D-EITI Reporting

Crude Oil

History

Crude oil has been industrially extracted in Germany for more than 150 years. The successful oil well in Wietze near Celle in 1858/59 is generally recognised as being one of the first in the world. Crude oil production in Germany peaked in 1968 with an annual production of around 8 million tonnes. Proven and potential crude oil reserves in Germany were estimated to be almost 23 million tonnes as of 1 January 2024. Most of the crude oil reserves are in the North German Basin, primarily in Schleswig-Holstein and Lower Saxony. At the end of 2022, there were 43 oil fields in production.

Economic importance

With a share of around 35% of primary energy consumption, crude oil is by far the most important energy source in Germany. In this context, fossil fuels with a share of about 79% (2022) and 77% (2023) generally account for a much larger share than renewable forms of energy.¹ In 2022, domestic oil production amounted to around 2% of Germany’s annual consumption and the share thus remained the same compared to the previous year. Germany is one of the world’s largest users of mineral oil, making it almost entirely dependent on importing crude oil and crude oil products. Crude oil imports in 2022 rose by about 7 million tonnes compared to the previous year, to about 88 million tonnes and fell to about 77 million tonnes in 2023. These imports in total were valued at €61 billion and came from 30 countries, with 41% of the imported crude oil alone coming from Russia (22.4 million tonnes), the US (12 million tonnes) and Kazakhstan (9 million tonnes) – all figures for 2022.² In 2023, Norway, the US and Kazakhstan delivered the largest volumes. Until mid-2023, Russian crude oil was imported exclusively in the form of linefill (residual quantities in the Druzhba pipeline, about 0.2 million tonnes) and has since no longer played a role in the area of crude oil imports.³ Germany produced slightly less than 2 million tonnes of crude oil in 2022 and about 1.6 million tonnes in 2023.⁴ The country’s share of global oil production amounted to approx. 0.04% in 2022 and 0.03% in 2023. The value of crude oil produced in Germany in 2022 is estimated to be €1025 million, which represents 0.03% of GDP. Crude oil accounted for around 6% of the total value of natural resources produced in Germany in 2022.

In terms of economic significance, crude oil thus ranked third behind lignite and natural gas in the list of fossil energy resources produced in Germany and in seventh place out of all natural resources extracted nationwide.

In a 2022 international comparison of crude oil-producing countries, Germany was in 59th place (1970: 26th place). At the end of 2023, 1,940 persons were employed in oil production in Germany (see also Employment and Social Affairs).⁵

Extraction

In 2022, 43 oil fields were in production in Germany. These fields extract oil by means of some 683 production wells in drilling installations (onshore) and production platforms (offshore). In 2022 and 2023, the oilfields of Schleswig-Holstein and Lower Saxony yielded almost 90% of the total German production. The remaining quantity was mainly produced in the Federal States of Rhineland-Palatinate and Bavaria, together with very low production levels in Hamburg, and Mecklenburg-Western Pomerania. The largest German crude oil field is the Heide-Mittelplate I field in the Schleswig-Holstein Wadden Sea (Wattenmeer) National Park. It has been developed since 1987 by a drilling and production platform and by oil well facilities on the mainland. This oil field accounted for about half of Germany’s total crude oil production in 2022 and 2023.

Uses

Crude oil is a fossil fuel and mainly used as fuel for vehicles and means of transport and for heating buildings. Over the last few years, oil has accounted for 93% of energy consumption in the transport sector and has been used in the form of gasoline, diesel and aviation fuel.⁶ Oil makes up around 20% of the energy used for heating buildings. Crude oil is also used in the chemical industry in particular, for example in the production of plastics and dyes, foams, detergents, medicines, lubricants and cosmetics.

Hard coal

History

Hard coal mining in Germany gained economic importance in the course of industrialisation in the 19th and 20th centuries. Production increased steadily, reaching an annual peak of more than 200 million tonnes at the beginning of the Second World War. After WW2, German hard coal was used in the electricity, steel and heat supply industries. In the mid-1950s, more than 600,000 employees in 170 mines extracted 150 million tonnes of hard coal every year. This situation changed at the end of the 1950s. German hard coal could no longer compete efficiently in the world market since its extraction was carried out exclusively through underground mining and needed subsidies from public authorities until funding was discontinued in 2018. In recent decades, imported coal and, above all, cheaper crude oil have replaced domestic hard coal.

The current situation of the German hard coal industry is the result of a continuous adaptation process which started with the founding of the Ruhrkohle AG – a merger of 51 Ruhr area mines – in 1969.

Review

On 7 February 2007, the German Federal Government, the Federal States of North Rhine-Westphalia and Saarland, the RAG AG and the Mining, Chemical and Energy Industrial Union (IG BCE) agreed to end the subsidised production of hard coal in Germany at the end of 2018 in a socially-acceptable manner. The phase-out process is governed by the “socially acceptable phasing-out of subsidised hard coal mining in Germany” framework agreement of 14 August 2007 and by the German Hard Coal Financing Act, which came into force in December 2007 (in this connection, see Subsidies and tax concessions). For more information on the end of hard coal power generation, see Effects of the energy transition.

Economic importance

Consumption of hard coal in Germany increased by 2.7% in 2022 compared with 2021 and increased to around 39 million tonnes SKE (SKE: hard coal unit, a unit that is mainly used in central Europe). In 2022, hard coal in Germany therefore still covered 9.8% of primary energy consumption and contributed 11% to German gross electricity generation. The last two German hard coal mines closed at the end of 2018. Germany has to meet all its hard coal requirements through imports because German hard coal mining had been phased out. After the EU’s coal embargo on Russian exports came into force on 11 August 2022, existing German hard coal imports had to be replaced at short notice. As a result, the Russian share of hard coal imports fell from around 50% in 2021 to 29% (13 million tonnes) in 2022 and was mainly replaced by supplies from the USA (21%), Colombia (16%) and Australia (14%). Imports from Poland, the only remaining significant coal exporting country in the EU-27, remained at the previous year’s level of around 1.6 million tonnes. Of this, around 1.5 million tonnes was coke. Overall, Germany imported about 44.7 million tonnes of hard coal and hard coal products (primarily coke) in 2022. At the end of 2023, 1,000 persons were employed in German hard-coal mining.²

Extraction

Internationally, hard coal is mined both in underground and open-cast mines. In Europe, coal is mined almost exclusively underground and that was the case in Germany until the end of 2018. Hard coal was mined underground in Germany down to a depth of up to 1,400 m, exclusively using the “longwall mining” technique. Longwall mining involves removing the coal along a coal face up to 450 m long with a coal plough or cutting it with a longwall shearer between two extraction lines. Several thousand tonnes of coal can be mined from a longwall every day. The process is widely used today, with around 50% of the world’s hard coal being extracted using this method. The most important German deposits were in North Rhine-Westphalia in the Aachen coalfield, the Ruhr and the Saarland. In addition to these, there are a large number of smaller hard coal mining areas in Germany.

Uses

In 2022, heating and power stations accounted for roughly 51% of the total consumption of hard coal, the steel industry accounted for 42%, while other producing industries, the domestic heating sector and small consumers accounted for some 4%.

History

In addition to the mineral natural resources described in the following section (vii. Other natural resources), salts are industrial minerals. Industrial minerals are mineral resources that can be immediately used in industry due to their special chemical and physical properties, i.e. without any substance conversion. A distinction is made between rock salt, potash salts and magnesium salts.

Germany has large salt deposits, which are mainly concentrated in northern Germany. Over millions of years, deposits of salts resulted in several 100 m-thick layers. Bavarian and Austrian Alps salt is also millions of years old and has been extracted for thousands of years.

The commissioning of the world’s first potash factory in Staßfurt in 1861 marked the beginning of what is now a 150-year tradition of German potash mining. The extraction of salt by solubilisation, i.e. by making it soluble using water injected via boreholes, or by mining in salt mines, has a long history. People were digging for salt in the Berchtesgaden area as early as the 12th century. In the 16th century a salt mine was built there which is still in operation today.

Economic importance

In 2022, the amount produced in Germany was approximately 14.1 million tonnes of rock salt (including industrial brine) and some 6.0 million tonnes of potash and potash salt products. This is roughly equivalent to a value of €4.0 billion and it accounts for a 1.0% share of GDP. Salts accounted for around 22% of the total value of natural resources mined in Germany in 2022. This means that salts ranked 3rd among all natural resources mined in Germany in terms of economic importance behind natural gas and the aggregates. Domestic production covered 100% of German requirements for salts (2022). With a total production of approx. 5%, Germany was the fourth largest producer of salt in the world in 2022, after China, the USA and India, and also the fifth largest potash producer with around 5% of the world’s total production. In 2022 and 2023, a total of 8,198 and 8,398 persons were directly employed in potash mining in Germany and a further 2,386 and 2,472 were employed in salt mining.¹

Extraction

Extraction takes place in Germany in five potash mines (in Hesse, and Thuringia), seven salt mines (in Baden-Wuerttemberg, Bavaria, Lower Saxony, North Rhine-Westphalia, Saxony-Anhalt and Thuringia), six salt works (in Baden-Wuerttemberg, Bavaria, Lower Saxony and North Rhine-Westphalia, and Saxony-Anhalt) and ten solubilisation facilities (in North Rhine-Westphalia, Schleswig-Holstein, Lower Saxony, Saxony-Anhalt and Thuringia), including one operation for the extraction of potash salts (Thuringia).²

Salt and potash mining is carried out in the mines by means of drilling, blasting or cutting techniques or by brining out underground deposits (solubilisation). Brining out is done by introducing freshwater or half-brine into the salt deposits through borehole probes, after which the salts dissolve. The brine is then pumped through a probe and processed above ground in salt works or specialised facilities, where it eventually becomes salt, potash salt and other products.

Uses

Rock salt and evaporated salt is used for commercial and industrial purposes as well as for food and de-icing. Salt is an indispensable natural resource for the chemical industry, e.g. in the production of soda, chlorine and caustic soda. Glass, plastic and aluminium could not be produced without salt. It is used as regenerating salt in water softening plants, in the feed industry, in road services, for snow clearing and in the food industry. Sodium chloride meets particularly high purity requirements as an active pharmaceutical ingredient.

The potash crude salts, which are mainly extracted by mining and to a lesser extent by brine, are mainly used as fertilisers in agriculture. However, they are also used as industrial salt in electrolysis and other industrial processes and are in demand in high-purity form from the food and animal feed industry and for pharmaceutical purposes.

Quarried natural resources

Natural stone and earth materials include a variety of mineral resources, in particular gravel and sand, crushed natural stone, natural stone, limestone, marlstone and dolomite, gypsum and anhydrite stone as well as coarse ceramic clay and loam. Stone and earth are bulk raw materials; they are site-specific due to geological conditions and are not evenly distributed across the country.

History

Quarrying has been handed down since the beginning of human history. According to scientific findings, the oldest known “stones from human hands” originate from the 9th to the 8th millennium B.C., taken from ground fortifications in the Middle East. The extraction of quarried natural resources also has a very long tradition in Germany. In the past, these natural resources were mainly extracted by hand, but companies today use modern technology. Geophysics, GPS, intelligent machine and plant control and largely automated processes control the extraction of these natural resources.

Economic Importance

Every year, the building materials and quarrying industry extracts roughly 540 million tonnes of primary raw materials (excluding quartz sand and gravel, kaolin and fine ceramic clay; these natural resources are covered in the section on industrial minerals) or uses these materials in production. In 2022, gravel and sands with 253 million tonnes and broken natural stone with 210 million tonnes represented the largest share of natural resources in terms of quantity in the German extractive industry. The total value of quarried natural resources was around €5.8 billion in 2022. Thus in 2022 around 31% of the total value of natural resources mined in Germany was attributed to quarried natural resources.

Germany meets its own requirements for quarried natural resources largely from reserves within the country. Quarried products are generally mined on a regional basis and are transported over short distances to the consumers. The reason for this is that the transport costs are relatively high compared to the value of the material. Accordingly, foreign trade plays mainly a role in areas adjacent to the border. The main customers are the countries which are Germany’s direct neighbours, e.g. the Netherlands, Switzerland and Belgium. In 2022 (2023), imports in terms of volume were approx. 16.4 (14.2) million tonnes valued at €1.5 (€1.2) billion. Exports in terms of volume were approx. 26.3 (23.2 million tonnes valued at €0.9 (€0.9) billion.¹ In 2022 (2023), the quarried natural resources sector (including Other mining) employed 38,229 (37,777)² people in Germany who are subject to social insurance contributions.

Extraction

Quarried natural resources are mined decentrally and, with just a few exceptions, are extracted in open-cast operations. According to the association, gravel and sands were extracted in around 1,970 plants and natural stones at around 760 locations in 2022. A plant/location may include several production sites in Germany.³ When extracting sand and gravel, a distinction is made between dry and wet extraction, depending on the groundwater situation, and these two scenarios require different production techniques. Nearly all quarried natural resources require processing and refinement before they are sent on for their intended use. As non-renewable natural resources, they are also site-bound because of their volumes.

Uses

Around 80% of the quarried materials are supplied directly to the building industry (e.g. civil engineering to build road bases and wearing courses, track ballast) or are initially processed by the building products sector into basic and building materials (e.g. cement, concrete, quick lime, mortar, insulation materials, tiles, bricks) and then supplied to the construction industry. The remaining approx. 20% are used in the chemical, steel or glass industries. In addition to the quarried quantities of primary earth and stone, approx. 100 million tonnes of secondary raw materials (mineral construction waste and by-products from industrial processes) are used in the building industry every year.⁴ These result from e.g. the demolition of buildings, the production of pig iron (blast furnace slag) or from electricity generation in conventional power stations (FGD gypsum, fly ash). The use of secondary raw materials contributes to the substitution of primary natural resources. The substitution rate is around 15%.⁵

In Germany, the extraction of natural resources is for example regulated by the Federal Mining Act (BBergG), which replaced the old mining laws of the Federal States as well as numerous ancillary mining laws of the Federal and Federal State governments in 1982. The BBergG is complemented by various regulations on mining law matters. The Federal Ministry for Economic Affairs and Climate Protection (BMWK) is responsible for mining law within the Federal Government. The mining authorities of the Federal States (see figure 1 below) implement the law and are responsible for approving and supervising mining activities, depending on the mineral resources. For certain natural resources not covered by the BBergG, some Federal States have adopted their own regulations for these landowners’ natural resources in the so-called Excavation Law of the Federal States.

With regard to their legal regulation, a distinction is made between three groups of natural resources in Germany:

• Free-to-mine natural resources are not the property of the landowner. The exploration and extraction of these natural resources is subject to the BBergG, requires a mining license and must be approved by the mining authorities of the Federal States in a two-stage application procedure: firstly, the granting of a mining license (concession under public law) and then the site-specific approval of the operating plan procedure.
• Privately-owned natural resources are owned by the landowner and are subject to mining law (see Section 2(1) number 1 BBergG). The exploration and extraction of these mineral resources do not require a mining license, however they require approval (operating plan procedure) by the mining authorities of the Federal States.
• Landowners’ natural resources are all natural resources that are not free-to-mine or privately-owned and are owned by the landowner. They are not subject to mining law and are therefore not supervised by the mining inspection authorities. Instead, the approval procedures for the landowners’ natural resources are carried out in accordance with the provisions of the Federal Immission Control Act (BImSchG) or in accordance with provisions of state law (e.g. Excavation Laws, Water or Building Law, Nature Conservation Law).

Depending on the Federal State, natural resource and type of extraction, middle and lower-management levels of governmental bodies are responsible for the latter group of landowners’ natural resources.

The procedures for the approval and supervision of raw material extraction projects in Germany are not regulated in the same way for all mineral resources. They vary depending on the natural resource type and its legal anchoring in the Federal and State Governments.

Mining licences

Mining licenses are the basis for exploring and extracting free-to-mine mineral resources. They are applied for in the form of a permit, license or proprietary mining rights.

We can distinguish between three types of mining licenses:

Permit

The permit is a mining license that grants the right to explore free-to-mine natural resources in a particular licensed mining site. The permit is limited to a maximum of five years and can be extended by three years (see Section 16(4) BBergG). There is a legal entitlement to the granting of a permit, provided there are no grounds for refusal. The permit may be refused if, for example, no work programme is available or the specified period is not taken into account in the planning. The grounds for refusal are listed exhaustively in Section 11 BBergG. If for reasons for which the permit holder is responsible, exploration is not started within one year, the permit must be revoked (Section 18 BBergG).

License

The license is a mining license granting the right to explore and extract free-to-mine mineral resources in a particular licensed mining site. The license is granted for “a period of time appropriate for the completion of the extraction in the individual case”. Fifty years may only be exceeded if this is necessary in view of the investments normally required for the extraction. An extension is possible (see Section 16(5) BBergG). There is a legal entitlement to the granting of a license, provided there are no grounds for refusal.

The license can be refused if, for example, it cannot be proven that the mineral resources can be extracted according to their location and nature (see Section 12 BBergG). A license shall be revoked after three years in cases where extraction is not commenced or is interrupted, unless there are grounds for obstruction pursuant to Section 18(3) sentence 2 BBergG. The grounds for refusal are listed exhaustively in Section 12 BBergG (incl. reference to Section 11 BBergG).

Proprietary mining rights

Proprietary mining rights are a special form of mining license for the extraction of free-to-mine mineral resources. They comprise the rights and obligations associated with the granting of a license, but also allow mortgage lending and the registration of easements. The proprietary mining rights are entered in the land register with the name and address of the applicant and details of the field. The proprietary mining rights are granted for “a period of time appropriate for the completion of the extraction in the individual case”. Fifty years may only be exceeded if this is necessary in view of the investments normally required for the extraction. An extension is possible (see Section 16(5) BBergG). If the regular extraction of natural resources has been interrupted for more than ten years, the proprietary mining rights must be revoked in certain cases (if Section 18(4) sentence 1 BBergG is applicable). In order to apply for proprietary mining rights, the applicant must already hold a license for the specified field. In addition, proprietary mining rights may be denied if, for example, it cannot be demonstrated that an economic extraction of the natural resources is to be expected (see Section 13 BBergG).

For the documentation of the mining license, so-called mining rights registers and mining rights maps are created in accordance with Section 75 et seq. BBergG. The information on permits, licenses and proprietary mining rights as well as information on the relevant fields can be viewed there. In the EfA Bergbau project community, 14 of the 16 federal states jointly develop the BergPass application software, by means of which mining applications can be submitted (BergPass® – Start (lbeg.de)). The application to inspect the mining rights register will be available online in future.

Special case: Mining license according to old law

In addition to the above-mentioned authorisations (permit, license or proprietary mining rights), the authorisation forms also include authorisations derived from old law, which are referred to as old rights. These are mining licenses granted before the current Federal Mining Act of 1982 entered into force. They include, for example, the opencast lignite mining industry in the Rhenish mining area or the salt mining leasehold rights (Salzabbaugerechtigkeiten) and old crude oil contracts in Lower Saxony. They remain valid under current law (see Section 149(1) sentence 1 BBergG) if they have been notified to the mining authorities and confirmed by the mining inspection authorities within a transitional period of three years after the BBergG 1982 came into force. In contrast to authorisations under the new BBergG, authorisations under the old law are neither limited in time nor do mine site or extraction royalties have to be paid. In practice, these old rights related/relate in particular to coal and lignite, salts and hydrocarbons. However, the approval of an operating plan is also required for the extraction of mineral resources under the old law.

Special case: special requirements on the territory of the former GDR

The mining law system of the GDR only knew the nationally owned natural resources and other mineral resources. The nationally owned natural resources essentially comprised the natural resources that were free-to-mine and privately owned according to German federal law; they were owned by the people. Other mineral resources mainly consisted of the landowners’ natural resources and were classified as property. With the Lending Ordinance of 15 August 1990, the basis was created for converting mining licenses for nationally owned mineral resources into free-to-mine natural resources and thus recognising them in the legal system of reunified Germany. The transferred mining licenses are considered proprietary mining rights. Excluded from this are confirmed old rights based on Section 153 BBergG with the status of a license (according to Section 8 BBergG). Just like mining licenses under old law, mining licenses that are considered proprietary mining rights are unlimited in time and exempt from mine site and extraction royalties (see Sections 149 and 151 BBergG). In contrast to the former federal territory, the old rights (see section on mining licenses under old law) in the federal states on the territory of the former GDR extend not only up to 1980, but also to the deposits explored up to 1990, in accordance with the legal requirements adapted as a result of unification. They also not only include the free-to-mine but also the privately-owned natural resources.

Overview of old mining laws, mining laws in the GDR and modern mining laws

You can find an overview of all mining rights at Data on mining authorizations​.

Register of licences

Legal basis

In Germany, the right to explore and extract is only granted by the state for free-to-mine natural resources. The right to dispose of a free-to-mine natural resource is referred to as a mining license and can be applied for from the mining authorities of the Federal States (see How are projects for the extraction of raw materials approved and monitored?)

In accordance with Section 75 BBergG, the mining authorities keep a so-called mining rights register and a mining rights map in which the mining licenses newly granted under the BBergG or maintained under Section 149 BBergG (so-called “old rights and contracts”) must be entered.

Public access to the mining rights register and the mining rights map was made possible within the scope of the German implementation of the D-EITI. Since 21 July 2017, the following information on granted and maintained mining licenses can be inspected upon request to the mining authorities in accordance with Section 76(3) BBergG without having to demonstrate a legitimate interest:

• Owner
• Fields to which the mining license relates
• Date of application and granting
• Duration
• Mineral resource to which the mining license relates

Mining exploration licenses and permits can also be viewed due to the amendment (see also Explanation of mining licenses).

The competent authorities can also make this information directly accessible to the public, which has already been the case in many federal states for some time. For example, some Federal States publish clear online license registers. Other federal states are planning to set up corresponding systems.

