On the one hand, we want climate protection measures to be effective to meet our commitments. On the other hand, we want to be economically sensible and act in a socially acceptable way so that all people can afford climate protection."
Reactions to the plan were mixed. While industrial leaders consider the measures doable as they will not stall the economic engine, many green activists feel the package is not bold enough.
The opposition Green party characterised the plan as "slow, sloppy and non-committal". Greenpeace Germany head Martin Kaiser said that the measures left Germany "miles behind its obligations from the Paris climate agreement".
The package, however, carries enormous political weight. Catching up with countries that have overtaken Germany on climate issues was one goal. But equally important is the fact that the plan is accepted by the members of the two coalition partners.
The alliance of conservatives and Social Democrats is fragile at best. Two years into their term both parties are heavily losing voters with support for Social Democrats even dramatically melting away.
Without a convincing climate plan, the voices of those who are demanding the coalition to end will become increasingly louder.
This story is part of The Straits Times' partnership with Covering Climate Now, a global collaboration of more than 250 news outlets to strengthen coverage of the climate story.