Furthermore, all mining licenses in Germany in the hydrocarbons sector are published in the annual publication “Erdöl und Erdgas in der Bundesrepublik Deutschland” (Crude oil and natural gas in the Federal Republic of Germany) ^1,2

An overview of all mining licenses can be found at https://d-eiti.de/en/report/how-are-resource-extraction-projects-approved-and-supervised/

Example of an online system: the NiBiS map server

A good example of the publication of information on mining licenses on the Internet is the NIBIS map server maintained by the State Office for Mining, Energy and Geology (LBEG) in Lower Saxony. On this website, citizens can obtain information on more than 400 specialised maps on the topics of contaminated sites, mining, soil science, erosion, geology, geothermal energy, geophysics, hydrogeology, engineering geology, climate and natural resources. With regard to mining licenses, the following data and, in some cases, initial decisions issued are regularly available to the public on the NIBIS map server for the Federal States of Lower Saxony, Bremen, Hamburg and Schleswig-Holstein:

• Information on the licence holder
• Coordinates of the licenced area
• Date of granting and validity period of the licence
• Type of mineral resource

Mining licenses in the NiBiS map server

Implementation in other Federal States

Other Federal States have also made it possible to view the mining rights register and the mining rights map online. Examples are Baden­Württemberg at https://maps.lgrb-bw.de/, Berlin and Brandenburg at http://www.geo.brandenburg.de/lbgr/bergbau, North-Rhine Westphalia at https://www.geoportal.nrw/,Saarland at www.geoportal.saarland.de or Saxony-Anhalt. ³ In Thuringia, anyone can inspect the digital mining rights register or the digital mining rights map upon written request (e.g. by submitting an online request via the contact page TLUBN website). In the BergPass application software, the application for access to the mining rights register will be available online in 14 of the 16 Federal States.

Beneficial Ownership

The question of who is behind a company and who is its so-called beneficial owner has become increasingly important in recent years with regard to combating the financing of terrorism, money laundering and their predicate offences, such as tax crimes. The framework is set by the European Union with its Money Laundering Directive, most recently the 5th EU Money Laundering Directive (Directive [EU] 2018/843), which is implemented by Member States. On 19 June 2024, the new EU money laundering package was announced in the Official Journal of the EU, which consists of the 1st EU Money Laundering Regulation, the 6th EU Money Laundering Directive and the AMLA Regulation and will apply from 10 July 2027 or must be implemented by then. The 1st EU Money Laundering Regulation and the 6th EU Money Laundering Directive provide for further tightening of transparency regarding beneficial owners.

Beneficial owners of companies are those natural persons who ultimately own or control a company or those natural persons at whose instigation a transaction¹ is ultimately carried out or a business relationship is ultimately established (see Section 3(1) of the Money Laundering Act – GwG). The improved accessibility of this information should make it easier to combat money laundering and terrorist financing.

Enhanced due diligence obligations apply if the beneficial owner is a so-called politically exposed person (PeP). A PeP is defined in Section 1(12) GwG as any person who holds or has held a high-ranking important public office at international, European or national level. It also includes persons who hold or have held a public office below national level but of comparable political importance. PePs include, in particular, ministers, state secretaries, members of parliament, members of the administrative, management and supervisory bodies of state-owned companies (if the federal or state governments hold a stake of more than 50% and have more than 2,000 employees) and members of the management bodies of courts of audit.

In order to facilitate the identification of PePs, each EU Member State and the European Commission shall establish and update a list of PePs in accordance with Article 1(13) of the 5th EU Money Laundering Directive (Directive (EU) 2018/843), a list which specifies the precise functions to be considered as important public offices within the meaning of the Directive. In Germany, the Federal Ministry of Finance is responsible for drawing up and updating the list and sending it to the European Commission. The European Commission brings together the lists of EU member states and its own list and publishes a common list.

German Transparency Register

In Germany, beneficial owners can be found in the Transparency Register, which is accessible via an Internet portal. As part of the implementation of the 4th Money Laundering Directive (EU) 2015/849 of 20 May 2015, a transparency register was set up on 26 June 2017 in the form of a catch-all register that holds data on beneficial owners, provided this data is not already available in other publicly accessible registers.

The Act on the European interconnection of transparency registers and the implementation of Directive (EU) 2019/1153 of the European Parliament and of the Council of 20 June 2019 on the use of financial information to combat money laundering, terrorist financing and other serious crimes (Transparency Register and Financial Information Act), which was announced on 30 June 2021, changed the transparency register from a catch-all register to a full register. This means that all legal entities are obliged to notify their beneficial owner directly to the register-keeping office of the Transparency Register for entry. From 1 January 2023, an entry on the beneficial owners of all German companies and other legal entities will be available in digital format in the Transparency Register.

Information on beneficial owners in the Transparency Register

The first and last name of the beneficial owner, date of birth and place of residence, country of residence, type and scope of the beneficial interest and all nationalities are recorded.

Management of the Transparency Register

The Transparency Register is kept by Bundesanzeiger Verlag GmbH as the entrusted agency. In principle, the associations and legal entities in Germany specified in sections 20 and 21 GwG are obliged to report the current details of the beneficial owner to the Transparency Register in electronic form. Upon registration, the office keeping the register carries out a conclusiveness check of the reported data, Section 18(3) GwG. The content of the reported data is checked if a discrepancy report has been submitted.

Incorrect, incomplete or missing entries are subject to fines in accordance with Section 56(1) sentence 1 no. 55 GwG. The competent regulatory authority for the imposition of fines is the Federal Office of Administration (BVA). In addition, persons subject to anti-money laundering obligations (e.g. credit institutions, financial services institutions, insurance institutions, auditors, real estate agents or lawyers and notaries if they buy or sell real estate or commercial enterprises for the client) and certain authorities² must report any discrepancies they notice in the Transparency Register in accordance with Section 23a GwG. Obliged parties are also liable to a fine for failing to submit a required discrepancy report (Section 56(1) sentence 1 no. 66 GwG). Since the introduction of the obligation to report discrepancies in accordance with Section 23a GwG (1 January 2020), obliged entities have submitted a total of 8,851 discrepancy reports in 2020, 18,052 in 2021, 34,287 in 2022, 127,092 in 2023 and 120,352 in 2024. Authorities that are permitted to inspect the Transparency Register in order to perform their duties have submitted seven discrepancy reports in 2020, three in 2021, three in 2022, eight in 2023 and fourteen in 2024 to date. Final and non-appealable decisions on fines are published on the Internet by the BVA if the fine exceeds 200 euros.³

Inspection of the Transparency Register

The information on the beneficial owners in the Transparency Register is accessible to authorities, courts and the bodies specified in Section 2(4) GwG within the scope of their statutory duties, and to persons subject to anti-money laundering obligations within the scope of fulfilling their due diligence obligations under anti-money laundering law.

The Transparency Register has also been accessible to the general public since 1 January 2020 in accordance with the provisions of the Amending Directive to the 4th EU Anti-Money Laundering Directive (Directive [EU] 2018/843) (Section 23(1) GwG). In this context, a ruling by the European Court of Justice on 22 November 2022 in joined cases C37/20 and C601/20 stipulates that the provision of the EU Money Laundering Directive is invalid, which stipulates for the entire EU that information on the beneficial owners of companies or other legal entities entered in the Transparency Register is accessible to all members of the public without restriction in all cases. In order to protect the fundamental rights to privacy and data protection of beneficial owners, the data may only be made accessible under certain conditions. The notification obligations regarding beneficial owners remain unchanged and the continuation of the Transparency Register is also not affected.

In an EU member state, national laws must be in line with EU law. Therefore, a legitimate interest in accessing the Transparency Register must currently be demonstrated. Art. 74 of the 6th EU Money Laundering Directive provides for the reintroduction of the legitimate interest; this regulation must be implemented by the EU member states by 10 July 2025.

If interested parties wish to view the Transparency Register, they must register once online on the website www.transparenzregister.de. The individual registration steps are explained in more detail in the quick guide “Inspection of the Transparency Register for members of the public”.

To cover the administrative costs, a fee of EUR 1.65 is payable for each document that is inspected (see the list of fees in the special fee schedule of the Federal Ministry of Finance for the Transparency Register dated 15 December 2023, Transparency Register Fee Ordinance [TrGebV]).

If the beneficial owner has interests worthy of protection, it is still possible to have access to the Transparency Register restricted by the office keeping the register. For this purpose, the beneficial owners must present facts according to which public inspection would expose them to the risk of becoming victims of certain criminal offences (e.g. extortion) (Section 23(2) GwG). As of 20 September 2024, 4,423 requests for restriction have been

submitted. Since 2021, the office keeping the register has published annual statistics on the number of restrictions granted and the reasons for restrictions on its website under Downloads (direct link to the Statistics in PDF format) and transmitted them to the European Commission (see Section 23(2) last sentence GwG as amended).

As of 1 January 2021, law enforcement authorities and the Financial Intelligence Unit (FIU) were granted automated access to all data in the Transparency Register as part of their duties (see Section 26a GwG). The Transparency Register and the Financial Information Act have extended this possibility to the supervisory authorities, the Federal Central Tax Office, the local tax authorities and the federal and state constitutional protection authorities.

For D-EITI reporting, the Independent Administrator has a legitimate interest and is therefore authorised to access the Transparency Register.  For the companies invited to report, it determines whether they have an entry in the Transparency Register and whether this is plausible on the basis of the information available to it and to be obtained.⁴

The Independent Administrator was able to inspect all entries of the companies participating in the D­EITI in the Transparency Register and to check them for plausibility. On 24 April 2023, it announced: “After reviewing the information […] and comparing it with public sources available to us, we have not identified any implausibilities in the information (as of 21 April 2023). As a precautionary measure, we would like to point out that an audit in accordance with Section 23a GWG was completed for one participating company in April 2023 and an audit was still pending for another participating company at the time of our inquiry.”

The private sector players in the MSG examined whether voluntary disclosure of information on beneficial owners is possible. The companies pointed out that there are practical and legal obstacles to obtaining the consent of those affected. A basis under data protection law is required for the disclosure of beneficial owners and PePs. Without the consent of the data subjects, individual case assessments are necessary for each data subject, which is time-consuming, as contact persons in the companies must first be identified and contacted.

The EU member states are currently working together with the EU Commission on the networking of the European Transparency Registers in accordance with Art. 30 et seq. of the Amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843). This networking will lead to access to the Transparency Registers of all Member States via a common European platform (“BORIS”). Following the announcement of the ECJ ruling, 12 member states suspended access to their Transparency Registers. The networking of the European Transparency Registers was partially suspended for this reason. However, the authorities already have access to the networked data.

Other publicly available information on company structures

Information on registered natural and legal persons as well as commercial partnerships (e.g. corporations, general partnerships) is recorded in the registers of the competent registry courts. These registers document persons authorised to represent the company and, for certain legal forms, information on other parties involved that must be published (e.g. in accordance with the German Commercial Code (HGB), Limited Liability Companies Act (GmbHG), Partnership Act (PartG), etc.).

The commercial register serves to disclose the facts and legal relationships of merchants and commercial companies that are of particular importance for legal transactions.  All authorised representatives and shareholders of commercial partnerships are entered in the commercial register and can be viewed by the public. The shareholders of a GmbH are included in the publicly accessible list of shareholders.

As part of the implementation of the so-called 4th EU Anti-Money Laundering Directive 2015, the 2017 GwG reform also created regulations that expanded the required shareholding information in shareholder lists in accordance with Section 40(1) GmbHG and the GmbH Shareholder List Ordinance.

Anyone is permitted to inspect the commercial register for information purposes (cf. section 9(1) sentence 1 HGB33). The right includes all documents to be submitted, including the lists of shareholders submitted to the register. Entries and documents from the commercial, association, cooperative and partnership registers can be viewed publicly online via the joint register portal of the federal states (www.handelsregister.de), as is also possible in the Transparency Register.

The Company Register contains entries in the above-mentioned registers and the disclosed documents, as well as accounting documents and company reports in accordance with the German Commercial Code (HGB) and publications in accordance with capital market regulations (e.g. German Securities Trading Act (WpHG)). As with the commercial register, anyone can view the Company Register online (Sections 8b, 9(6) HGB; see www.unternehmensregister.de).

The beneficial owner of listed companies can often be determined on the basis of the voting rights notifications in the Company Register. Pursuant to Section 33 (1) WpHG, reaching, exceeding and falling below 25% of voting rights is subject to notification, whereby far-reaching attribution facts apply pursuant to Section 34 WpHG (e.g. in the case of fiduciary constellations). These notifications must be published in accordance with Section 40 WpHG and can be viewed in the Company Register. The 25% threshold also corresponds to the notification requirement for significant shareholdings in unlisted stock corporations (Sections 20 et seq. AktG (German Stock Corporation Act).

There is further information about companies and individuals that can be viewed online, which serves different purposes and can only be mentioned here as examples. For example, insolvency proceedings can be viewed in the Insolvency Notifications and data from debtor directories in the Joint Enforcement Portal of the Federal States.

Public contracting authorities are obliged or can access the electronic competition register in the context of procurement procedures in order to check companies with regard to the existence of final criminal convictions and penalty orders or decisions imposing fines for certain economic offences. Details are regulated in the Competition Register Act.

Corruption prevention regulations in public administration and the private sector

Corrupt behaviour can occur in a variety of forms and in different areas of a society. Whether bribery or corruptibility in international business transactions or in one’s own country, whether venality in politics and administration – corruption undermines the foundations of a society by damaging the trust of citizens in the state and the economy and can also cause material damage.

In Germany, various regulations and instruments are used to prevent and prosecute corruption in administration, politics and business. These include laws, administrative regulations and awareness-raising measures. Since corruption often happens in secret, transparency is key to preventing and detecting illegitimate practices.

Public administration

Public authorities make decisions and set rules, particularly for private sector activities. Public officials are exposed to certain corruption risks in the performance of their duties. Criminal offences and

penalties are regulated in particular by the German Criminal Code (StGB).¹ Accepting and granting benefits as well as bribery and corruption are punishable. The penalty ranges from three years (Sections 331, 333 StGB) to 15 years (Section 335(1)(2) StGB). Corruptibility of judges (Section 332(2) StGB) and corruptibility and bribery of elected officials (Section 108e StGB) are crimes and punishable by a prison sentence of one to ten years.

In accordance with Section 71 of the Federal Civil Service Act (BBG), civil servants of the Federal States and local authorities may not demand, accept promises of or accept any rewards, gifts or other benefits in relation to their office/official duties for themselves or third parties in accordance with Section 42 of the Civil Service Status Act (BeamtStG). The prohibition applies to all benefits of an economic and non-economic nature.

An analogous provision applies to employees covered by collective agreements (salaried and hourly workers) in accordance with Section 3(2) of the Collective Agreement for the Public Service (TVöD): Rewards, gifts, commissions or other benefits relating to official activities must not be accepted.

Civil servants in Germany are subject to special obligations, such as the duty of confidentiality and the obligation to comply with the official channels. In connection with acts of corruption, however, they are entitled under Section 67(2) sentence 1 no. 3 BBG or Section 37(2) sentence 1 no. 3 BeamtStG to report suspicions of a corruption offence under Sections 331 to 337 StGB to the competent highest service authority, a prosecution authority or other bodies without following official channels.

In addition to statutory regulations, the prevention strategy in the area of federal administration is essentially based on the Guideline of the Federal Government for Corruption Prevention in the Federal Administration from 2004 and its annexes. The administrative regulation specifies concrete measures to prevent corruption, e.g. the regular identification of work areas particularly at risk of corruption, the multiple-control principle, the appointment of a contact person for corruption prevention, awareness-raising and further training for employees as well as guidelines for awarding public contracts.²

The following key requirements exist at EU level: Directive of the European Parliament and of the Council 2017/1371 of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law and the Convention drawn up on the basis of Article K.3(2)(c) of the Treaty on European Union on the fight against corruption involving officials of the European Communities or officials of Member States of the EU.

Under international law, Germany’s obligations to combat corruption arise primarily from the United Nations Convention against Corruption (UNCAC) of 2003³, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organisation for Economic Cooperation and Development (OECD) of 1997 and the Criminal Law Convention on Corruption of the Council of Europe of 1999.⁴ Separate regulations exist for state administrations at the federal state level. They are essentially based on the Federal Government’s directive.

Municipal administration

A wide range of regulations and measures to prevent corruption can also be found at municipal level, such as service instructions, codes of conduct and contact persons. In view of the local self-government guaranteed in Art. 28 (2) Basic Law, the municipalities are granted the right to regulate all matters of the local community on their own responsibility within the framework of the law. As a rule, municipal administrations have detailed anti-corruption measures in place.⁵

Bribery and corruption of elected representatives

Anyone who holds a political mandate bears particular responsibility for the integrity of the political system in Germany.⁶ Corruption in the form of bribery and venality (e.g. “vote buying”) damages this integrity and therefore democracy. To counter this danger, the criminal offence of bribery of members of parliament was introduced in 1994. As part of the implementation of the United Nations Convention against Corruption, the offence was expanded in 2014 and Section 108e StGB was revised under the heading of bribery and corruption of public officials. On 19 October 2021, the penalty threat was significantly increased. Corruption and bribery of elected officials is therefore punishable by a prison sentence of one to ten years, and in less serious cases by a prison sentence of six months to five years.

Prevention and control through transparency

Corruption is an offence that is committed in secret and the parties involved have no interest in exposing it. Furthermore, the actual damage to individuals and the general public cannot usually be determined, or only after a delay. Measures to create transparency are therefore important instruments in the fight against corruption. These include, on the one hand, the regulations to combat money laundering with the help of the disclosure of “beneficial owners” through the Transparency Register (see Beneficial Owner). In addition, the transparency rights under the Environmental Information Act enable the disclosure of the contents of authorisation notices that companies in the natural resources extraction sector require for their practical activities, for example to avoid unlawful environmental pollution (see Public access to environmental information and “Authorisation Notices”).

Another instrument is the reporting of corruption by employees in companies and public authorities (whistleblowers). They are often the first to notice abuses and can use their information to ensure that violations of the law are uncovered, investigated, prosecuted and stopped. At state level, there are reporting offices for corruption, for example at the Federal Financial Supervisory Authority (BaFin), the state criminal investigation offices or in the form of ombudspersons in various federal states and municipalities. The contact persons for the prevention of corruption (at federal level in accordance with the Directive on the Prevention of Corruption, section 5) also receive reports of suspected cases of corruption.

The Directive (EU) 2019/1937 of the European Parliament and the Council of 23 October 2019 on the protection of persons who report breaches of Union law has now been implemented. On 2 July 2023, the law for better protection of whistleblowers and for the implementation of the directive on the protection of persons who report breaches of Union law came into force. The central component of the law is a new parent law for better protection of whistleblowers (Whistleblower Protection Act). The law also applies to the reporting of crimes, so that the reporting of corruption offences under Sections 321 et seq. StGB is also covered.

The Federal Criminal Police Office provides information on annual developments and corruption statistics in the Federal Situation Report on Corruption. In addition, the Federal Ministry of the Interior publishes an annual Report on Corruption Prevention in the Federal Administration (since the 2020 reporting year, the “Integrity Report”), which provides an account of the implementation of the Corruption Prevention Directive to the German Bundestag.

Private Sector

Corruption is harmful to business and society and is also prohibited. Corruption in the form of bribery and venality in business dealings is a criminal offence (Section 299/Section 300 StGB) and can be punished with a fine or a prison sentence of up to three years or a prison sentence of three to five years.

Many companies support the 17 Sustainable Development Goals (SDGs), which underline, for example, in Goal 16 “Peace, justice and strong institutions” and more specifically in Subgoal 16.5 “Substantially reduce corruption and bribery in all their forms”.

Based on 10 universal principles and the Sustainable Development Goals, the UN Global Compact (UN GCD) pursues the vision of a more inclusive and sustainable economy for the benefit of all people, communities and markets, today and in the future. Currently, the signatories include over 25,000 companies and organisations from civil society, politics and science in more than 160 countries. In Germany, more than 1,250 participants are registered, including about 1,200 companies from DAX to mid tier and SMEs. In principle 10 of the UNGC on Anti-Corruption, companies are asked to “fight all forms of corruption, including extortion and bribery”.

Other sustainability frameworks also contain principles or requirements in the area of anti-corruption. Criterion 20 of the German Sustainability Code, for example, specifies behaviour that complies with the law and guidelines. The user group includes large and small, public and private companies with and without sustainability reporting, companies subject to reporting requirements and all those organisations that want to inform their stakeholders about their sustainability performance. Selected indicators of the Global Reporting Initiative (GRI) and European Federation of Financial Analysts Societies (EFFAS) need to be reported.

Compliance is generally understood to mean ensuring that a company, its executive bodies and employees and, where applicable, third parties act in accordance with the statutory, internal and external regulations that affect the company by means of suitable, usually sub-legal measures. This does not only include compliance per se, but also the formal and informal organisation of compliance through the implementation of appropriate measures. Compliance management systems in companies are based on a risk-based approach that takes into account the long-term interests of the company, ethical behaviour, reputational risks and special liability risks in addition to avoiding conduct that is relevant under criminal law and subject to fines. Compliance regulations and codes of conduct play a central role as an instrument of prevention and a core element of an effective compliance management system. In addition, many companies have compliance officers and whistleblower systems as central points of contact for the implementation of compliance regulations.

In codes of conduct¹ , companies usually formulate a zero-tolerance policy towards corruption, which is generally binding for all employees.

Although there are no comprehensive legal regulations on compliance, some government regulations in particular are close to compliance. For example, the law on administrative offences and company law (Section 43 GmbHG and Sections 91, 93 AktG) should be mentioned here. In addition, the German Corporate Governance Code (DCGK) in the 2022 version plays a central role, for which every listed public limited company must issue a declaration of compliance in accordance with Section 161 AktG. In addition, there are a number of special statutory provisions, such as for insurance companies in the Insurance Supervision Act, for companies in the financial sector in the Securities Trading Act, in the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing MiFID II Directive with regard to organic requirements for investment firms, the Investment Services, Conduct and Organization Regulation, in the Banking Act or in the circulars of the German Federal Financial Supervisory Authority (BaFin), in particular the Minimum requirements on risk management (MaRisk) or the Minimum requirements on the compliance function and other conduct, organization and transparency obligations (MaComp).

If a company fails to take appropriate compliance measures and a corruption offence is committed as a result, the company may be fined in accordance with Sections 130 and 30 OWiG (German Administrative Offences Act). The respective requirements on compliance are not specifically regulated by law.

Extractive companies in Germany pay various fees, duties and taxes on their activities. A company that extracts free-to-mine natural resources in a Federal State pays specific mine site and extraction royalties to that Federal State as per the Federal Mining Act. Excluded from this are natural resources that are extracted on the basis of “old rights” (see Legal framework b.). Regardless of the activity involved, all companies in the extractive sector – and most other companies – are subject to trade and corporate tax.

Who is responsible for revenues collection?

Due to the federal structure of the Federal Republic of Germany, tax administration is split between the Federal Government and the Federal States. Depending on the type of tax, it is levied by the financial authorities of the Federal Government, the Federal States or the local authorities. One exception to this rule is mine site and extraction royalties, which are levied by the mining authorities of the Federal States.

Which payments are made by the extractive industry?

Corporate tax and solidarity surcharge

Extractive companies with the legal form of a corporation (in particular a limited liability company or public limited company) which have their head office or management in Germany are subject to unlimited corporate tax. Corporations which do not have their head offices and management in Germany are subject to corporate tax on the income generated in Germany. In Germany, corporate tax amounts to 15% of the taxable income. The revenue is shared by the Federal Government and the Federal States. Corporate tax is levied by the tax authorities of the Federal States. A solidarity surcharge set at 5.5% of the corporate tax determined is levied as a supplementary tax to corporate tax. The solidarity surcharge is payable to the Federal Government and is collected by the tax offices of the Federal States.

Mine site and extraction royalties

Companies and persons require a permit to prospect for “free-to-mine” natural resources (Section 7 BBergG). Owners of this type of permit are required to pay annual mine site royalties as per Section 30 BBergG. Pursuant to Section 30(3) sentence 1 of the BBergG a mine site royalty generally amounts to €5 per square kilometre of a mine site in the first year after the permit has been granted; the amount increases by €5 per year to a maximum of €25 per year, whereby the legislation of individual Federal States may provide for differing royalty amounts and even exemptions under certain conditions (see Section 32(2) BBergG and table: Federal State law regulations on mine site and extraction royalties (PDF)). The expenses incurred for prospecting are set off against the mine site royalties. Mine site royalties must be paid to the Federal State in which the licensed mine site is located.

If natural resources are found, a license is required for their extraction. However, extraction is only possible if the necessary operating plan permit and any other approvals such as water right approvals have already been granted. If the extracted natural resources can be used for financial gain, the permit holder must pay extraction royalties for the extracted free-to-mine natural resources as per Section 31 BBergG. The standard rate for extraction royalties is 10% of the market value of the natural resources in question (Section 31(2) sentence 1 BBergG). Here too, individual Federal States may stipulate different regulations in their legislation for the calculation of mine site and extraction royalties under certain conditions (see Section 32 BBergG and table: Federal State law regulations on mine site and extraction royalties).

Owners of old rights are exempt from extraction royalties in accordance with Section 151(2) no. 2 BBergG (see Legal framework). In practice, this primarily affects lignite and (until the end of 2018) hard coal extraction and old grants for granite, coloured earths, salt and brine. Even before BBergG 1982 came into force, the operators of these sites had received unlimited-term, irrevocable extraction rights free from royalties or had acquired old rights in the “new” Federal States in eastern Germany in the course of privatising proprietary mining rights. For this reason, they are not recorded in the State ordinances on extraction royalties. This excludes Saxony and Saxony-Anhalt. In these Federal States, special aspects required new licenses to be applied for in accordance with the BBergG within the framework of the Unification Treaty. These licenses are always subject to royalties. Therefore, exemptions were created in the Extraction Royalties Ordinances of both States (Parliamentary advisory service of the State parliament of Brandenburg 2008).¹ In Saxony-Anhalt, the exemptions were limited until 31 December 2023.

Mine site and extraction royalties only apply to free-to-mine natural resources. While mine site royalties are appropriated into the respective Federal State’s budget, the revenue from extraction royalties is used for inter-state financial equalisation. Mine site and extraction royalties are levied by the mining authorities of the Federal States.

For the table on federal state law regulations on  mine site and extraction royalties of the 5. D-EITI report, click here.

Trade tax

Trade tax is levied on real estate or property. Assessment of trade tax involves several stages: The municipalities due to receive the trade tax are routinely responsible for levying the tax. It is levied by the municipality in which the enterprise is located. The purpose of the trade tax is to tax the objective earning potential of a commercial enterprise. However, unlike corporate tax, trade tax is not linked to economic performance. Additions and deductions correct the income of the commercial enterprise (Sections 8 and 9 GewStG (Trade tax)). To calculate trade tax, the responsible tax office determines the taxable amount, which is 3.5% of the objective earning potential. For all the companies in its area of jurisdiction, the responsible municipality sets a uniform tax factor, which must be at least 200% (Section 16(4) sentence 2 GewStG) and calculates the trade tax based on the taxable amount determined by the tax office and the individual tax factor.

Extractive companies with the legal form of a partnership or limited company are subject to trade tax. If operating facilities are located in an area belonging to several municipalities or are operated in a number of municipalities, the tax assessment basis (assessment basis for trade tax) is distributed among these individual municipalities (so-called “reallocation”). As a general rule, the wages in the individual operating facilities are used as a yardstick for the calculations. This means that each municipality involved can levy its share of the trade tax.

An overview of the trade tax assessment rates (2022 and before) of the municipalities in Germany is available via the Federal Statistical Office.² Trade tax is the main source of tax for municipalities, followed by land tax. The Federal Government and the States’ share in the revenues of the trade tax through an allocation and redistribution mechanism for trade tax. The remainder of the trade tax for the municipalities flows into their general budgets, thus helping to finance the local infrastructure and to provide education and social services among other things.

Lease payments

In Germany, the extraction of natural resources is governed by the BBergG, if the resources concerned are free-to-mine or privately-owned natural resources. As per Section 3(3) BBergG, free-to-mine natural resources include metals, salts and fossil fuels such as hydrocarbons, lignite and hard coal. The ownership of a property does not extend to free-to-mine natural resources, so in this respect the property rights of the landowner are limited. In contrast, privately-owned natural resources are the property of the landowner. The landowner may carry out prospecting and extract the resources if found, without the need for any additional special legal title in addition to the operating permit and other required public-law approvals. Its inclusion in the scope of validity of the BBergG aims to make their extraction subject to a uniform legal framework throughout Germany and (in particular) to uniformly regulate natural resource extraction in underground mining and ensure uniformity in the management of mining inspection authorities.

In addition to privately owned natural resources, there are the so-called “landowners’ natural resources”. These are bulk raw materials, such as gravel and sands, which are predominantly used as building materials and are extracted through open-cast mining. Like the privately owned natural resources, these are also the property of the landowner, but they are neither subject to mining law nor to mining inspection authorities.

A company does not have to own the land to extract privately owned natural resources and landowners’ natural resources. If the owner of the land simply makes it available to the company on the basis of a legal private contract (e. g. through a lease agreement) – and this is often the case – that alone suffices. Such contractual arrangements may include fixed payments or payments that depend on the quantity extracted, or a combination of both variants. On the Federal State side, official bodies including local authorities (e. g. counties or municipalities) and forestry offices may have the roles of landowners and landlords. The revenues from these leaseholds may be transferred to municipal budgets or Federal State budgets, thus making it possible to finance statutory tasks.

Excise duties

Energy and electricity taxes are particularly relevant for companies in the extractive sector, within the framework of excise duties. Like the other excise duties, energy and electricity taxes are explicitly excluded from the reporting obligation within the framework of the legal commercial (corporation) payment report, as per the EU Accounting Directive and its implementation in Section 341r, no. 3 b) HGB (German Commercial Code).

The Energy and Electricity Tax Act is based on the harmonised provisions of the EU Energy Tax Directive 2003/96/EC of 27 October 2003. On 1 April 1999, the electricity tax was introduced in Germany within the framework of the law covering entry into the ecological tax reform, and the tax rates of the energy tax (at that time still called mineral oil tax) were gradually increased. This created incentives to reduce energy consumption and to develop resource-conserving products and production processes.

The Electricity Tax Act and the Electricity Tax Implementing Ordinance constitute the legal basis for levying electricity tax. The Federal Government is entitled to electricity tax revenues, which in each case amounted to €6.8 billion in 2022 and 2023.³ The revenue from the electricity tax and the higher taxation of fuels and heating materials obtained in connection with the ecological tax reform contribute to keeping social insurance contributions at a manageable level. Administration and collection tasks are carried out by customs administration.

The electricity tax is levied for drawing electricity from the grid, but it is usually levied as an indirect tax on the supplier and passed on to consumers via the electricity price for practical reasons. This means that companies in the extractive sector must also pay electricity tax. The statutory tax rate is €20.50 per megawatt hour. Reduced tax rates can be considered for various purposes, e. g. railway electricity, whereas the production industry can particularly benefit from tax relief. In addition, all consumers can benefit from tax exemptions for environmentally friendly electricity generated and used by themselves. (see Subsidies and tax concessions).

The energy tax is an excise duty on energy products. It is governed by Federal legislation, and levied to tax the use of energy products as fuels or heating fuels within the German tax territory. The Energy Tax Act defines energy products as being (in particular), petrol, diesel fuel, light and heavy fuel oil, liquefied petroleum gas, natural gas, natural gas and coal as well as biodiesel, vegetable oil and energy products of a similar nature that are used as motor or heating fuels. The amount of the tax varies according to the energy product and its intended use and is regulated in the Energy Tax Act. Tax concessions are standardised in the Energy Tax Act for certain energy products and intended uses (see Subsidies and tax concessions). Like the electricity tax, energy tax is levied by the customs administration, and the revenues flow to the Federal Government. In 2022, energy tax revenue totalled approx. €33.7 billion due to the fuel discount and approx. €36.7 billion in 2023. The revenue from energy and electricity taxes is the third-largest source of income for the Federal Government, after income tax and VAT.⁴

The sheer financial volume of electricity and energy tax payments by companies in the natural resources extractive sector, and the financial scale of electricity and energy tax concessions (see Subsidies and tax concessions) cannot be feasibly presented without a disproportionate amount of bureaucratic effort. Statistics that differentiate between individual economic sectors are not yet kept.⁵

The financial scale can be estimated on the basis of data from the Federal Statistical Office concerning the use of energy in manufacturing companies and information in the EU’s state aid transparency database (see Subsidies and tax concessions.).

EU energy crisis contribution

According to Chapter III of Council Regulation (EU) 2022/1854 of 6 October 2022 on emergency measures in response to high energy prices (OJ L 261I, 7.10.2022, p. 1), profits of companies and permanent establishments of the Union operating in the oil, gas, coal and refinery sectors are subject to an EU energy crisis contribution limited to two years (generally the financial years 2022 and 2023) (EU Energy Crisis Contribution Act of 16 December 2022 (Federal Official Gazette I p. 2294, 2325). The EU energy crisis contribution is 33% of the assessment basis. The assessment basis is the amount equal to the positive difference by which the tax profit for the tax period exceeds the average of the tax profit for the four preceding financial years, increased by 20%.

How important is tax secrecy in Germany?

Tax secrecy has a high priority in Germany. Since taxpayers must fully disclose their tax details to the financial authorities within the framework of their cooperation obligations, the privacy of their information must be ensured. This is ensured by the regulations in Sections 30 et seq. of the German Tax Code (AO) and the provisions of the General Data Protection Regulation (GDPR). The provisions of the Sections 30 et seq. AO regulate who must protect tax secrecy and under what conditions the disclosure or utilisation of data (which is subject to tax secrecy) is permitted. Tax secrecy thus serves to protect the taxpayer.

A breach of tax secrecy can only be permitted under very strict conditions. Any disclosure of information which is subject to tax secrecy is only permitted if expressly authorised by Federal law, if the data subject agrees to the disclosure, or if there is a compelling public interest in the disclosure of the tax data in question.

This is why the disclosure by the tax authorities of data for voluntary reporting initiatives – like the Extractive Industries Transparency Initiative – requires the explicit consent of the companies concerned. Because payment reconciliation regarding tax payments within the framework of the EITI process was carried out with the tax authorities for the 1st and 2nd D-EITI reports, the permission of the taxpayer in the form of a power of attorney for the Independent Administrator was required in each case for each of the finance authorities involved to query the relevant tax data. For this year’s reporting the D-EITI has – since the third report – applied an alternative procedure for assuring the quality of the payments disclosed by the reporting companies (see Disclosed payment flows and quality assurance). With this procedure it is not necessary to obtain a release from tax secrecy and thus the considerable extra work¹ that this involves for companies and the tax authorities, as the data is only collected from the company and not from the tax authorities.

Statutory reporting obligation for extractive companies (§§ 341q et seq. HGB)

The Accounting Directive Implementation Law (BilRUG) of 23 July 2015 implemented the requirements of the EU Accounting Directive 2013/34/EU of 26 June 2013 into German legislation. The provisions of Sections 341q et seq. German Commercial Code (HGB).

HGB largely correspond to the requirements of the EITI. All the “large” limited companies and limited liability commercial partnerships involved in the extractive sector or in the logging sector in primary forests are subject to these reporting requirements under commercial law (cf. Section 341q HGB). The term “large” in the legal sense refers to companies that exceed at least two of the following three criteria on two successive reporting dates (Section 267(3) sentence 1 HGB):

1. Balance sheet total of €20 million.
2. Net turnover of €40 million.
3. An annual average of 250 employees.

Within the meaning of Section 264d HGB capital market-oriented limited companies, as well as credit institutions and insurance companies in the legal form of limited companies (including limited liability commercial partnerships) are also subject to the reporting obligation, irrespective of their size. Besides reporting at the level of an individual company, the HGB also provides for an obligation to report at corporate level. Here it is not a prerequisite that the parent company itself is involved in the extractive sector or in the logging sector in primary forests. It is sufficient if this applies at least to a subsidiary.

The companies subject to the legal provisions are required to disclose payments made to government agencies above a “materiality threshold” of €100,000 per government agency, if these payments fall under one of the reasons for payment specified in Section 341r no. 3 HGB. In addition to tax payments, this includes e.g. licenses, concessions (for both it applies to mining licenses as such) and other contractual relationships related to the extraction of natural resources. The data must be allocated to individual projects, if more than one project has been carried out in the year under review.

Similarities and differences in the reporting obligation as per EITI

In addition to the reporting obligations pursuant to Sections 341q et seq. HGB, certain financial flows of the extractive industries are also disclosed via the EITI (see Disclosed payment flows and quality assurance). The reporting requirements under commercial law largely correspond to those of the EITI. However, there are also differences.

One fundamental difference between the reporting obligations stipulated by the HGB and the EITI lies in the extent of the reporting. EITI stipulates that the participating companies from the natural resources extractive sector publish all material payments they make to government agencies. In contrast to the HGB, the material payments are not exhaustively listed by the EITI and must be clarified in the course of the EITI process (see Disclosed payment flows and quality assurance). The EITI standard does not provide for a distinction between payments above or below the limit of at least €100,000 annually. The stakeholders of the German EITI have agreed to adopt the materiality threshold of Section 341t(4) HGB.

In contrast to the HGB provisions, EITI relies on the mutual disclosure of the payment flows for quality assurance as standard. The Federal State previously also had to grant an insight into its income from the extractive sector in the form of payment reconciliation.

At the request of the EITI Board and the international EITI secretariat, D-EITI took part in a pilot project as part of the 3rd and the 4th D-EITI report involving the alternative method of quality assurance for the disclosed payments that dispenses with disclosure from both parties. The procedure will continue to apply. As has been the case to date, the data is collected in addition from publicly available information on payments by extractive companies for presentation in the D-EITI reporting. This fulfils one of the EITI’s main objectives of making payment flows accessible to all interested parties in the form of open data and thus supporting the public debate. Quality assurance is applied to this data instead of the payment reconciliation through systematic analysis of the state processes and systems on which royalties and tax collection is based and a subsequent risk assessment. This methodology from the pilot project was retained for the present reporting (cf. on this the report of the Independent Administrator in Disclosed payment flows and quality assurance.

How are the revenues of the natural resources sector allocated?

The Federal State structure of the Federal Republic of Germany is reflected in the distribution of tax revenues. The level which has the authority for the revenues, i.e. how they are distributed between the Federal Government, the Federal States and the municipalities is regulated by Article 106 of the Basic Law (GG). Here a distinction is made between so-called “community taxes” and taxes which flow in their entirety to the municipalities, Federal States or Federal Government. In the case of community taxes, the revenues are shared between the Federal Government and the Federal States.

With regard to the extraction of natural resources, corporate tax and income tax are relevant examples of community taxes. The Federal Government and the Federal States are each allocated 50% of corporate tax revenues.

Trade tax, on the other hand, is purely a municipal tax. As the most important source of income of the communities, it is allocated to the individual municipalities in which the relevant operating facilities are situated. The Federal Government and the Federal States’ share in the revenues of the trade tax through a specific allocation and redistribution mechanism.

With regard to the revenues from extraction royalties, redistribution between the Federal Government and the Federal States also takes place. The revenues flow into inter-state financial equalisation. The Federal Government is entitled to the revenues from electricity and energy taxes.

As per Section 3 of the Tax Code, the tax revenues from the extraction of natural resources are not earmarked for a specific purpose; the persons responsible for the Federal Budget, the Federal State budget and the municipal budgets decide how they will be used. The amount and use of revenues and expenditure are disclosed in detail every year. To this end, the Federal Government and the Federal States adopt budget laws (the municipalities adopt budget statutes) that include their own budgets. When the budgets are published, all citizens then have free access to the information.

To facilitate public access to information on the use of tax revenues, the BMF publishes information about the Federal Budget on https://www.bundeshaushalt.de/DE/Home/home.html ¹

The Federal Government presented the first national sustainability strategy in 2002 and has updated it every four years since 2004.¹ In the update of the German Sustainable Development Strategy (DNS) for 2021, the Federal Government emphasises that “the promotion of sustainable development is the fundamental goal and benchmark of government action” in order to “meet the needs of present and future generations – in Germany and in all parts of the world – and to enable them to lead a life in full development of their dignity”. The goal is a progressive, innovative, open and liveable Germany that lives up to its international responsibilities and is characterised by a high quality of life, effective environmental protection and inclusive and integrative policymaking.^{2 3}

The new edition of the German Sustainability Strategy in 2016 was aligned with the United Nations 2030 Agenda adopted in 2015 and its 17 Sustainable Development Goals (SDGs), for which specific implementation measures were defined.

These were further developed with the DNS 2021, with the 17 sustainability goals serving Germany as a “compass (…) for all policy areas”⁴ and thus also for the extraction of natural resources. One goal of DNS 2021 is to “use resources sparingly and efficiently” and to increase Germany’s overall raw material productivity.⁵ The aim is to return to the trend of the years 2000 to 2010 (annual increase of 1.6%) by 2030. According to the Federal Statistical Office (Destatis), total raw material productivity increased by 9 percentage points from 2010 to 2018 (0.9% per year), which is below the target path.⁶ As in many other market economies, a relative decoupling of economic growth and the use of natural resources⁷ can be observed in Germany, but not to the extent desired in terms of environmental and climate protection.

An update of the German Sustainable Development Strategy is planned by the end of 2024, involving relevant stakeholders and citizens.⁸ The dialogue presented for this purpose is structured thematically along “transformation areas” and “levers”; from a raw materials perspective, the transformation area “circular economy” is of particular relevance. The target contained in the 2021 Sustainability Strategy (DNS) for a further increase in total raw material productivity in the trend 2000-2010 (indicator 8.1) is expected to be adopted in the 2024 DNS.

The German Sustainability Strategy is based on a holistic, integrative approach: Sustainable solutions can only be achieved in the long term if the interactions between the three dimensions of sustainability – ecology, economy and social issues – are taken into account. The strategy aims to achieve economically efficient, socially equitable and ecologically sustainable development, with the planetary boundaries of our planet and the goal of a life in dignity for all as the absolute guidelines for policy decisions. This also applies to the various value chains in the extractive industries.⁹

For the natural resources sector, the goal of the German Sustainable Development Strategy was reaffirmed in the natural resources strategy¹⁰ adopted by the Federal Government in January 2020 and in the key points¹¹ presented by the Federal Ministry for Economic Affairs and Climate Action in January 2023 to further concretise the strategy. Germany is one of the world’s leading technology locations and, as an exporting nation, depends on a reliable supply of natural resources. Against the backdrop of the climate goals of the Paris Agreement and the associated double transformation of energy transition and digitalisation, primary resource consumption in Germany is even expected to increase in the coming years (see Effects of the energy transition and Supply security). This entails a responsibility to promote the efficient and sustainable use of natural resources in a manner that is environmentally and socially responsible. The German government has therefore set itself the goal of reducing the consumption of primary natural resources and closing material cycles. To achieve these goals, the circular economy will be significantly strengthened as a pillar of the natural resources strategy and a national circular economy strategy will be developed by 2024. Both strategies should be closely interlinked (see Circular economy).

The chapters Managing human intervention in nature and landscape; Environmental protection, renaturation, recultivation; Employment and social affairs and Circular economy, in particular recycling, highlight some important contributions regarding the three dimensions of sustainability ecology, economy and social issues; in addition, reference is made to various sustainability reports by public, civil society and private actors.

The chapter Managing human intervention in nature and landscape explains the legal framework in Germany with regard to human interventions in nature and landscape due to natural resources extraction in Germany. It also contains information on compensatory measures and payments, provisions and implementation securities from extractive companies for the restoration/rehabilitation of former mining areas and water abstraction fees.

The chapter Environmental protection, renaturation, recultivation additionally describes for the various extractive sectors which aspects are important for the rehabilitation of former mining regions and areas in Germany and which legal principles apply in this respect.

The chapter Employment and social affairs covers the area of employment and the legal provisions for the social protection of employees in the extractive industries in Germany. The diversity and equal opportunities section focuses on gender equality. The importance of co-determination and cooperation between employee representatives and employers as part of the German social partnership is discussed. Information is also provided on measures to mitigate the loss of jobs resulting from the end of the extraction and use of fossil fuels for electricity generation.

The “Corporate responsibility” section includes references to areas such as private sector initiatives for greater sustainability and appropriate collaborative agreements with civil society. In addition, the current legal situation regarding sustainability reporting is presented.

The chapter Circular economy, in particular recycling examines the status of Germany’s efforts to use resources efficiently and economically. As Germany is highly dependent on imports of natural resources, this is an area with great potential for innovation.

Rules of intervention under nature conservation law

Every mining activity is associated with interventions in nature and landscape and can result in serious environmental impacts. Compensatory actions, such as compensatory or substitution measures according to the Federal Nature Conservation Act (BNatSchG) are intended to compensate for interventions in nature and landscape and to restore or replace their impaired functions. Only if real compensation is not possible, compensatory payments are to be made, provided that the nature conservation interests are of secondary importance. The compensatory payment shall be earmarked for nature conservation and landscape conservation measures.

Overall, it is estimated that just over 1% of Germany’s entire area will be necessary to ensure the country’s natural resources in the medium and long term. On the last key date of 31 December 2022, according to the Federal Office of Statistics approx. 1,340 km², i. e. approx. 0.375% of the area of Germany is used as mining land.¹ In the last 30 years or so, the amount of land required for quarrying in Germany has therefore decreased by over 28% (538 km²). The equivalent in area for the volume of natural resources used in 2022 was just over 28 km². In relation to the total area of Germany (357,582 km²), this results in a temporary land requirement of approx. 0.008% of the country’s area for 2022.² The areas used for the extraction of natural resources are concentrated in different regions, which means that there are significant differences in how strong the different regions are affected by the impacts on nature and landscape.

Legal framework

The Federal Mining Act (BBergG) requires the mining operator to take the necessary precautions to reclaim the surface to the extent required by the circumstances (Section 55 (1)(7) BBergG). The term “reclaiming” means proper shaping of the surface used by the mining operation, considering the public interest (Section 4 (4) BBergG). This term covers all activities required for recultivation, without the status quo ante having to be achieved. Within the scope of the obligation under mining law to rehabilitate the area, the obligation that simultaneously exists under nature conservation law to compensate for interventions in nature (Section 13 BNatSchG) may have already been met in the individual case – depending on type and scope of the measures taken for this purpose.³

The Federal Nature Conservation Act (BNatSchG) establishes the general principle that major interventions in nature and landscape are to be primarily avoided and minimised by the polluter (avoidance obligation). Unavoidable interventions are to be compensated by means of compensatory or substitution measures (hereinafter “compensatory measures”) or, if this is not possible, by a compensatory payment in money (Section 13 BNatSchG). It is not possible to deviate from this general principle and the ensuing legal consequences (first the avoidance, then compensatory measures and, as a last resort, a compensatory payment). In the case of mining measures, the avoidance rule primarily targets a variant that is as environmentally friendly as possible. Unavoidable interventions in nature and landscape must therefore be offset or mitigated, particularly through the promotion of natural succession, renaturation, near-natural design, rehabilitation, or recultivation (Section 1 (5) p. 4 BNatSchG). Interventions are avoidable if there are reasonable alternatives to achieving the purpose of the intervention in the same place, without or with less impairment of nature and landscape (Section 15 BNatSchG).

Compensatory measures must be maintained and legally secured during the required period. The period of maintenance is determined by the approval authority in the certificate of approval. The perpetrator of the intervention (the polluter) or its legal successor is responsible for the execution, maintenance and safeguarding of the compensatory measures.

In accordance with German federal and European regulations, the possible effects of a project on particularly protected species of animals and plants (special species protection legislation) and on the European protected area network NATURA 2000 is one of the aspects that must be examined in the approval procedures for nature conservation law interventions.

The BNatSchG contains a full regulation, viz. that the laws and norms of the Federal States on the instrumental design of the intervention regulation may not contradict it. To make the regulation more applicable, some Federal States have made supplementary regulations, whereby the practice differs from Federal State to Federal State. For example, the concrete assessment of the amount and the use of compensatory payments differ from Federal State to Federal State. As different biotope type lists are used at Federal State level, the Federal Government produces conversion keys that allow the respective biotope types to be counted.⁴

The Federal Compensation Ordinance (BKompV) provides specific details of the rules of intervention intended under nature conservation law for projects in the area for which the Federal Administration is responsible. It covers public infrastructure projects (e. g. power lines and pipelines, offshore wind farms, waterway projects and usually also Federal autobahns). The objective of BKompV is to standardise the rules of intervention under nature conservation law across all Federal States and make them both more transparent and more effective. Different regulations continue to apply in some countries.⁵

Approval practices in the extraction of natural resources

If a company plans to intervene in nature and landscape by extracting natural resources, the rules of intervention under nature conservation law are examined at the level of the responsible approval authority. Different laws may apply depending on the natural resource extracted. This depends on which authorities are responsible in a Federal State. A nature conservation authority may be responsible for the extraction of mineral resources that are not subject to mining law or water law (The nature conservation legislation of many federal states includes specific procedures for extraction e.g. in Saxony-Anhalt⁶). In addition, the mining authorities of the Federal States (in the case of free-to-mine and privately-owned mineral resources or underground extraction) or the Federal State authorities responsible for enforcing the state excavation laws, the building and water management laws or the Federal Immission Control Act (in the case of so-called landowners’ natural resources) may also be involved.⁷ This procedure corresponds to the “piggyback procedure”: The rules of intervention are always examined within the framework of the notification and approval procedure under the specific legislation, without separate administration proceedings. The nature conservation authorities must be involved, and they will give their opinion as nature conservation experts. The responsible approval authority then grants the authorisation taking account of the opinion in “consultation” with the responsible nature conservation authorities (Section 17(1) BNatSchG).⁸ The responsible approval authority, which makes the decision on the legal consequences of the intervention, is here not bound by the opinion of the nature conservation authorities that go beyond the legal requirements of the nature conservation laws and the recognised professional standards in nature and species conservation.

It is allowed to differ from these on objective grounds. It is compulsory to comply with the provisions of the specific species protection independently of the rules of intervention. Statutory biotope protection, national and European area protection, like special species protection, are nature conservation concerns that are independent of the intervention regulation and must be dealt with separately.

In the approval procedure, the entrepreneur shall provide a nature conservation expert opinion to the competent authority, in which the contents are processed in accordance with Section 17(4) sentence 1 BNatSchG.  A Landscape Management Plan (LBP) for example provides information on the location, nature, extent, and timing of the intervention, as well as the intended avoidance and compensatory measures and, where required, the amount of the compensatory payment. In this case, a major part of the necessary compensation is to be regularly provided for renaturation or recultivation (see target definition in Section 1(5) sentence 4 BNatSchG).

Compensatory measures on external surfaces are necessary, for example, if certain landscape or biotope structures at the place of intervention cannot be restored in the same way, if the time that has elapsed between the damage and renaturation is too long or if specific measures are necessary for reasons of biotope protection, protection area or species protection.⁹

In the case of the extraction of the so-called “free-to-mine” (e. g. coal, salts, oil, and natural gas) and privately-owned natural resources (e.g. quarried natural resources, and industrial minerals) governed by the German Federal Mining Act (BBergG), the intervention regulation is processed as per the BNatSchG in accordance with the operating plan procedure under mining law, whereby the obligations as per the BNatSchG apply in full. Compensation for interventions can in general already take place within the scope of the obligation under mining law to rehabilitate the area (Section 55(1) no. 7 BBergG, Section 1(5) sentence 4 BNatSchG). If this is not possible, compensatory and/or substitution measures or subordinated compensatory payments pursuant to BNatSchG are necessary (see North Rhine-Westphalia (NRW) example below). In the case of procedures which are subject to the Federal Mining Act (BBergG), the legal instruments of the Federal Mining Act are applied, such as (and in particular) regular monitoring based on the main operating plans, which must be submitted and re-approved every two years.

Documentation of compensatory measures for interventions in nature and landscape

Since the amendment of the BNatschG in 2010, German Federal States are obliged to create compensation directories for all interventions in nature. However, these take various forms and are not publicly available in all Federal States.

Example of the transparency of compensation directories in Baden-Wuerttemberg¹⁰

The basis for the compensation directory in Baden-Wuerttemberg is formed by Section 17(6) of the BNatSchG and Section 18 of NatSchG BW, the compensation directory regulation (KompVzVO) and the eco-account regulation (ÖKVO) of the State, which provide for the obligation to make documentation available for the public. The latter two regulations can be downloaded from the website of the Baden-Wuerttemberg State Law:

• Compensation Directory Regulation (KompVzVO)
  https://www.landesrecht-bw.de/bsbw/document/jlr-KompVerzVBWrahmen

• Eco-Account Regulation (ÖKVO)
  https://www.landesrecht-bw.de/bsbw/document/jlr-%C3%96koKVBWrahmen

The Baden-Württemberg compensatory register is divided into the sections “eco-account” and “impact compensation”.

An eco-account is an instrument for the perpetrators of interventions (polluters). It enables them to decouple compensation measures temporally and spatially from the extraction site, making the measures more flexible to manage. Compensatory measures can be stockpiled via so-called “eco-points”, which are accumulated by means of the targeted enhancement of external areas through nature conservation. The corresponding eco-points can be allocated for later interventions to compensate for the interventions either in whole or in part.¹¹ Polluters such as natural resource companies and local authorities are involved here as bodies of measures, consumers, and traders of eco-points.

A central overview of the total number of all interventions in Baden-Wuerttemberg, including their compensatory measures, is not available; however, the legal environmental protection eco-account measures and the compensatory measures already assigned to an intervention under nature conservation law can be accessed via the Internet sites of the responsible nature conservation sub-authorities at city and county levels (https://www. lubw.baden-wuerttemberg.de/natur-und-landschaft/ oeffentliches-verzeichnis-abteilung-oekokonto).

There, you can view the following information on the nature conservation compensatory measures of the districts:

• description of the approval authority and the compensatory measure (brief description),
• file number and date of the approval certificate,
• type of project causing the intervention,
• project developer,
• location of the compensation area,
• measures for the timely implementation of the compensatory measure and the fixed period of maintenance,
• state of the implementation.

The following information on eco-account measures can also be accessed:

• complex of measures,
• status,
• natural area,
• location of the measure,
• eco-points.

Compensatory measures on intervention areas and substitute areas are documented in the compensation directory of the Federal State of Baden-Wuerttemberg. Measures taken since April 2011 have been listed. At present work is proceeding with updating KompVzVO. In future, compensatory measures under building planning law within the meaning of Section 1a (3) and 200a BauGB are also to be included, if they are carried out outside the impact area of the development plan, in a spatially separate partial area of application of the impact development plan, in the area of application of a compensatory development plan, on areas provided by the municipality outside the impact development plan or on areas in another municipality (Section 18 (2) NatSchG BW). In addition, Natura 2000 and species protection-related measures are to be recorded. It is intended that this will provide greater transparency and make it easier to verify these measures.

Besides, impairments of Natura 2000 sites below the significance threshold should also be recorded to better determine possible summation effects (as documented in the so-called summation register), cf. Section 18 (3) NatSchG BW.

Example of the assessment of compensatory payments in North-Rhine-Westphalia (NRW) ¹²

According to Section 15 (6) BNatSchG, in the case of an authorised intervention the polluter can make a payment as an Ultima Ratio if negative impacts on nature are unavoidable, or if they cannot be compensated or replaced within a reasonable period. The compensatory payment is based on the average costs of the non-feasible compensation measures, including the necessary average costs for their planning and maintenance, as well as the provision of the area, which encompasses personnel and other administrative costs. If these costs cannot be ascertained, the compensatory payment is based on the duration and severity of the intervention, considering the advantages accruing to the polluter (Section 15(6) sentence 1 et seq. BNatSchG).

The assessment of the amounts of compensatory payment is the exception rather than the rule in the approval of the activities of the extractive industry in North Rhine-Westphalia. Nevertheless, there are cases in which, for example, a major part of the compensation takes place in recultivation, but a small computational, compensation deficit still must be implemented on an external area, or the assessment of the compensation through rehabilitation will not be appropriate. If the area in question or the required measure is unavailable or can neither be implemented nor is expedient at a reasonable cost, a relevant compensatory payment is assessed. In North Rhine-Westphalia, this assessment is made in accordance with the provisions of the State-level Nature Conservation Law (LNatSchG NRW) in consultation with the nature conservation authorities of the same administrative level (Section 33 (1), LNatSchG NRW).

The recipient of the compensation payment is the district or town/city in which the intervention is carried out; the compensation money is to be earmarked for nature conservation and landscape management measures (Section 31 (4) LNatSchG NRW).

If the compensatory payment is to be paid for an intervention in forested areas or to be used for the afforestation of land, the payment will be made available to the forestry administration and earmarked for that purpose (Section 31(4) LNatSchG NRW).

Examples of the assessments of compensatory payments are the open-cast gravel mines in the open-cast mining zones in front of the lignite mining projects. In three of the open-cast mines, rehabilitation that is valuable in nature conservation terms was not indicated because open-cast lignite mining would use the area directly after the gravel or sand extraction operations. In these cases, the local sub-authority for nature conservation developed a simplified procedure by means of which an appropriate compensatory payment could be assessed. A total of €265,767.90 in compensatory payments was assessed for the three projects mentioned above.

For another open-cast gravel mining project, a small-scale expansion was planned for which a compensatory payment was assessed, if the intended recultivation could not be implemented. The district sub-authority for nature conservation, however, would have to use the compensatory payment of €21,900 it received to implement another equivalent compensatory measure.

In the period between 2011 and 2015, only a total of around €300,000 in compensatory payments were assessed for the North Rhine-Westphalia mining authorities. The significance of compensatory payments in the procedures carried out under mining law has fallen considerably between 2015 and 2019. During this period, the total amount was less than €100,000.

So far, there have been no compensatory payments for the opencast lignite mining industry in North Rhine-Westphalia; intervention compensation is mainly carried out in the form of rehabilitation. The ratio of the many open-cast mining projects (especially lignite mining projects, some of which are on a large scale) conducted under mining law in North Rhine-Westphalia to the few small projects mentioned above shows that the assessment of compensatory payments plays a subordinate role.

Cooperation between stakeholders

Since each extraction of natural resources represents a significant intervention in nature and landscape, an environmentally friendly extraction development and technology approach must be standard for companies in this sector. Timely renaturation and recultivation can contribute to the promotion of biological diversity; but operating extraction sites may also sometimes be habitats for rare animals and plants. Cooperation between the extractive companies, the employees there and nature conservationists who are familiar with the area has proven to be useful. This means that operational management can be adapted to local and specific biodiversity requirements. This usually succeeds if the company management and employees are continually involved in dialogue with specialist nature conservation institutions and persons. In the case of expansions or new extraction projects, an early dialogue between the stakeholders can also avoid conflicts before they arise. Information and training materials on the subject help to broaden the impact of initiatives like this, which are supported by strong memberships in the environmental and nature conservation associations, the industrial trade union for the construction, agriculture and environment sectors, and economic associations at Federal Government and Federal State levels.

Abstraction of water for the extraction of natural resources

The abstraction of ground and surface water may be necessary during the extraction and further processing of natural resources. The volumes of water abstracted in Germany for the activities of the natural resources extractive sector are published by the Federal Office of Statistics based on the data of the responsible statistical authorities of the Federal States.¹

The mining and quarrying sector abstracted a total of 1,289 million of m³ of water in 2019 (mainly groundwater). groundwater). Coal mining accounted for around 75% of this volume. This corresponds to around 6.5% of all water withdrawn by industry in Germany in 2019.² Depending on the regional importance of the extractive sector – especially coal mining – the proportion is higher in some Federal States (in some cases more than 50%).³

Use of water

During the initial development of a deposit of natural resources, the pumping out of groundwater can lead to a lowering of the groundwater level. Water abstractions during extraction of the natural resources may also be necessary e.g. to keep shafts or excavation pits dry. If necessary, this so-called drainage and mine water is treated, purified, seeps away or is reused, if applicable, complying with the approval conditions, e. g. to maintain moist biotopes or introduced into surface water without being used further.

The use of water by the mining industry is associated with consequences for the water balance. Environmental impacts may result, inter alia, from changes in groundwater levels, the flow velocity of water bodies and the discharge of marsh and pit water into surface water bodies.

Example: Use of water in potash and rock salt mining

In potash and rock salt mining, water from different origins and of different quality levels including river water, groundwater and drinking water is used in many processes.

Raw salt is mined by means of drilling and blasting in the underground mining of potash and rock salt. However, salt can also be extracted in a brine plant, where fresh water is introduced into soluble (salt) rock by means of a borehole, resulting in the creation of chambers filled with salt water. The salt-saturated water (so-called brine) is then conveyed to the surface via another pipeline. The salt is extracted when the brine evaporates.

Legal framework for water abstraction

The Water Resources Act that came into force in 1960 dictates that water can only be abstracted from the groundwater and surface water if a permit has been granted in which this usage has been regulated in terms of the nature and quantity of usage. An EU-wide legal framework for the protection of water and groundwater was created in 2000 with the Water Framework Directive 2000/60/EC of 23 October 2000 (WRRL). The WRRL stipulates (inter alia) that the costs of water services (including certain water abstractions) and environmental and resource-related costs are covered by the polluter-pays principle.⁴ Water abstractions must also be checked for compliance with the general environment targets of the WRRL. If the volume of ground or surface water abstracted exceeds certain thresholds, environmental impact assessments must be carried out for the projects concerned.

The implementation of the WRRL into national law took place in Germany through the Water Resources Act, which regulates the protection and use of surface and groundwater at national level. Water abstraction procedures are subject to the reservation on the granting of permits by the water authorities. The State Water Acts of the Federal States supplement and concretise the federal water laws. Overall, the Federal States are left to regulate the water abstraction fees.

[1] In its ruling of 11 September 2014 (docket ref. C-525/12), the European Court of Justice (ECJ) confirmed that with these regulations of the Federal Government and the Federal States, Germany had sufficiently implemented the principle of cost recovery from the EU Water Framework Directive. The ECJ also expressly points out that in accordance with the provisions of Article 9(4) of this directive, the EU Member States are in any case empowered not to apply the cost-covering principle to certain water uses, while addressing the purposes and objectives of the directive.

Structuring of water abstraction fees

The structuring of fees for water abstraction is carried out by the Federal States that receive these fees. This is why water abstraction fees levied in Germany differ widely in 13 out of 16 Federal States. In Hesse, Bavaria, and Thuringia no water abstraction charges are currently levied. The total revenue in the 2024 budgetary plans of the Federal States was estimated at around €452.9 million. These revenues are partly used for water management tasks, or they flow into the general budget of the respective Federal State.⁵

Most Federal States levy consumption-related fees for the abstraction of ground and surface water.⁶ Depending on the individual structure, these fees are also intended to reflect the “value of the public services” for the utilisation of resources and can therefore function as incentive taxes for a sustainable water management programme and for the allocation of environmental and resource costs (Section 1 and Section 6a of the Water Resources Act).

In most Federal States, levy rates differ according to the type of abstraction, volume, origin of the water (surface water or groundwater) and the purpose for which the water is to be used. There are also various state-specific deviations from the relevant rules through exemptions or discounts, and these may also apply to the extractive sector.

Water abstraction fees in the natural resources sector

Quite different rates are levied nationwide for the abstraction of water in the extractive sector. For example, fees of between 0.5 and 6 cents/m³ for surface water are applied in some Federal States for certain types of mining operations (e. g. in Baden-Wuerttemberg, Lower Saxony, Mecklenburg-Western Pomerania), while in other Federal States, the fees for groundwater abstraction can range from 5 to 18 cents/m³.

In some Federal States, including Rhineland-Palatinate and Schleswig-Holstein, on the other hand, groundwater excavation is exempt from water abstraction charges. In some Federal States, there are explicit regulations for dewatering operations in mines, or for water that is reintroduced into surface waters without being subsequently used.

The various fee levy rates, exemptions and discount rules are published in the individual State Water Acts or ordinances of the Federal States. The German Federal Environment Agency provides an overview of the relevant fee levy rates in the extractive sector.⁷ However, a publicly accessible source of information on the amount of revenue from water abstraction fees paid by the extractive sector does not exist in all Federal States. Reports on this are regularly given to the State Parliament in North Rhine-Westphalia.

Water abstraction fees represent a flow of cash between companies that extract natural resources and the German State. Due to the different levy rates (inter alia) in individual Federal States, most payments lie below the materiality threshold agreed in the D-EITI, which is why they are not disclosed as a payment flow in the D-EITI report. Where companies in the extractive sector have reported water abstraction charges above the materiality threshold of €100,000, these can be found in the BilRUG payment reports.⁸

The extraction of natural resources is responsible for lasting interventions in nature and the landscape in Germany, e. g. because overburden has to be removed and heaped up in piles or areas are temporarily used to erect conveyors or other operating plant. The statutory requirements of the Federal Mining Act guarantee that rehabilitation will be planned at an early stage and taken into account. A balance is achieved between the interests of the extractive sector and the environment in the approval procedure reflecting the Federal State’s plans and mining law. Citizens, the elected political representatives of mining regions together with sectoral authorities, environmental associations and other public interest parties have various opportunities to exercise influence and be involved in co-determination. In general, the principle that the burden on the environment must be kept to the minimum applies to both the planning and operation of mines. In addition to this, the mining operator has an obligation to rehabilitate the areas affected by the extraction of natural resources (Section 55 BBergG). The measures on how the surface will be structured in an individual case is part of the planning and approval process and depends on the original condition of the area used for mining and what the plans are for its future use.

When the mining authorities approve the respective operating plans, one of the aspects they also check is whether the company can finance the costs that will be incurred at the time as a result of future rehabilitation obligations. If there are any doubts, the mining authorities can make approval of an operating plan dependent on implementation securities (Section 56(2) BBergG).

As a rule, the companies make provisions to meet their future mining-related obligations. The purpose of these provisions is to provide financial security for the rehabilitation and the amount must be assessed accordingly. The principles of provisions are the rules on setting up provisions for future obligations that are binding for all businesses under commercial law.

Coal and mining

Rehabilitation during the operational and closing-down phase

Rehabilitation during the operating phase

Where rehabilitation is carried out during extraction and processing operations, the areas taken for extraction are generally rehabilitated in parallel to the continuing extraction. In the course of extracting natural resources, the material on the site is piled up and the shape of the land changed whilst adhering to safety requirements. The land is rehabilitated by means of geotechnical, landscaping, hydraulic engineering, agricultural and forestry measures to restore the land usage or biotopes.

One example of this is groundwater lowering required for operation in opencast mines. In these cases, backfilled areas¹ must be designed in such a way that no unwanted waterlogging occurs preventing the intended public interest use (including agriculture, forestry or construction). In addition, the final slopes of opencast mines that are not backfilled and in which a lake is to be created after the end of coal extraction must be laid out and designed in such a way that permanent stability is ensured during and after the rise of groundwater and the filling of the former opencast mine with water. To this end, appropriate technical guidelines are applied and expert assessments are used. A prerequisite for successful reclamation of mine sites is the targeted, selective extraction of soil and the refilling of mining holes using soil material that meets the requirements relevant for the intended subsequent use of the mine site. This requires a correctly coordinated management of soil material. In slope areas, for example, this soil material must primarily fulfil the requirements relevant for ensuring stability. If, for example, a subsequent agricultural use of backfilled areas is planned, the primary reclamation and thus recultivation objective is to restore soil fertility and soil functions as a habitat for plants and cultivation.

The objectives of reclamation and the measures to be taken and requirements to be met for this purpose are defined in lignite plans or the operating plans approved under mining law. Depending on the type of use, the topsoil used for restoration must be “cultivated” and the areas must be gradually looked after and developed:

1. Agricultural rehabilitation includes scientifically tested crop rotation to achieve the rehabilitation of the soil. Once successful rehabilitation is complete, the areas are made available for their subsequent use and released from supervision by the mining inspection authorities.
2. Rehabilitation through forestry aims to establish mixed woodland with a variety of uses. Depending on site conditions, native species of trees dominate an effective mix of broad-leaved trees and conifers.

Elements to benefit nature are incorporated to support integrated and widespread nature conservation, e. g. planting native trees, including dead wood and other small structures, hedge planting, planting solitary trees, including wild fruit, creating dry biotopes and wet scrapes, retention of small unplanned areas and small areas of succession sites. This work is undertaken according to locally recognised methods and in close cooperation with the specialist nature conservation authorities. It will still be necessary to dewater the surface, build paths and contour the surface for optimum site restoration in order to facilitate functional use after extraction has finished.

Rehabilitation during the closing-down phase

Once the natural resources have been extracted, renaturation will be undertaken in accordance with the specification in the final operating plan. In the large majority of cases, a remaining lake exists at the end once open-cast lignite mining has finished. The needs of future use after mining will be taken into account in the completion work, providing it has been agreed with future users before the mine was authorised. Underground coal mining has finally ceased in Germany since the end of 2018. After the cessation of hard coal extraction, the operator will withdraw from the operating buildings. Mechanical equipment, operating materials, pipelines and other operating equipment have to be dismantled and removed from the mine site. In addition, the isolation of mine fields and the backfilling of extraction holes may be necessary. Besides, waste must be disposed of properly. As a rule, the withdrawal from an underground mine site is followed by a rise in mine water. The mine water level must often be limited by removing excess water to avoid any risk to aquifers used to extract drinking water. This usually requires conversion work in mining shafts to be able to resume mine water extraction in due course to limit the rise in mine water.

Land used for mining activities above ground shall also be properly reclaimed with due regard to the public interest. Here, too, operational facilities and equipment must be dismantled, provided that they are not to be used later for any other purpose. If the result of risk assessment indicates a need for remediation, any necessary remediation or safeguarding measures are planned and then implemented. Waste rock piles must also be made usable again so that they do no longer pose a danger even after filling of further material has stopped to enable a duly planned subsequent use.

Any temporary storage or outside heaps created during mining operations are removed or recultivated. Once checks have been carried out to ensure that the soil is safe, waste that had accumulated in heaps since the start of mining is recultivated to form features such as landmarks and also to meet regional planning criteria.

Employment in the natural resources sector

The extractive industry provides industrial jobs in a variety of different occupations and activities. At the end of 2022 (2023), around 59,000 people (58,000 people)¹ were employed in the extractive industry. This corresponds to around 0.17% (0.17%) of all employees in Germany subject to social security contributions. At around 65% (65%), most employees worked in the quarrying and other mining sector, followed by the provision of services for mining and quarrying at around 15% (15%).

Compared to the reporting period 2016 (1st D-EITI report), the number of employees in the sector fell by around 12,300 in 2022 (13,300 in 2023), mainly due to the phasing out of the hard coal mining by the end of 2018.

Each direct job in the extractive industry is associated with additional jobs in upstream and downstream economic sectors.²

The role of legislation

The German economic system is characterised by the interplay of free market activities and state social policy. At the same time, there is a strong social partnership, especially in the extractive sector, by means of which existing differences of interest between employers and employees can be compensated.

In principle, the German legislature regulates a uniform (minimum) level of protection for employees (e.g. working hours, holidays, protection against dismissal, protection laws for young people, pregnant women or the severely disabled, safety and health at work, etc.).³ Above this level of protection, the social partners are free to regulate working conditions independently for the company or the respective sector within the framework of their collective bargaining autonomy guaranteed by Article 9(3) of the German Basic Law.

Statutory social security provides protection against life risks such as unemployment, illness, dependency, accident and occupational disease as well as old-age security. In particular, employees are insured under the social security scheme; self-employed persons are partially covered by this scheme. Social insurance funds are mainly raised through contributions from insured persons and employers. An exception is the statutory accident insurance, which is financed exclusively by the employer. Some branches of social security are additionally financed by taxes. The social security institutions are corporations with legal capacity under public law with self-government. Self-government is generally exercised by the insured persons and the employers.

The role and cooperation of the social partners

Co-Determination

One of the main pillars of the social market economy in Germany is co-determination, i.e. the right of employees and their stakeholders to participate in company or entrepreneurial decisions. The scope and form of participation differ according to company size, legal form and industry.

Company co-determination goes furthest in mining and in the iron and steel producing industry (co-determination in the coal, iron and steel industry: (MontanMitbestG (~Act on Co-determination in the Coal, Iron and Steel Industry),⁴ MontanMitbestGErgG (~ Supplementary Co-determination Act)⁵): Here, the supervisory boards are made up of an equal number of shareholder and employee representatives. In addition, a labour director is appointed, who is responsible for personnel and social affairs as an equal member of the management. According to the MontanMitbestG, his/her appointment is subject to the approval of the majority of employee representatives in the supervisory board.

For other companies, which are managed in the legal form of a corporation or a cooperative, the equal representation of employees and shareholders in the supervisory bodies according to the Co-Determination Act (MitbestG) also applies in case of more than 2,000 employees. However, there are two significant differences compared to the co-determination in the coal, iron and steel industry.

If there is a tie in votes, the Chairman of the Supervisory Board, who is generally attributable to the shareholders, has the casting vote. This dual voting right of the Chairman of the Supervisory Board effectively overrides the formal parity between employees and employers. In addition, the labour director can in principle also be appointed against the votes of the employee representatives on the supervisory board. To companies with 500 to 2,000 employees, the one third participation of employee representatives on the supervisory board (DrittelbG⁶) applies.

Company co-determination is governed by the Works Constitution Act. In every company in Germany with at least five employees, employees have the right to elect a works council. As representative of all employees, the works council represents the interests of the employees vis-à-vis the employer. It has different rights of participation, especially in social, personnel and economic matters. Works agreements are a key instrument in the work of the works council. Similar to collective agreements, they are legally binding agreements between the employer and the works council and regulate the employment relationship of the employees. Frequent topics are regulations on working hours, occupational health and safety, health promotion, data protection or further training, which are tailored to the conditions prevailing in the company. However, the works council must also be involved in the introduction of new technical equipment and work processes or the drawing up of social plans in the event of planned operational changes.

Collective bargaining coverage

Freedom of association and the right to collective bargaining are guaranteed in Germany by Article 9 of the Basic Law. Collective agreements are concluded by one or more employers or employers’ associations with one or more trade unions. They are binding only on their members (collective bargaining coverage). However, it is common practice for employers bound by collective agreements to allow employees who are not unionised to participate in what has been agreed by collective agreement by referring to the relevant collective agreements in individual contracts. In addition, many companies that are not bound by collective agreements are guided by existing collective agreements. In 2022, 32% of the companies in the extractive sector⁷ were bound by collective agreements; 25% within the framework of a regional collective agreement and 7% with a company collective agreement. The collective agreements apply to 62% of employees in the sector, with 25% subject to the terms of a regional collective agreement and 37% subject to those of a company collective agreement.⁸

Training

The demanding activities in the extractive industry require well-trained specialist personnel. Approximately 74% (74%) of employees have a recognised vocational qualification⁹, and another 11% (12%) have an academic degree¹⁰ in, for example, engineering.

Vocational training in Germany is essentially carried out via the dual vocational training system, in which training takes place in parallel at two learning locations. The trainee concludes a training contract with the company and learns the necessary practical vocational skills and competencies in the workplace. The second pillar of the system is the vocational school, which teaches general and specialist theoretical knowledge. The duration of training depends on the respective profession and varies between two and three and a half years. During this time, the trainee receives a training allowance from the company. After successful completion of the training, you are qualified to work directly as a qualified specialist.

The sector provides training in a number of different professions. These include, for example, mechatronics technicians, electronics technicians, industrial and process mechanics, reprocessing mechanics, miners and machine operators, mining technologists and industrial clerks. At the reporting date¹¹, 1,998 (1,992) of the employees in the extractive industry were trainees, which corresponds to a training rate of 3.4% (3.3%). The training rate in the sector was therefore below the German average of 4.5% (4.5%). Looking at individual sectors, the picture for the extractive industries is relatively differentiated. For example, the training rates in the mining and quarrying industry fluctuate (from 0.8% (0.5%) to 4.9% (4.4%) (2022 (2023)) because the importance of training occupations varies and the proportion of semi-skilled workers varies accordingly.

Earnings level

Gainful employment plays a central role in both social and individual terms.

Work is undisputedly seen as the main source of livelihood, and earnings are the most important component of personal income for employees. The average gross monthly earnings of full-time employees in the sector amounted to EUR 4,682 per month in 2023, with an additional EUR 687 per month in special payments.¹² This means that average monthly earnings in the extractive sector are a good 8.8% higher than the average in the manufacturing and service sectors.¹³ Due to the income tax to be deducted and the proportionate social security contributions to be paid, employees’ individually disposable net wages are significantly lower than their gross wages.¹⁴

The average paid weekly working time was 40.5 hours, which was relatively high compared to the manufacturing industry as a whole, at 38.7 hours.¹⁵

In Germany, equality between women and men is protected by constitutional law. A key component of this is the requirement of equal pay for women and men for equal work and work of equal value. This means that gender-specific income differences in particular must be further reduced. This is also the aim of the Act on the Promotion of Pay Transparency between Women and Men (Pay Transparency Act (Entgelttransparenzgesetz (EntgTranspG))). Among other things, it includes an individual right to information for employees, reporting obligations for large companies and the requirement for large private employers to carry out company audit procedures to review pay structures.

The planned further development of the Pay Transparency Act will also take into account the EU Pay Transparency Directive, which entered into force in June 2023. The directive must be transposed into national law by June 2026. In 2023, the average gross monthly earnings of 5,636 euros of women in the extractive industry were 5.5% higher than the average gross monthly earnings of male employees (5,340 euros).¹⁶

Diversity and equal opportunities

The different life experiences and work horizons of employees make a significant contribution to the economic success of companies. By consciously promoting diversity, companies can tap into an important success and competitive factor that has a positive impact on both companies and their workforces.

Diversity can be measured using a range of quantitative indicators, such as the proportion of women among all employees and managers, the proportion of foreign employees or the age structure of the workforce.

At the end of 2022 (2023), the proportion of women among those employed in the sector subject to social security contributions was 13.7% (13.7%). Foreign nationals accounted for 6.7% (6.9%) of the total workforce.¹⁷

The proportion of female supervisory board members in the mining industry is very low at 15.4% (fiscal year 2021). Of the management board members of these companies, only 10.8% are women. In order to further increase the proportion of women in the workforce and in management positions, there is also a great need for action compared to other sectors. It should be noted that the employment structure is traditionally characterised by male-dominated technical training occupations and degree courses.¹⁸

At 61.4% (60.6%), the 25 to under 55 age group made up by far the largest proportion of the workforce, followed by the 55 to under 65 age group at 30.1% (29.8%). 7.4% (7.5%) of the employees were younger than 25 years and 1.3% (1.5%) of the employees were older than 65.

Equal opportunities in Germany are promoted by the General Equal Treatment Act (AGG). It prohibits discrimination in employment on grounds of race or ethnic origin, sex, religion or belief, disability, age or sexual identity.

As an industrial nation, Germany is particularly dependent on the reliable availability of natural resources. The protection of natural resources, their economical use and the extraction of secondary natural resources¹ from waste or residues are highly important, not only for man and the environment, but also for German industry, which is dependent on imports for a number of natural resources it needs.

Particularly against the background of the increasing global demand for natural resources, but also the challenges posed by climate change, the focus is increasingly shifting to a circular economy in which the aim is to achieve closed natural resource cycles with as little material loss as possible as early as the product development stage.

The first legal foundations for waste disposal were already developed in some parts of the country at the beginning of the 19th century. The first uniform federal regulation was created in 1972 with the enactment of the Waste Disposal Act (AbfG).

Legal base

Environmental pollution, the scarcity of landfill sites in the 1980s and the growing realisation that materials and energy sources derived from nature are valuable resources have triggered the development of a modern recycling economy. This is largely shaped by the Recycling Management Act (KrWG), which is based on the EU Waste Framework Directive 2008/98/EC.2008 An essential element of the KrWG is the so-called five-level waste hierarchy to be applied by waste owners and producers in the following order of priority: 1. Avoidance, 2. Preparation for reutilisation, 3. Recycling, 4. Other form of recovery – in particular energy recovery and backfilling, 5. Disposal.

One component of German waste legislation is the transfer of product responsibility to producers and distributors, who must ensure that the generation of waste is reduced from product development and production through to use and that environmentally-sound recycling or disposal procedures are in place. A new dimension is the “duty of care” introduced in the KrWG in 2020, which requires companies to make sure that the fitness for use of their products is maintained and they do not become waste.

The goal of a modern recycling economy is a sustainable use of recyclable materials and the decoupling of waste volumes from economic performance, preferably a reduction in waste volumes with increasing economic growth. This goes hand-in-hand with the protection of water, soil and the climate by avoiding e.g. climate-damaging gases from landfills and achieving a reduction in greenhouse gas emissions and energy consumption through the use of recycled natural resources. In Germany, a ban on landfilling untreated municipal waste has been in place since 2005 in order to noticeably reduce the generation of climate-damaging gases from landfills.

The product responsibility for electric equipment was developed further with the amendment of the Electrical and Electronic Equipment Act (ElektroG) and the re-adoption of the ordinance on requirements for processing old electric and electronic equipment, which comes into force on 1 January 2022. The Federal Government extended the existing obligation of retailers of electrical equipment to include the large discounters, supermarkets and other grocery retailers with a shop area of 800 m² or more. The collection network has been expanded, enabling consumers to dispose of old electrical and electronic equipment more easily and separating them from unsorted municipal waste at an early stage. The processing ordinance extended the existing requirements, which were essentially geared towards the targeted removal of pollutants and contaminated products from waste, to include the goal of resource conservation and thus the increased recovery of resource-relevant substances.

With the current re-adoption of the packaging law,² which primarily came into force on 3 July 2021, further regulations were applied in addition to the existing system of extended manufacturer responsibility that already existed in relation to packaging. For instance, since 1 January 2023 the final distributor must offer multi-use packaging alternatives when placing on the market single-use food packaging and single-use beverage cups. In addition, a mandatory minimum proportion of recycled material was introduced for certain single-use plastic drink bottles on 1 January.

As part of the implementation of the amendment to Directive (EU) 2019/904 (EU Single-Use Plastics Directive), the marketing of certain single-use plastic products (e.g. cutlery, plates, plastic straws and to-go packaging and cups made of expanded polystyrene) was initially prohibited by the Single-Use Plastics Prohibition Ordinance (EWKVerbotV).³ The aim of the prohibitions is to help to manage plastics more sustainably along the value chain, to reduce throwing away waste carelessly and to combat pollution in the sea.

The Single-Use Plastic Marking Ordinance (EWKKennzV), also services these objectives. It is intended that this will help to further reduce the use of products made of single-use plastic. The EWKKennzV stipulates that single-use plastic products must be marked to indicate that, if the product is not disposed of in the proper way, it will have negative implications for the environment. The establishment of a single-use plastics fund is the final step in the transposition of the EU Single-Use Plastics Directive into national law. Extended producer responsibility is being introduced for certain single-use plastic products (such as to-go food containers, bag and film packaging, drinks cups and containers, lightweight carrier bags, wet wipes, balloons and tobacco filters (products) containing plastic). The central element is the creation and management of a single-use plastics fund, based on the Single-Use Plastics Fund Act (EWKFondsG). The manufacturers of the single-use plastic products pay an annual levy as contribution to the fund. The public waste management organisations and other legal entities under public law entitled to claim from the fund receive compensation for the costs they have incurred with regard to the waste management services provided and the cleaning of public spaces, as well as for awareness-raising measures. Up to now, these costs have been borne by the general public. The levy is to be paid for the first time in 2025 on the basis of the quantity of products sold in the calendar year 2024. The Single-Use Plastics Fund is intended to help promote cleanliness in public spaces and reduce littering of the environment with single-use plastic products.

The regulations on the export of plastic waste from the EU were tightened as of 1 January 2021 by amendments to the European Waste Shipment Regulation. The changes stem from amendments to the Basel Convention adopted in May 2019 and amendments to an OECD decision adopted in September 2020. According to these amendments and decisions, the export of hazardous plastic waste and non-hazardous plastic waste that is more difficult to recycle from the EU to non-OECD countries is prohibited. Further restrictions apply to the export of non-hazardous plastic waste that is easily recyclable from the EU to non-OECD countries in accordance with Regulation (EC) No 1418/2007.

The new Substitute Building Materials Ordinance,⁴ as part of umbrella ordinance, stipulates requirements that apply nationwide and are legally binding regarding the production, quality assurance and the inclusion of mineral replacement substances in certain technical structures. Mineral substitute building materials within the scope of the ordinance include recycling building materials from construction and demolition waste, slag from metal production and ashes from thermal processes. The substitute building materials ordinance assists the aims of the circular economy. The aim is also to improve acceptance for using substitute building materials. This umbrella ordinance entered into force on 1 August 2023.

Waste volume and waste recovery

The total gross waste volume in Germany in 2021 was 411.5 million tonnes, a further decrease from the previous peak in 2018 (417.2 million tonnes). Construction and demolition waste accounted for €222.0 million tonnes, slightly more than half of the total gross volume (approx. 53.9%). The volume of municipal waste, secondary waste (from waste treatment plants) at around 51.8 million tonnes and other waste, which comes mainly from production and industry, was considerably lower at around 49.6 million tonnes. Around 29.9 million tonnes of waste was generated from the extraction and processing of natural resources.

Around 336.9 million tonnes of waste were recycled in 2021, of which 288.5 million tonnes were recycled as materials and 48.1 million tonnes as energy.⁵ The recycling rate for all waste has risen continuously over the last ten years from 74.3% in 2006 to 82% in 2021 and it has remained stable in recent years.⁶ The recycling rate measures the proportion (input) of collected waste that is fed into a material or energy recovery process. The (input) recycling rate, in other words, the proportion of waste recycled or prepared for reuse has remained constant over the last three years at around 70%.⁷

A new, output-centred calculation method was introduced with the amendment of the EU Waste Framework Directive in 2018. The recycling rate is no longer based on the quantity of waste sent to the recycling plants (input quantity) but instead how much material is actually recycled (output quantity, after screening out material that cannot be recycled). The recycling figures achieved according to the new procedure will only become gradually available.; the estimate is approx. 53% for 2020.

Recycling involves processing waste so that the materials obtained can be used to replace primary raw materials required for new products, whereas products prepared for reuse by means of repairs and other methods are returned to be used for their original purpose. A comprehensive network of approx. 14,400 pre-treatment, treatment, sorting and processing plants⁸ has been established in Germany for the recycling and, in particular, material recovery of waste. The network includes soil treatment plants, building rubble processing plants, sorting and dismantling plants (inter alia) in addition to chemical-physical, biological and mechanical treatment plants.

Examples of recycling and usage rates ⁹

In 2020, 91.4 per cent of tinplate from private final consumption was recycled in Germany. The recycling rate for total consumption of tinplate has also been stable at around 90% since 2006.¹⁰ Around 18.8 million tonnes of steel scrap were used in steel production in 2021. This corresponds to a utilisation rate of 46.6%.¹¹ In 2020, around 2.25 million tonnes of non-ferrous metals (such as copper, aluminium, zinc, bronze, lead and brass) were produced. Of this, around 1.04 million tonnes were secondary metals, corresponding to a share of around 46.3%.¹²

Aluminium recycling rates range from 90 % to 95 % depending on the sector. The energy input for recycling aluminium is up to 95% lower compared to primary production.¹³ In 2021, the usage rate was approx. 53%.¹⁴ The recycling rate for copper is about 45%. In copper production around 38% of the copper used is recycled copper.¹⁵ The share of secondary raw materials in copper production has temporarily decreased in 2021 compared to 2020, partly due to remediation measures in the recycling smelter sector.¹⁶

Paper and glass also have high recycling and usage rates while the recycling of plastics still requires additional efforts:

• Paper/paperboard/cardboard, which is mainly collected separately, achieves a recycling rate of almost 100%.¹⁷ The usage rate of recovered paper was 79% in 2021.¹⁸ Recycling saves primary natural resources such as wood, kaolin and lime, as well as water and energy. However, paper is not infinitely recyclable, since the fibres become progressively shorter during recycling and fresh fibers have to be added again.
• In the case of glass packaging collection, the recycling rate also amounts to almost 100%.¹⁹ Today, every glass packaging unit consists of up to 60% recycled glass, and for green glass the usage rate is as high as 95%.²⁰ The recovery of the glass reduces the demand for the primary natural resource which is quartz sand.
• In 2021, a total of 65.5% of the packaging plastics collected via the dual systems were mechanically recovered (recycled). In total, around 5.9 million tonnes of used packaging from private final consumption was recycled in 2021. This represents an increase of around 3% compared to the previous year.²¹ Around 35% of the total plastic waste generated (1.96 out of 5.67 million tonnes) was recycled in 2021, 64% of plastic waste was recycled for energy purposes and 0.4% was recycled as natural resources or chemically.²² The recycling rates for 2021, some of which differ significantly from previous years, are due to the change in data collection based on EU Implementing Decision 2019/665 in the packaging sector.²³
• In 2021 the recycling rate for old electric devices was 84.5% and the utilisation rate was almost 98%. However, only just under 39% of the average amount of old electric devices placed on the market in the previous three years were actually collected in 2021 ²⁴. In order to increase this quantity and to achieve the collection rate of 65 % set by the EU from 2019 ²⁵, the Federal Government amended the Electrical and Electronic Equipment Act in 2021 to extend the existing obligation of retailers of electrical equipment to include the large discounters, supermarkets and other grocery retailers with a shop area of 800 m² or more. As a result, the collection network is going to be expanded, enabling consumers to dispose of old electrical and electronic equipment more easily and separate them from unsorted municipal waste at an early stage. However, these measures will probably only have a noticeable effect in the next few years.

In the building sector, around 90% of the non-hazardous mineral construction and demolition waste generated is recycled. The processing of mineral building waste enabled the manufacture of 76.9 million tonnes of recycled building materials in 2020. Of these 50.3% were used in road construction, 23% in earthworks, 7.2% in other applications (mainly landfill construction) and 19.5% as aggregates in asphalt and concrete production.²⁶

The building and waste disposal industry thus makes an important contribution to a sustainable and resource-efficient society. Thanks to the collection, sorting and material-based and energy-related recycling of waste, this industry not only fulfils an important ecological function, it also supplies our economy with natural resources. Overall, it now provides one sixth of the natural resources needed in Germany.²⁷ The recycling industry also contributes significantly to Germany’s economic performance.²⁸ It provides jobs for around 209,100 (2021) employees in nearly 7,200 municipal and private companies and has a turnover of around €48.3 billion.²⁹ The gross value added amounts to 30.3 billion euros.³⁰ The substitution of primary resources with secondary resources is also associated with significant savings in energy consumption, for  example.³¹

Climate change poses major challenges for players in politics, industry and civil society worldwide. Due to international and national plans to reduce emissions of climate-damaging greenhouse gases, the extractive industry must make a decisive contribution to achieving the goal of climate neutrality. The energy transition will have a significant impact on demand and sales of coal, oil and gas and will initiate or accelerate structural change in these industries. At the same time, the demand for natural resources for climate-neutral technologies, renewable energies, electric mobility and hydrogen is increasing (see Security of supply).

The Federal Republic of Germany is bound by various international guidelines to tackle climate change. In the Paris Climate Agreement of 2015, the global community agreed for the first time in a legally binding manner to limit global warming to 1.5° Celsius compared to the pre-industrial age. The European Union has also set concrete targets with the European Green Deal (“European Climate Law”). The core element of all agreements is a massive reduction of greenhouse gases in order to reduce emissions in the EU by at least 55% by 2030 and achieve the EU’s greenhouse gas neutrality by 2050.

In order to fulfil these obligations, the Federal Republic pursues a national climate policy, as a result of which a number of laws have been passed in recent years. The Federal Climate Protection Act sets concrete annual reduction targets for greenhouse gas emissions and formulates the target of greenhouse gas neutrality¹ by 2045. The 2020 “Coal Phase-Out Act”² regulates the gradual reduction and phasing out of coal-fired power generation by 2038.

In addition to the European emissions trading system, which has been in place since 2003, Germany set up its own national emissions trading system for pricing fossil greenhouse gas emissions at the start of 2021.

This chapter presents some of the laws in force in Germany to improve climate protection and highlights the state of development in the use of renewable energies. In addition, activities and measures are described that are being undertaken in Germany to tackle the challenges of the energy transition and structural change in the area of raw materials extraction.

Legal base

German Federal Climate Protection Act

The new Federal Climate Protection Act introduced in 2019 sets the legal framework for Germany’s climate policy. It sets out the German climate protection targets in law and contains a review and follow-up mechanism to ensure compliance with the climate protection targets.

The 2021 amendment adopted new, more ambitious climate protection targets with the aim of achieving net greenhouse gas neutrality in Germany by 2045. The interim targets are to reduce greenhouse gas emissions by at least 65% by 2030 compared to 1990 levels and by at least 88% by 2040. In addition, the land use, land use change and forestry (LULUCF) sector is to be gradually developed into a reliable dip to -25 million tons in 2030 and to -40 million tons of CO2 equivalents in 2045. The 2024³ amendment abolished binding targets for reducing greenhouse gas emissions for individual sectors, removing the obligation for these sectors to submit a sector-specific immediate action programme if targets are missed. In future, a cross-sectoral and multi-year overall calculation will be decisive for the decision on further climate protection measures as part of the follow-up. To this end, cross-sectoral annual emission totals were introduced, thus clarifying the overall responsibility of the German government for achieving the climate protection targets. In addition, the switch from prior-year estimates to projection data has resulted in a forward-looking approach. At the same time, each of the energy, industry, buildings, transport, agriculture and waste management sectors must continue to make its own appropriate contribution. The basis for determining this contribution is the annual emission volumes of the individual sectors.

The Federal Climate Protection Act provides for a review and readjustment mechanism to ensure compliance with the total annual emissions in the respective decade. By 15 March of each year, the Federal Environment Agency publishes the previous year’s greenhouse gas emissions data and the projection data for all individual years up to 2030 and at least for the years 2035, 2040 and 2045. These will be reviewed by the Expert Council for Climate Issues. If all sectors aggregated according to the projection data exceed the sum of the total annual emission volumes for the years 2021-2030, the Federal Government must adopt further climate protection measures to ensure compliance with the aggregated total annual emission volumes. To this end, all departments primarily responsible for sectors, but especially those that contribute to the overrun, must submit proposals for measures. The annual emission levels of the sectors are used for the assessment. The Federal Government will then decide on the measures to be taken.

According to the Expert Council for Climate Issues, the projection data for 2024 does not show compliance with the total annual emissions for the years 2021 to 2030 for the first time. On this basis and if this is re-determined, there could be an obligation to pay additional taxes in 2025. According to the projection data for 2024, the points target for 2030 will also fall just short of being achieved, but it is within reach for the first time ever.

The Climate Protection Act requires a climate protection programme that contains an overall plan of the federal government for climate protection policy and concrete measures⁴. The measures for industry include the promotion of low-emission technologies, the introduction of carbon pricing systems, support for the research and development of sustainable technologies and financial incentives for the modernisation of industrial production processes.

In July 2022, the Bundestag launched a comprehensive package of measures to improve planning and approval procedures for onshore wind energy. For example, the Renewable Energy Sources Act stipulates that the use of renewable energies is in the overriding public interest and serves public safety. Furthermore, the “Act to Increase and Accelerate the Expansion of Onshore Wind Energy Systems” was passed as a key component in further accelerating the expansion of onshore wind energy. This law introduces the Wind Energy Area Requirements Act (WindBG) and amends the Building Code, among other things. The main regulatory content is the legal implementation of the stipulation from the coalition agreement regarding a 2 percent area target for onshore wind energy. In addition, the amendments to the Federal Nature Conservation Act have standardised and simplified the species protection assessment of onshore wind turbines in the approval procedure, and the Federal/State Working Group on Soil Protection (LABO) has also published guidelines on the “Soil protection requirements for the dismantling of wind turbines”⁵

National Allowance Trading for Fuel Emissions

The European Emissions Trading System has been in place since 2005, setting a Europe-wide CO2 price for the energy sector, energy-intensive industries and intra-European aviation. The heating and transport sectors have not yet been included. This changed with the introduction of national fuel emissions trading in accordance with the Fuel Emissions Trading Act (BEHG) on 1 January 2021. The BEHG obliges companies that place fuels (heating and motor fuels) on the market to purchase emission allowances and surrender them by 30 September of the following year. The costs are usually passed on along the supply chain. As a result, the CO₂ price has a steering effect on end consumers, as more climate-friendly alternatives become increasingly attractive as prices rise.

For the introductory phase, the legislator has provided for a fixed price system. With an increasing but reliable price path, citizens and businesses should be able to gradually adjust to the CO2 price. At the same time, a trading platform is being set up to enable the certificates to be auctioned and traded. While an emissions certificate costs EUR 25 in 2021, companies will already have to pay EUR 55 per certificate in 2025. A price corridor of EUR 55 to 65 per emissions certificate is planned for 2026.

If national fuel emissions trading should lead to competitive disadvantages for German companies (known as carbon leakage), this should be offset as far as possible. The BECV (Ordinance on Measures to Prevent Carbon Leakage through National Fuel Emissions Trading) adopted by the German government relieves the burden on affected companies entitled to aid by providing financial compensation, but obliges them to invest in climate protection measures in return.

As of 1 January 2023, the financing of renewable energies has been completely restructured. The EEG levy was permanently abolished with the Energy Financing Act (EnFiG). This will reduce the price of electricity for citizens and industry.

This and other measures such as the increase in housing benefit are intended to make fuel emissions trading socially acceptable.

From 2027, national fuel emissions trading will be transferred to the newly created EU fuel emissions trading system in accordance with Directive 2003/87/EC.

German Coal Phase-Out Act

The key regulations for the German coal phase-out are set out in the Act on the Reduction and Termination of Coal-fired Power Generation (Act to Reduce and End Coal-Fired Power Generation – KVBG)⁶, which came into force in August 2020 as part of the Act on the Reduction and Termination of Coal-fired Power Generation and the Amendment of Other Acts (Coal Phase-out Act).⁷ At the same time, other energy industry regulations were amended in the Coal Phase-out Act – such as the German Energy Act, the Greenhouse Gas Emissions Trading Act, the Renewable Energy Sources Act, the Combined Heat and Power Act, etc. The aim of the KVBG is to reduce the generation of electrical energy from coal in Germany in a socially responsible manner, gradually and as steadily as possible, and to phase it out by 2038 at the latest. The aim is to reduce greenhouse gas emissions. At the same time, a secure, affordable, efficient and climate-friendly supply of electricity to the general public should continue to be ensured. The legislative package contains provisions to reduce and end coal and lignite-fired power generation, to continuously review the security of supply, to cancel CO2 certificates that become available and for an adaptation payment for older employees in the coal sector (see Subsidies and tax concessions).

The reduction in hard coal-fired power generation will initially take place gradually between 2020 and 2026 through competitive tenders for hard coal plants already participating in the electricity market.⁸ In the tendering process, the plant operators specified a bid value at which they were prepared to refrain from firing coal in their plant. By participating in the competitive process, plant operators were able to receive appropriate financial compensation for phasing out hard coal. Small lignite-fired power plants up to 150 megawatts (MW) were also able to participate in the tenders. This should enable the defined target dates of 2022 (15 gigawatts (GW) each of hard coal and lignite), 2030 (8 GW of hard coal, 9 GW of lignite) and 2038 (zero GW) to be achieved. The possible maximum price per reduced MW fell from EUR 165,000/MW (2020) to EUR 89,000/MW (2026). In the event that the statutory reduction targets for hard coal capacities are not achieved, the tendering process will be accompanied by regulatory provisions from 2024. From 2027, closures in the hard coal sector will be carried out exclusively on the basis of regulatory provisions.

On 25 November 2020, the European Commission granted state aid approval for the statutory regulations on the reduction and termination of hard coal-fired power generation. To reduce and end lignite-based electricity generation in Germany, the KVBG sets out a binding plan for the decommissioning of lignite plants. Among other things, it contains mandatory decommissioning dates and regulations on compensation for the operators of decommissioned lignite plants. Accordingly, RWE will receive EUR 2.6 billion and LEAG will receive EUR 1.75 billion. The statutory regulations are accompanied by a public law agreement in which – among other regulations – the lignite operators have committed to the socially responsible decommissioning of all power plants. In accordance with Annex 2 of the Act to Reduce and End Coal-Fired Power Generation (KVBG), the decommissioning dates for the individual lignite-fired power plants range from 2020 to 2038. The agreement also contains provisions on the use of the compensation payments to cover and secure the post-mining costs as well as a comprehensive waiver of legal remedies by the operators of the lignite plants. In the Lausitz coalfield, compensation payments are made to special purpose vehicles that were set up as part of precautionary agreements between the lignite operator and the states of Brandenburg and Saxony (see Managing human intervention in nature and landscape). From 2025, the annual compensation instalments attributable to the respective special purpose vehicle are to be contributed to the special purpose vehicles by the federal government. The additional contributions made by LEAG in the years 2021 to 2024 can be partially reimbursed by the Federal Government.

The European Commission is reviewing the appropriateness of the compensation payments to the operators of the lignite-fired power plants and their special purpose vehicles in a main investigation procedure under state aid law. The aim of the procedure is to achieve greater legal certainty for all parties involved. The compensation to RWE has already been approved by the European Commission on 11 December 2023. The European Commission’s investigation has no suspensive effect on the agreed decommissioning path for the power plants. The European Commission has procedural sovereignty.

Structural Strengthening Act

The end of coal-fired power generation also means the end of coal production in Germany. While hard coal production in Germany already ended on 31 December 2018 (see Subsidies and tax concessions) and the remaining hard coal plants are operated with imported coal, lignite plants are operated exclusively with lignite from domestic production. This production will be reduced in accordance with the decommissioning plan set out in the Act to Reduce and End Coal-Fired Power Generation and will end by 2038. The Structural Strengthening Act for Coal Regions (Structural Strengthening Act)⁹ came into force at the same time as the Coal Phase-out Act in order to mitigate the economic and structural consequences of the phase-out of coal-fired power generation and to promote economic growth in the regions affected by the coal phase-out.

An essential part is the new Coal Regions Investment Act. Its so-called first pillar consists of financial aid from the federal government for projects in the federal states. A total of up to EUR14 billion is available for this purpose, which can be used to fund investments in lignite mining areas with up to 90%. The possible applications are wide-ranging and range from the promotion of business-related infrastructure to tourism projects, research facilities, digitalisation, urban and regional development and climate and environmental protection measures.

The so-called second pillar supports measures that fall under the sole responsibility of the federal government. Up to EUR 26 billion have been earmarked for this purpose. As part of these measures, for example, transport routes to the coal regions will be improved, research projects and centres will be funded and federal institutions will be established locally.

Additional support of up to EUR 1.09 billion will also be provided to hard coal-fired power plant locations that are structurally weak and where hard coal is of particular economic importance.

These funding instruments aimed at investments are supplemented by the STARK federal programme, which primarily supports non-investment projects.¹⁰ A wide range of funding areas is covered. For example, STARK can finance the operation of structural development companies or technology transfer projects. In August 2024, the STARK federal programme was amended and expanded to include investment components. In future, among other things, direct business development will be possible on the basis of the TCTF.

Heat Planning Act

The Heat Planning Act, which came into force on 1 January 2024, introduces systematic heat planning throughout Germany. The aim of the law is to make a significant contribution to the transition to a greenhouse gas-neutral heat supply by 2045 at the latest. This is to be achieved through coordinated planning and development of local energy infrastructures and a switch to renewable energies, unavoidable waste heat or a combination of these sources.

The law obliges the federal states to draw up or have drawn up heating plans that provide citizens and businesses with guidance on which heating supply option is most suitable in their area. As a rule, the federal states will transfer this obligation to the municipalities. The heating plans should be available by mid-2026 (municipal areas with more than 100,000 inhabitants) or mid-2028 (other municipal areas) at the latest. The law enables both centralised solutions such as district heating and decentralised solutions such as heat pumps.

The Heat Planning Act ensures strategic planning at municipal level, while the GeoWG (09/2024 in draft form, see below) ensures that technological options are available. These laws complement each other and thus contribute to meeting the federal government’s climate targets and ensuring a sustainable, climate-friendly heat supply.

Geothermal and Heat Pump Act (GeoWG)

In September 2024, the Federal Cabinet passed a draft law to accelerate the approval procedures for geothermal energy plants, heat pumps and heat storage systems (GeoWG). The draft is currently in the parliamentary voting process (as of 12/2024).

The draft law is intended to implement the EU Renewable Energy Directive (RED III) for the geothermal energy sector in mining law and also contains extensive acceleration elements in water, nature conservation and mining law as well as in legal protection procedures. Among other things, it regulates the specification of an overriding public interest for geothermal energy, heat pumps and heat storage systems and the introduction of maximum deadlines for approval procedures, as well as procedural simplifications such as deadlines for the authorities to check the completeness of documents. Private households no longer need to obtain an authorisation under water law for small groundwater heat pumps and geothermal collectors. The draft law also contains provisions on the digitalisation of the relevant approval procedures.

The law is closely linked to the WHG amendment passed by the cabinet on 28 August. It contains short procedural deadlines for large heat pumps and small heat pumps as well as a digitalisation requirement for the approval procedure.

Natural resource requirements

As an industrial and technology location, Germany is dependent on a secure supply of energy and non-energy (mineral) natural resources. In the future, even more mineral resources will be needed than before for important technologies of the future such as renewable energies (RE) and technologies relevant for digitalisation and electromobility. In addition to high-tech metals, Germany needs selected industrial minerals. The specific natural resources requirements for renewable energy systems needed for the overall energy supply and for electromobility can be found in Effects of the energy transition and structural change.

Regarding the security of supply for natural resource requirements in Germany, three pillars must be considered: domestic primary resources, secondary resources, and imports of natural resources ¹. The Federal Institute for Geosciences and Natural Resources (BGR) reports annually on how the situation evolved in the field of natural resources in Germany in the previous year. Data on natural resources production, German foreign trade, the use of secondary resources from recycling, the development of prices and consumption of natural resources are presented in the context of Germany’s supply situation with mineral and energy resources.²

Domestic primary natural resources

Contrary to popular opinion, Germany is certainly rich in natural resources (see figure 8). The demand for quarried natural resources (especially for the building materials, glass, and ceramics industries), potash products (for agriculture), rock salt (especially for the chemical and pharmaceutical industries and as de-icing salt) and some industrial minerals can be met entirely from domestic sources. Some energy resources such as lignite, natural gas and crude oil are also extracted in Germany close to consumers³ and contribute to the security of supply of natural resources. At the same time, high environmental and social standards are maintained by international comparison. The energy use of domestic lignite covered about 9% of primary energy consumption in Germany in 2021 and about 10% in 2022, with production volumes of 126.3 million tonnes and 130.8 million tonnes respectively.^{4 5 6} Domestic production of oil and natural gas covered 2% and about 5% of consumption in Germany in 2020 to 2022.⁷ However, metallic resources are almost no longer mined in Germany and must be obtained from recycling or imported.

Raw material production in Germany in 2022 ⁸

Secondary resources from recycling

Metallic resources are often not only used once but several times due to their good recyclability. They can be returned to a product cycle after reprocessing. Many products made from non-metallic resources, on the other hand, are often chemically modified (e.g. cement, concrete) and can therefore not be fed back directly into the product cycle. However, they can be reintroduced into the economic cycle as substitutes for primary resources, e.g. building materials may be replaced with recycling materials.⁹ Secondary resources contribute to the domestic supply of resources and reduce dependence on imports. Individual data on recycling and use rates from 2021 can be found in the chapter on “Circular economy, especially recycling”.

By expanding the circular economy and improving the quality and quantity of recycling, a rising share of the German demand for natural resources can be covered in the future.¹⁰ The EU’s Critical Raw Materials Act (CRMA) calls for an increase in processing and recycling capacities in the EU to strengthen the supply of the EU with domestic natural resources. The DERA Recycling Atlas for metal production shows that Germany already has an efficient recycling industry for base metals such as copper, aluminium, and iron/steel.¹¹ In the field of rare earths or other special metals, however, circular economy approaches, or recycling processes have so far hardly progressed beyond the state of research and developments.¹² The necessary further development of the circular economy must aim to cover a larger share of Germany’s need for natural resources through secondary materials and make the greatest possible contribution to greenhouse gas reduction. To this end, it is necessary to establish and expand appropriate recycling channels, to reduce the necessary imports. Nevertheless, the supply of recycled material is not sufficient to fully compensate for the increasing demand for resources for the transformation of the energy supply and for other future technologies. Therefore, additional specific natural resources will have to be extracted and/or procured in the future.

Imports of natural resources

In the case of metals, individual industrial minerals, and energy resources (except for lignite), the industry is heavily dependent on non-European imports (see metal imports in chart 10) and thus heavily dependent on availability on the international raw materials markets. At 342.5 million tonnes, Germany imported almost 14 % less natural resources in 2022 than in the previous year. Imports of energy resources (-16.1%), non-metals (-9.0%) and metals (-8.3%) fell significantly. In 2022, energy resources, metals, and non-metals (of which around 57% were industrial minerals) worth €311 billion were imported into Germany.¹³ Further information on import volumes in the German raw materials extraction sectors can be found in the chapter on the extractive industry in Germany.

In 2023, the German Mineral Resources Agency (DERA), a department of the BGR, published another monitoring report on the global supply concentration of important mineral resources and intermediate products.

A wide range of different mineral resources and energy resources is mined in Germany. The following tables list the natural resources extracted in Germany by quantities and estimated value in 2022.

Further information on data sources as well as links to original data are available here: Data on natural resource extraction in Germany

In 2022 and in 2023, the gross value added in Germany amounted to €3,510 and €3,768 billion at current prices, respectively. According to the International Monetary Fund, this makes Germany the largest economy in Europe and the third largest in the world, measured in current US dollars.¹ The gross value added of the “mining and quarrying” economic sector amounted to €9.2 billion in 2022, which is equivalent to 0.26% of Germany’s gross value added (for detailed source information see final note iii).²

Turnover: Mining and Quarrying sector

“Mining and quarrying” sector companies generated a total turnover of around €11 billion (€11.1 billion) in 2022 (2023). Domestic sales accounted for around €10 billion (around 91%) (€10.0 billion (around 90%)) and export sales for €1.0 billion (around 9%) (€1.1 billion (around 10%)).

The extractive sector generates revenue for the state at the various federal levels. The most important revenues are the taxes from general company taxation (corporate tax and personal income tax plus solidarity surcharge and trade tax), as well as mine site and extraction royalties specific to the natural resource extracted in each case. Together, these revenues generated by the extractive industry amounted to approximately €814 millions in 2022 (as of 06/2024). This represents 0.04% of total Federal Government revenue. More detailed information on this revenue can be found in Disclosed payment flows and quality assurance . Other payments are also made by the extractive sector to the state, such as leaseholds, energy and electricity taxes (see Revenues generated by the extractive industry), as well as payments relating to interventions in nature conservation legislation and water use (see Managing human intervention in nature and landscape) which are not described in this chapter.

Taxes

The sum of the above-mentioned taxes paid by the extractive industry in 2022 amounted to around €577 million (as of 06/2024). This corresponds to a proportion of around 0.03% of the state’s total income.¹ The largest amount of tax revenues is generated by trade, income and corporate taxes.

The following table shows the estimated revenues from the above taxes of the extractive industry and their share of the total tax revenue (for detailed source information see final note iv). Other payment flows not addressed in the following table are described in Revenues generated by the extractive industry and Subsidies and tax concessions.

Extraction and mine site royalties

Extraction royalties are levied by the mining authorities of the Federal States. They vary greatly, depending on the local mining activity and the fixed levy rates in the individual Federal States.

A total of €236.1 millions (€204.7 millions) in extraction royalties was collected in Germany in 2022 (2023). The amount of revenue has fluctuated significantly in some Federal States in recent years. This may have different reasons, e. g. changes in world market prices for natural resources or changes in production quantities or levy rates (for detailed source information see final note v).

Only a few Federal States publish their revenues from mine site royalties in their budgets. A summarised overview of the mine site royalties is not available. Most Federal States publish accumulated mine site and extraction revenues in their individual budgets. Their amount is significantly lower than the amount of extractive sector revenues. The revenue from the 2023 mine site royalties is only available for three Federal States: Bavaria, Brandenburg and Lower Saxony (see table 6).

Germany is characterised by a strongly export-oriented and diversified economic structure. In 2022 (2023), Germany exported goods worth a total of around €1.59 trillion (€1.58 trillion)². Products of the extractive industries accounted for some €11.4 billion of this amount (€5.2 billion), equivalent 0.72% (0.33%) of total exports. At around €9.0 billion (€2.9 billion), crude oil and natural gas accounted for the largest share of exports.

Data on the exported goods of the extractive industries also include previously imported goods, so-called re-exports (cf. “The extractive companies in Germany”). Domestically-extracted natural gas is almost completely consumed in Germany. The “Crude oil and natural gas” sector is followed by “Quarried natural resources, other mining products” with approx. €1.7 billion (€1.6 billion). Exports also included ores worth approx. €0.4 billion (€0.3 billion) and coals valued at about €0.4 billion (€0.4 billion). Here too, the figures include re-exports.³

The payments made by extractive companies to government agencies (see Revenues generated by the extractive industry) must be seen in the context of the subsidies and tax concessions with which the state supports companies. Here the financial help provided to hard coal mining (see section a. and b.) is the only subsidy that specifically relates to the extractive industry. This financial help provided subsidies for the sales of hard coal, compensation for bottlenecks resulting from capacity adjustments (until 2022); in addition, there are adaptation payments (APG) for socially-acceptable personnel reductions in the sector (until 2027). This financial help ensures the socially acceptable phasing out of subsidised German hard coal mining.

Companies in the extractive industry outside of hard coal can benefit from additional financial help without a specific link to the extractive industry (see section c.). An example is concessions granted by the State in respect of energy and electricity taxes for manufacturing companies (see section d.).

There are different definitions of the term subsidies at both national and international level, and several methodological approaches are used to tackle the topic. The term used here is based on the definition of the subsidy report of the Federal Government. The subject matter of the subsidy report is defined in Section 12 of the Stability and Growth Act (StabG) and includes benefits and concessions for private companies and economic sectors. Financial help is defined as financial contributions by the Federal Government to entities outside the Federal Administration that benefit private companies and sectors of the economy, while tax benefits are special tax exemptions that result in a loss of revenue for the public authorities. Individual federal states report on their financial help in their own subsidy reports (see Appendix 5 of the FederalGovernment’s Subsidy Report).

Subsidies for the sale and closure of hard coal

The German hard coal industry is not competitive, mainly because of geologically-related high production costs. An agreement was therefore reached in 2007 between the Federal Government, the hard coal-producing Federal States of North Rhine-Westphalia and Saarland, the RAG AG (the largest German coal mining corporation based in the Ruhr region) and the Mining, Chemical and Energy Industrial Trade Union (IG BCE) that the subsidised hard coal industry would be terminated in a socially-responsible manner by the year 2018.

The agreement was based on the German Hard Coal Financing Act of 20 December 2007 and on a framework agreement between the Federal Government, the hard coal-producing Federal States, the RAG AG and the IG BCE. The public sector granted temporary aid to promote sales (balancing the difference between domestic production costs and the world market price) and to cope with the necessary decommissioning measures. The subsidies were gradually reduced and ultimately cycled out, a move that also addresses climate protection and resource conservation.

Development

State aids are intended to ensure that after the permanent cessation of mining, any existing obligations (contaminated sites, in particular shaft safety and monitoring, settlement of mining damage, demolition obligations and land rehabilitation as well as personnel settlement costs) that are not borne by the RAG Foundation are fulfilled. In 2022, the Federal Government granted sales and closure aids for the last time, the amount of this aid was €264.8 million. The Federal State of North Rhine-Westphalia provided more financial aid. The subsidies pledged to the hard coal mining industry for the sales of hard coal and mine closures were reduced over time. Between 1998 and 2005, Federal aid was cut by approximately 50% – and the payments were again reduced by 25% between 2006 and 2014. Deviations from the declining trend regarding the subsidisation are based on the fluctuating world market prices for hard coal (inter alia). For 2021, the state of North Rhine-Westphalia granted subsidies totalling €156.4 million for contaminated sites and decommissioning expenses for hard coal mining. In 2022, the subsidies paid by the Federal State totalled €153.7 million. From 2023 onwards, the Federal State of North Rhine-Westphalia will only grant payments for contaminated sites; these payments will be made for the last time in 2025.

State aid procedure and control measures

The subsidisation of the German hard coal industry is generally subject to approval by the EU – insofar as it constitutes aid within the meaning of Art. 107 TFEU and does not fall within the scope of the General Block Exemption Regulation – and has been reviewed and approved by the EU Commission. The German Federal Office of Economics and Export Control (BAFA) (in cooperation with auditors) also monitors how these financial subsidies are being used on an annual basis.

Prevention

To cope with the necessary decommissioning activities, the private-law RAG Foundation is making the former investment assets of the RAG AG available to finance the remaining perpetual burdens following the closure of the mines (burdens such as mine water drainage¹, permanent land subsidence² and groundwater purification³).

If these assets are not sufficient to cover the perpetual burdens, the Federal Government and the hard coal-producing Federal States will provide subsidies at a ratio of one-third to two-thirds respectively.

Adaption payments

Workers who are at least 50 years of age (underground workers) or 57 years of age (above ground workers) and who, on the occasion of a closure or rationalisation measure, have lost their job before 1 January 2023, will receive adaptation payments (APG) for up to five years as interim aid until they become eligible for pension insurance benefits.⁴ The adaptation payments reflect the commitment of the Federal Government and the coal-producing Federal States to social responsibility. In 2022 and 2023, the Federal Government granted adaptation payments totalling €48.7 million and €38.6, respectively.

Employees

The number of employees subject to compulsory social security contributions in hard coal mining is declining. At the beginning of 2008, 32,803 persons were employed. By the end of 2021, the number of employees had been reduced to 1,520 employees in a socially acceptable manner. This figure fell to 1,011 employees subject to social security contributions in the coal mining industry as at 31 December 2022 and to 1,000 again as at 31 December 2023. The number of persons entitled to adaptation payments is following this reduction trend, albeit with a time lag. Since more employees will be retiring after the last mine closures at the end of 2018 and a declining number of employees will still be needed after 2018 to complete the closure of mines and deal with contamination and other problems caused by mining the current adaptation payment guidelines will still apply until 2027.

Control measures

In addition to the monitoring of the intended use of funds by the German Federal Office of Economics and Export Control in cooperation with external auditors, the German Federal Audit Office also randomly reviews individual adaptation payment cases within the framework of the Federal Office’s annual budget review.

Transparency of State Financial Aid and Support

Extractive companies can also receive non-specific financial help from the state that is not related to the natural resources sector, if they meet the appropriate criteria for the support programme. Financial aid can be granted as a subsidy, loan or help servicing debt, although nowadays the majority of financial help is in the form of subsidies. For a long time now loans granted directly from the Federal budget have played a secondary role. The reason for this is that the Federal Government uses banks to award the loans and they generally receive an interest subsidy for implementing the programme. The Federal Government’s subsidy report provides information about the financial aid, the extent of the aid and the support objectives. There is no information in the report about the amount of financial aid paid out to the individual recipients.

State subsidies for companies are also the subject of the Treaty on the Functioning of the European Union, as this may reduce competition in the common internal market.

Instead of the term “subsidy”, EU law uses the term “state aid”, which has a legal definition that differs from the term “subsidy”.⁵ Government support does not only mean direct financial contributions to undertakings, debt write-offs or subsidised loans, but may also cover guarantees, tax breaks or the provision of land and goods and services on special terms which confer an advantage on the undertaking concerned. In order to guarantee fair competition in Europe, the Treaties and corresponding secondary legislation determine the conditions under which such state aid is permissible. The member states of the European Union are required each year to disclose information on any government support granted. Depending on the legal basis under state aid law, this obligation applies to each individual aid above a threshold of €100,000 per company. The respective member state has to disclose this information on a detailed state aid website.

The name of the recipient, the amount and the purpose of the state aid together with the legal basis must be published. Where companies in the extractive industry receive state aid, e. g. in the form of reduced-rate loans above the threshold, these can be viewed by the public.

Concessions for electricity and energy taxes

There are various tax concessions for both electricity and energy taxes, including tax exemptions, tax reductions and tax relief. The Electricity Tax Act (StromStG) provides concessions for certain types of use, or electricity generation. The Energy Taxation Act (EnergieStG) also covers uses in which energy products are tax-favoured. A part of these concessions is mandatory under the Energy Tax Directive (EU) 2003/96/EC of 27 October 2003.

As manufacturing companies, extractive sector enterprises can particularly profit from the different tax relief possibilities provided by energy and electricity tax legislation.

Three regulations are particularly relevant here for the reporting years 2022 and 2023:

• Tax relief for companies (Section 54 Energy Tax Act (EnergieStG, Section 9 b Electricity Tax Act (StromStG)): If a manufacturing company applies for electricity and energy tax concessions and its application is approved, it is granted a reduction of 25% of the tax rates on electricity, heating and the fuels used in its production facilities eligible for tax In the area of electricity tax law, tax relief is possible for electricity consumed in 2024 and 2025 up to the EU minimum commercial rate (relief from EUR 20/MWh to EUR 0.5/MWh). A relief within the framework of the so-called “electricity price package” that exceeds the level of individual peak compensation in any case.⁶
• Tax relief in the form of so-called peak compensation (Section 55 EnergieStG, Section 10 StromStG): The statutory relief provisions expired at the end of 2023. Before that time, the additional burden of the “ecological tax reform” on manufacturing companies could be lightened by a reduction in their energy and electricity taxes. Since the increase in revenues generated by the ecological tax reform also served to reduce the factor of “work” and contributed to companies paying less for employers’ contributions to pension insurance schemes in comparison to 1999, a comparative peak compensation calculation is carried out for companies in question. In order to avoid double relief for the employers’ pension insurance as well as for the energy used, saved pension contributions are taken into account in the calculation of the tax relief. The amount of relief is therefore calculated individually depending on the company, and is also capped at a maximum of 90% of the electricity tax paid and 90% of the tax share pursuant to Section 55(3) of the EnergieStG.Prerequisites for claiming peak compensation are, among other things, evidence of a certified energy management system and an annual energy intensity reduction (by a statutory value) achieved by all the plants of the manufacturing company. The comparative value is the average energy intensity value for manufacturing industry companies between 2007 to 2012.

• Certain processes and procedures/manufacturer privilege (Section 9a StromStG, Section 51 EnergieStG, Section 26, 37, 44 and 47 EnergieStG): Companies in the manufacturing industry can use electricity or energy products for specific, energy-intensive purposes (such as electrolysis, metal production, manufacture of glassware, etc.). and reduce their tax bills by 100%. In addition, companies that produce energy products on their own premises (refineries, gas extraction and coal mining companies) can use these self-produced energy products tax-free (or obtain tax relief) for the purposes of maintaining operations within their own companies.

The subsidy report of the Federal Government contains the total subsidies for the entire manufacturing industry; they are not shown separately for each sector such as the extractive sector. Where the concessions in the field of electricity and energy constitute state aid, these come under the reporting and transparency obligations of the European Union for state aid.

In Germany, the data on tax concessions that are to be published under EU law are collected and forwarded in accordance with the regulation on the implementation of publication, information and transparency obligations in the Energy Tax and Electricity Tax Act (EnSTransV). Under this regulation, the customs administration collects and transmits data relating to energy and electricity tax concessions to the extent prescribed by the EU. The corresponding data can be accessed on the European Commission’s website on state aid.⁷

According to data from the Federal Statistical Office concerning the use of energy in manufacturing companies⁸, the electricity consumption of the “Mining and quarrying sector” (WZ 08-B) totalled 5,847,324 MWh in 2022. Multiplied by the electricity tax tariff of €20.50/MWh without taking account of possible concessions, this figure results in an electricity tax revenue of €120 million.

The companies in the natural resources extraction industry are generally entitled to relief under Section 9b StromStG as companies of the manufacturing industry. In 2022 (also in 2023), the tax relief amounted to EUR 5.13/MWh (25%).  In relation to the theoretical tax burden mentioned above, this leaves a tax liability of around EUR 90 million or EUR 15.37 electricity tax per MWh after deduction of the tax relief under Section 9b StromStG. The second stage of the relief is the so-called peak compensation according to Section 10 StromStG (until the end of 2023). This is calculated individually for each company depending on the electricity consumption and the pension insurance contributions paid and amounts to a maximum of 90% of the remaining electricity tax. In the absence of individual company figures, a flat-rate relief of 50% of the remaining tax burden can be assumed for all extractive companies as a result of the peak equalisation.

This estimate indicates electricity tax payments from the extractive sector of about €50 million.⁹

Financial aid as part of the energy cost reduction programme

The Energy Cost Reduction Programme (EKDP) ran from 15 July to 31 December 2022.¹⁰ As part of the EKDP, the government was able to pay subsidies to particularly affected energy-intensive industries for the months of February to December 2022 to cover increased natural gas and electricity prices. The basis under state aid law is the European Commission’s Temporary Crisis Framework for state aid to support the economy in the wake of the Russian war of aggression against Ukraine (EU Crisis Framework). Companies in some natural resources sectors¹¹ are among the eligible economic sectors that were able to apply for grants of up to €25 million per company until 31 December 2022. However, extractive companies were excluded from the maximum funding level of €50 million per company under state aid law. A total of EUR 2.4 million was paid out to 30 extractive companies.

Participating companies and sector coverage

A total of 17 companies or groups of companies out of the 33 companies and/or consolidated group companies identified by the Independent Administrator in accordance with the requirements of the MSG (cf. Selection of companies) participated in the reporting process during the preparation of this EITI report.

It should be noted that the identification of companies or groups of companies was based on an estimate of the companies likely to be subject to the statutory requirements (cf. Selection of payment flows for details). Following the expiry of the deadlines for publication of the payment reports for the period from 1 January 2021 to 31 December 2021 and the experience gained from the publication of the payment reports for previous years, it has become apparent that the number of payment reports actually published is lagging behind the number of companies or consolidated groups that have been identified. An estimation or assessment of the number of companies or groups of companies participating in the EITI reporting process should therefore also be made against the background of the actually published payment reports. Considering the high coverage in the lignite, natural gas, crude oil, potash and salt sectors with regard to the production volume and the reported mining and extraction royalties, the participation rate seems positive.

All payment reports submitted by companies pursuant to §§ 341 q et seq. HGB are publicly available and can be inspected in the company register.¹ While drawing up the first D-EITI report, the MSG, at the suggestion of the civil society, made a list of the companies identified that did not participate in the reporting for the first report of the D-EITI or in the reporting for the supplementary report. In view of the public availability of the payment reports and the legal objections that the government has raised against naming these companies, the MSG has refrained from naming the non-participating companies for this 6th D-EITI report, as it did for the previous D-EITI reports. The legal concerns which, from the government’s point of view, oppose the naming of the companies are set out as follows:

On the one hand, data protection law applies in cases where the company name allows conclusions to be drawn about a specific natural person, such as when a company is named as a sole trader (possibly with further details such as the registered office). This is true for at least two companies that have not reported under D-EITI, so that they may not be named for reasons of data protection.

On the other hand, there are concerns that the publication of company names in the D-EITI report without sufficient legal basis could interfere with the fundamental right of companies to freely exercise their profession (Article 12 GG). There is no legal obligation to name the companies.

Protected property in art. 12 GG includes free entrepreneurial activity serving profit purposes. The publication of the company names in the D-EITI report would intervene in the protected property as an act of state economic control, because the publication of all those company names that did not participate in the reconciliation could result in a certain pillory effect which could lead in turn to the fact that the companies feel compelled to agree to a reconciliation. This problem is exacerbated by the fact that the data to be transmitted by the companies (including payment flows such as corporate income tax, extraction and mine site royalties, trade tax etc.) are actually trade, business and tax secrets.

Besides, publishing the names of these companies would not be compatible with the decisions of the BVerfG (Federal Constitutional Court) in the so-called Glykol² or Scientology³ cases. In the cases in question, the Federal Constitutional Court decided that the Federal Government could fulfil its warning and information obligations even without a legal basis, especially if (as in the case of glycol) there are interests worth protecting on the part of consumers which are in favour of a warning (consumer health). However, there are no comparable interests among the companies, which did not report under the D-EITI.

Selection of sectors

The EITI standard requires that all the important payment flows of a country’s extractive sector are considered. At various meetings, the MSG discussed which sectors of the natural resources extraction industry should be included in the 6th German EITI report. The following individual sectors were addressed:

• Lignite
• Crude oil and natural gas
• Potash and salts
• Quarried natural resources

The mining of hard coal in Germany ended in 2018. As for the previous reports, the sector is not included (cf. the general remarks on hard coal mining in Germany and State financial aid for the hard coal sector in chapter 2.a.iii., and in chapter 6).

Selection of companies

The EITI standard does not provide direct guidance for the process of selecting companies to be included in reporting – on the contrary, like the selection of sectors the selection of companies should be oriented on the objective of the EITI initiative to make the revenues of a country’s extractive industry transparent and to disclose any significant payment flows between companies and government agencies. Pursuant to EITI requirement 4.1b), payments and revenues are deemed to be significant if their non-consideration or misrepresentation could significantly affect the completeness of the EITI report.

Regarding the selection of companies, the MSG has resolved to comply with the requirements of EU Accounting Directive 2013/34 of June 26, 2013. The stated objectives of the EITI initiative and of the payment flows specified by the EITI are also largely congruent with the provisions of the EU Accounting Directive. Recital 44 and 45 of the Directive even explicitly state that

• the regulations are intended to help governments in the implementation of the EITI principles and criteria and
• that payments should be recorded which are comparable to those of the EITI.

The EU directive was transposed into German law by the BilRUG at the end of 2015. Pursuant to §§ 341q et seq. HGB, companies in the extractive industry must submit (consolidated) payment reports under certain conditions (registered office, legal form, size, activity) (see the comments in chapter 4.d.).

In various meetings, the MSG has agreed to further organise the content of the D-EITI process in accordance with the provisions of §§ 341 q et seq. HGB. This particularly affects:

• the criteria for the identification of the companies that are eligible for reporting,
• the relevant period of reporting
• and the establishment of materiality thresholds for the payment flows which are to be reported.

The link to the statutory provisions of the HGB is intended to create the prerequisites for the widest possible participation of the companies; possible double burdens (for the participating companies), which could result from differences between the legal requirements for the (consolidated group) payment report and the reporting requirements for the EITI should also be avoided (see also chapter 4.d.ii.). According to § 341t (3) No. 1 HGB, dividend payments to a government agency that is a shareholder of the paying company are only to be listed in the payment report if they were not paid under the same conditions as to other shareholders.

Pursuant to § 267(3) of the HGB, the criteria for “large” companies were used as an initial basis for the identification of the companies. In this case, two of the following three criteria for classification as a “large” company must be fulfilled on at least two successive two successive closing dates:

• Balance sheet total of €20 million
• Sales of more than €40 million
• A yearly average of more than 250 employees

Regarding the question whether or not an “activity” exists in the extractive industry, reference was made to Regulation 1893/2006/EC of December 20, 2006, which regulates the details of the statistical classification of economic activities. Section B of Annex I of this Regulation is divided into sub-sections 05 to 08. See table below.

For identifying possible companies, companies assigned to one of the sub-sections 05 to 08 are considered to be primarily “active” in the extractive industry. In addition to the statutory duty to draw up payment reports for “large” companies, there is also an obligation for parent companies to prepare group (consolidated) financial statements if at least one subsidiary is active in the extractive sector. The size of this “active” subsidiary is not relevant here (a “consolidated tax group infection”), so that even companies which are themselves not classified as being “large” can trigger a reporting obligation simply through being combined with a “large” parent company.

The approach to “consolidated tax group infection” was also addressed for the purpose of identifying extractive industry companies; and the number of such companies increased accordingly. As a result, the selection is made using a combination of size and activity criteria (cf. the explanations in chapter 10.c.iii.). In addition to the size of the companies and the economic classification, the MSG also used a substantial coverage of the sectors as a criterion for the selection of companies.

Depending on the natural resource in question, there are significant differences in the number of companies and active employees in the various sectors in Germany’s extractive industry. The coal mining and oil and gas extraction sectors, for example, are dominated by a few large companies. The quarried natural resources sector, on the other hand, is characterised by a structural mix of few large suppliers and a high proportion of small and medium-sized enterprises. Most companies in this sector are not subject to any legal obligation to prepare payment reports and are therefore not covered by the criteria for identifying companies for the EITI Report (see also the explanations in chapter 10.c.iii.).

Requirements 2.6, 4.5 and 6.2 of the EITI standard are related to government shareholdings in extractive companies. In Germany, an extractive company with a majority state participation was identified – Südwestdeutsche Salzwerke AG. According to the 2021 Annual Report, the town of Heilbronn and the State of Baden-Württemberg hold a total of 93.11% of the voting rights in this company (cf. Annual Report 2021, p. 179). The dividend paid in 2021 for the previous financial year totalled €16,812,000.00, corresponding to €1.60 per share (see Annual Report 2021, p. 109). The share capital stands at €27 million and is divided into 10,507,500 individual shares.

The 2021 annual report can be viewed at https://www.salzwerke.de/de/investor-relations/fi- nancialreports/annualreports.html

Revenues as requested under requirement 6.2 of the EITI Standard (quasi-fiscal expenditures) were not identified.

In the MSG’s view, requirements 2.6, 4.5 and 6.2 of the EITI standard are sufficiently met by the above explanations.

Selection of payment flows

In accordance with the EITI standard, payment flows from the extractive industry must be considered if they are regarded as significant for a complete presentation of the company payments and state revenues. The following payment flows are recorded as part of the 6th German EITI report (see also the explanations in Revenues generated).

Description of the concept for undertaking quality assurance for published information

MSG must ensure both the quality of the information of payments by companies to the state published in the report and the quality of information on the corresponding government revenues. This is a key requirement of the EITI standard. In the first two D-EITI reports, MSG relied on both sides’ disclosure of payment flows for quality assurance. This EITI standard procedure makes provision for an Independent Administrator to reconcile individual payments reported by companies with the corresponding receipts by government agencies. These did not produce any material differences between payments made and payments received between companies and government agencies.

In agreement with the international EITI secretariat, the 3rd German EITI report for the 2018 reporting period was the first to start with the development and implementation of an alternative quality assurance procedure for the payment flows to the government agencies reported by the extractive industry (“pilot procedure” or “pilot”). For this 6th D-EITI report, the alternative procedure will continue to be applied by the MSG and the IA.

The previous standard procedure included a test of details of the payment flows reported by the participating companies. Inclusion and assessment of the processes and controls associated with the payment flows were not undertaken, meaning that the knowledge gained from the standard procedure was always limited to the payment flows that are examined. The alternative procedure involves replacing the payment reconciliation procedure with a multi-stage system-based approach of obtaining information and the analysis of processes and controls relevant for EITI, in particular on the part of the government agencies in receipt of the payments. The aim is to put the MSG in a position where they can provide a well-founded assessment of whether or not there are sufficient signs of risks to indicate that payment flows to government agencies related to natural resources were not being properly processed during the respective reporting period. Regardless of the result of this risk assessment, a process for making a specific analysis of the companies’ reported payments will then be carried out. Where there are no sufficient indications for possible risks in respect of the correctness of the relevant (payment) processes and controls, the last step of quality assurance is an assessment of the plausibility of the reported payments, which is based on analyses of key indicators and further analytical considerations.

Explanation of the nature and extent of the work of the Independent Administrator

The work of the Independent Administrator encompasses the performance of investigative measures as per the International Standard on Related Services (ISRS) 4400, “Engagements to Perform Agreed-Upon Procedures”. The investigative measures carried out by the Independent Administrator do not constitute a (final) examination or audit review of the payment flows reported by the companies in accordance with the professional standards for auditors accepted in Germany or recognised internationally. Therefore, the Independent Administrator did not submit an overall judgement (neither with sufficient nor with limited judicial certainty) regarding the reported payment flows. The Independent Administrator did not undertake any specific investigations to verify the correctness, completeness, and reliability of the payment data, in particular with regard to the data notifications of the participating companies and/or of the government agencies. In addition, the objectives of the investigative measures carried out were neither to uncover errors nor to detect violations on the part of the participating companies or government agencies.

Identification of companies

The first step was to identify the companies that were relevant for the 6th D-EITI report. Here the Independent Administrator used a database analysis¹  to select all the companies which are mainly active in the extractive industry, and which are allocated to the lignite, potash/salts, crude oil/natural gas and quarried natural resources sectors. The classification criterion was the allocation of the companies to sub-sections 05 to 08 pursuant to Regulation 1893/2006/EC of December 2006 (cf. chapter 10.a.ii.). In the second step, these companies were filtered according to the size criteria stipulated by the HGB for “large” companies.

The Independent Administrator manually expanded the group of these provisionally identified companies by including groups of companies in which a potential “consolidated tax group infection” caused by “active” subsidiaries existed (for details, see chapter 10.a.ii.). The following aspects are unchanged from the previous D-EITI report and must be addressed:

• Companies the main activities of which are allocated to the storage (e. g. construction and operation of cavern storage facilities for the storage of natural gas) of natural resources underground are not considered, since the extraction of natural resources is not their primary activity, despite their being allocated to sub-sections 05 to 08;
• All the companies identified and allocated to sub-section 07 (ore mining) do not actively engage in extractive mining in Germany and are therefore not considered.

Against the background of the legal requirements (cf. §§ 341 q et seq. HGB) and the resulting interpretation possibilities, a final identification of all the companies obliged to report payments pursuant to HGB is not ensured, even with regard to this D-EITI report. Nevertheless, on the basis of the payment reports for 2021 that have been published in the meantime, it can be stated that the companies identified using the methodology described above are very largely the companies that have actually published a payment report to date.

It is evident that the selection criteria specified by the MSG ensured a prominent level of coverage for the lignite, crude oil and/or natural gas, potash and salts/industrial brine sectors (cf. chapter 10.b.i.). These are solely free-to-mine natural resources. They contain comparatively few, but relatively large business operations. On the other hand, quarried natural resources are extracted by a very high number of business operations with many extraction facilities and/or mines.

According to analyses by the German Building Materials Association – Quarried Natural Resources (bbs), a total of approx. 3,400 companies belonged to the building materials and minerals industry in Germany in 2021, with more than 81% of these companies employing fewer than 50 people. These smaller companies account for around 42% of sales in the building materials, bricks and mortar industry. The small-scale nature of the sector is also due to the widely varying capital intensity of production. Corporations and larger SME are more strongly represented in capital-intensive sub-sectors such as cement production than in the extraction of natural resources. The size structure of the sector has hardly changed over the past decade².

As a result, it must be assumed that a number of companies and/or consolidated companies (which are already among the 25 largest providers in this sector) do not fulfil the size criteria in chapter 10.a.ii. so that they are not identified by the selection criteria adopted by the MSG. As a result of the high number of non-identified small and medium-sized enterprises in the quarried natural resources sector, the coverage of this sector clearly lags behind that of the other sectors.

Identification of government agencies

The total number of government bodies that generate revenues from the extractive industry in Germany stem directly from the payment flows that were defined for this 6th D-EITI report. However, due to the federal structure of the administration in Germany, no central recording of the relevant payment flows is possible. The following individual government agencies are responsible for:

• Corporate tax: the responsible tax offices at the respective headquarters of the companies
• Mining and extraction royalties: the responsible mining authorities of the Federal States in which the approved/licensed site is located
• Trade tax: the municipalities in the territory of which the taxable operating facilities are located
• Lease payments and payments to improve the infrastructure: government agencies at State or municipal level, depending on the type of payment

Managing tax secrecy

The EITI reporting encompasses tax data, viz. payment flows relating to corporate tax and trade tax, which are subject to tax secrecy pursuant to §§ 30 ff. of the German Tax Code (AO) (cf. the comments in Tax secrecy). In the course of the preparation of the EITI report, the payment flows reported by the companies and received by government agencies were prepared and disclosed. This usage of tax-relevant data is only permissible if the taxpayer, i.e. the respective company, expressly agrees (§ 30 (4) No. 3 AO). Data collection templates ensure that this consent is obtained from each company for the purpose of publishing the data in the context of EITI reporting.

Measures for safeguarding confidential data

All project-related data were stored in an ISO 27001 and ISO 9001-certified data centre in Germany. A platform was specifically made available for the exchange of project-related data, and companies could use this to upload data (several times where required). Uploaded data could not be changed for security reasons. Measures were taken to prevent any company from gaining access to the data of other participants. The administration of the data exchange, storage and e-mail service was the responsibility of the EITI Secretariat in Berlin.

Templates and notes on data collection

In accordance with the decisions made by the MSG regarding the shaping of the contents of the D-EITI reporting process, the Independent Administrator has developed an Excel-based template to collect the relevant data from the companies. In addition to the data collection templates, the Independent Administrator has also created further “Notes on data collection within the framework of the EITI process”. These notes will give companies practical tips and help them to understand and use the data collection templates.

The data collection template is not only used by the MSG to record the actual payment flows for the reporting year, but also to communicate with the participating companies in a flexible manner. At the request of the MSG, additional queries on beneficial owners within the meaning of the Money Laundering Act and on the existence of politically exposed persons (PEPs) were included in the current report.

Quality of data provided by companies

Companies in Germany are subject to comprehensive, legally-regulated

• accounting,
• disclosure and
• auditing obligations.

These obligations depend on the company’s size, legal form and activity. Limited companies and limited liability partnerships within the meaning of § 264 a (1) of the HGB must draw up an annual financial statement with notes and (where required) a management report at the end of each fiscal year. The obligation to carry out the annual audit is regulated in particular in the HGB (§§ 316 et seq. HGB). The HGB stipulates a statutory audit obligation (inter alia) for “medium-sized” and/or “large” companies, whereby two of three criteria for grouping into the size classes must be met within a given period, pursuant to § 267(2) and (3) HGB).

The statutory audit must at least include the annual accounts (balance sheet, profit and loss account and notes), plus the management report and the accounting records. The auditor must determine whether or not the accounting is consistent with the underlying accounting principles and with any other legal basis such as the Articles of Association or the deed of partnership (compliance/regularity audit). Furthermore, it must also be determined whether the respective financial statements and the associated management report provide an accurate picture of the company’s position as a whole. An assessment of whether or not the opportunities and risks of future development are presented accurately in the management report must also be carried out. The result of the audit is summarised by the auditor in the auditor’s report (see § 322 HGB). In the case of statutory audits, the auditor’s reports must be disclosed with the annual financial statements and the management report in accordance with § 325 HGB through an electronic filing in the Federal Gazette and these are therefore always available to the public³. The shareholders of a subsidiary can refuse to disclose the annual financial statements of the subsidiary, if the parent company’s consolidated group financial statement which includes the subsidiary concerned is disclosed, the parent company has already agreed to implement obligations entered into by the subsidiary up to the balance sheet date in the following financial year and other prerequisites exist. However, these cases must be made transparent via the electronic Federal Gazette or the enterprise register.

In contrast to the annual financial statements, the (consolidated group) payment reports pursuant to §§ 341 q et seq. HGB, however, are not yet subject to statutory audit obligations. However, as part of their duty to report in accordance with § 321(1) sentence 3 HGB, auditors must report in the report addressed to the legal representatives and those responsible for monitoring the company if they have discovered during the audit work that no (group) payment report has been prepared or disclosed despite the legal obligation to do so.

The legal representatives and those responsible for monitoring corporate activity are generally supported by an Internal Audit team as they carry out their respective duties. Even where there is no explicit statutory obligation in Germany to set up such a process-independent function, the fact that such a function is in place corresponds to the principles of good corporate governance (see the German Government’s Public Corporate Governance Code). This is particularly true for those companies that are a part of large, complex and/or internationally active corporations. At the same time, these organisational structures also increasingly reflect efforts on the part of legal representatives to set up effective compliance management systems that aim to comply with legal regulations but also to observe the ethical rules of the company or corporate group. As a rule, an integral part of these systems is also formed by external contacts contracted by the company or corporate group to whom whistleblowers can report possible breaches of legal regulations or ethical rules.

Quality of data on government revenues

The basis for showing revenues received by government agencies is the corresponding data on the payments by companies for the current year under review.

In the D-EITI reports for the 2016 and 2017 years under review, the corresponding revenues are levied by government agencies and an immediate (payment) reconciliation is made with the payments reported by the companies for which there were no or no noteworthy differences (test of details or case-by-case approach).

Building on these findings, in contrast to the original course of action the processes and controls or control mechanisms were analysed for the third and this current 5th German EITI report. These processes and controls are set up by government agencies to ensure that the respective payment flows are collected properly (debit position) and processed (payment) (system-based approach). The term “correctness” refers to EITI’s objective and means

• that sufficient processes or procedures are in place at the relevant government agency to ensure that the debit position of payments is legally compliant and timely,
• that processes and controls are in place which ensure any differences between the debit position of government agencies and payments by companies can be clarified in a timely way,
• that there are adequate controls at the level of superior government agencies and
• that a check of the controls by independent auditors is ensured.

The entirety of the processes, procedures and controls set up must be viewed as an internal control system used to assist the defined objective of proper collection of the relevant payments. In Germany, this system is based on an interaction between the legal basis (e. g. civil service law, budget legislation, criminal law, administrative regulations), the structure and organisation of the authorities (e. g. via rules of procedure, schedules of responsibilities, establishment of segregation of duties, the dual-control principle) and additional monitoring of processes and controls (e. g. via in-house audit offices and other independent auditors). This system-based approach was continued in this 6th German EITI report.

The wider official environment of these government agencies and the relevant statutory framework are necessarily also considered alongside the analysis of processes and controls set up on the part of government agencies. A comprehensive description can be found in the brochure “Die Steuerverwaltung in Deutschland” (Tax administration in Germany), 2018 edition (bundesfinanzministerium.de). Annex c also contains schedules showing the organisational structure and the processes and controls relevant for the investigation in respect of the corporate tax and the mine site and extraction royalties.

As in the previous years, the Independent Administrator analysed documents received from the MSG, publicly available reports, descriptions of various public entities or institutions and discussions with representatives of the MSC or responsible agencies to get a picture of the processes and controls that have been established. The insights gained were compared to the regulations from the framework concept of the US Committee of Sponsoring Organisations of the Treadway Commission (COSO) This framework concept has gained widespread international acceptance. Its basic principles reflect the Standards for Internal Control in the Federal Government of the United States Government Accountability Office, which means that it can also be applied to government agencies. At the same time, this framework concept forms the basis for the Audit Standard 261 – “Determination and assessment of error risks and responses of the auditor to the evaluated error risks” issued by the Institute of Independent Auditors in Germany (IDW) that has been routinely applied for statutory audit reviews in Germany in 2021.

According to COSO, the components of an internal control system include the control environment, risk assessments, control activities, information and communication, and monitoring of the internal control system. The IA has applied these components to the relevant payment flows for corporate tax and mine site and extraction royalties.

In addition to this, the knowledge gained from the previous payment reconciliations as part of the first and second D-EITI report has been included in the IA’s analysis and assessment as a case-by-case confirmation of the effectiveness of the processes and controls set up. Therefore, the system-based approach and the knowledge obtained to date from the payment reconciliations complement each other and together form the basis for the IA’s assessment.

As a result, the IA considers that the concept developed in the scope of the alternative quality assurance procedure is well suited to satisfy the requirements of the EITI Standard regarding the reliable disclosure of the payments from the extractive industry. Therefore, it can be considered as an alternative procedure when compared to the original procedure of an extensive reconciliation of all material payment flows during a year under review within the context of tests of details.

Based on the sources of information available to it and the information provided by members of the MSG, the IA has also assessed for the current reporting period whether there are indications of irregularities of

• Mine site and extraction royalties
• Corporate taxes and
• Trade taxes.

Details of this assessment process are presented below. The work subsequently carried out by the Independent Administrator to make plausibility checks of the data reports of participating companies has led to the assessment that, the MSG can use the system-based approach for quality assurance purposes in accordance with Requirement 4.9 of the EITI standard.

The Independent Administrator’s work carried out to date under the alternative payment reconciliation procedure has been described in a comprehensive work report⁴.

Information and recommendations from the implementation of a system-based approach to payment reconciliation

The EITI Standard 2019 demands comprehensive publication of all material payment flows from the national extractive sector to government agencies. This information on payment flows must satisfy requirements in respect of reliability, understandability and public availability (cf. EITI requirements 4.1 and 4.9). In the first and second German EITI reports, the reliability of the published payment flows was, among other processes, ensured by the previous “standard procedure” of a direct reconciliation of the payment flows reported by the participating companies with the payments received by the government agencies (“payment reconciliation”). These did not produce any noteworthy differences between payments made and payments received between companies and government agencies.

In agreement with the international EITI secretariat, the 3rd German EITI report for the 2018 reporting period was the first to start with the development and implementation of an alternative quality assurance procedure for the payment flows to the government agencies reported by the extractive industry which has also been used for this 6th D-EITI report. This procedure replaces the test of details for payment flows from participating companies with a multi-stage system-based approach of obtaining information and analysing processes and controls relevant for EITI, in particular on the part of government agencies.

The aim is to put the MSGs in a position where they can provide a well-founded assessment of whether or not there are risks to indicate that payment flows to government agencies related to natural resources are not being properly processed during the respective reporting period. Regardless of the result of this risk assessment, the process used for assessing the participating companies’ reported payments will then be carried out. Where risks are identified to indicate that (payment) processes or controls relevant for EITI are not entirely correct, further investigations of the payment flows concerned will initially be carried out and, ultimately, a return to payment reconciliation will also be considered. Where, however, no corresponding risks are identified, the actual assessment of payment flows is made on the basis of plausibility assessments.

With the implementation of the system-based approach, the tasks of members of the MSG and of the Independent Administrator have changed, when compared to the previous standard procedure of payment reconciliation. The risk assessment process is based, among other things, on a comprehensive collection and evaluation of information that could be relevant for assessing whether payments from companies to public authorities are being correctly processed. This includes analysing reports from the responsible local and supra-local audits and the audit offices. The same applies to information from associations or clubs on findings that may be relevant to the risk assessment or reports in relevant media. We recommend that MSG members be more closely involved in this assessment process, in such a way that publicly available information and evidence from MSG members’ professional environments that is potentially relevant to the risk assessment is captured in the form of a “regular process” in cooperation with the EITI Secretariat. If no relevant findings are made in the reporting year, a negative report would have to be submitted to the EITI Secretariat.

Recommendations in connection with the implementation of the requirements of the EU Sustainability Reporting Directive

Furthermore, we recommend the MSG to deal with the content of the “Corporate Sustainability Reporting Directive – CSRD”(Directive (EU) 2022/2464), i.e. the directive on corporate sustainability reporting. On 22 December 2023, the Delegated Regulation (EU) 2023/2772 was published in the Official Journal of the European Union, which contains twelve standards for corporate sustainability reporting (European Sustainability Reporting Standards, ESRS). Furthermore, in February 2023, the European Financial Reporting Advisory Group (EFRAG), which is responsible for the development of reporting standards, published a working paper in preparation for a European Sustainability Reporting Standard (ESRS) on “Mining, Quarrying and Coal” . This first working paper on a sector-specific reporting standard makes explicit reference to the quality assurance mechanisms of the EITI and derives reporting obligations for companies in the extractive sector from this. Work on this sector-specific reporting standard is ongoing.

The companies that are subject to the Directive are invited to assess which disclosures are to be regarded as “relevant” in the sense of “material” for their own reporting. From the companies’ perspective, it is important to gain an appropriate overview of the aspects that the various stakeholders consider relevant in the context of sustainability reporting. As a central element of the respective EITI implementation, the MSG can be seen as an important stakeholder across all countries.

Against the background of the objective pursued with EITI requirements 4.1 and 4.9 (ensuring data quality and the regularity of payment processing), ESRS G1-3 (Prevention and detection of corruption/bribery) and G 1-5 (Political influence and lobbying activities) could be considered particular relevant aspects in the context of sustainability reporting from an EITI perspective. For the further development of the pilot procedure, we recommend that the MSG address these requirements and develop a view as to whether, and if so, under what conditions, the MSG would consider sustainability reporting by companies to be material.