Germany Signs Off on Major Climate Reform Package

The so-called climate package, which includes plans to reduce rail prices and increase taxes on air travel, will take effect on January 1 after months of wrangling.

Previously blocked by a dispute over costing, the bill was passed by the upper house after MPs reached a compromise on a higher carbon price earlier this week.

Merkel on Monday said that the carbon price compromise was a "positive contrast" to the lack of progress at the global COP25 climate conference a day earlier.

"The different parties... Showed a willingness to tend towards a solution without letting things go on forever," she said, AFP reported.

The bill's approval comes in the same month that new European Commission chief Ursula Von Der Leyen launched the bloc's flagship "European Green Deal" aimed at reducing carbon dioxide emissions.

In line with the EU plan, Germany is aiming to achieve carbon neutrality by 2050.

The country also intends to reduce greenhouse gas emissions by 55 percent compared to 1990 levels by 2030.

Yet the climate package has faced criticism from environmentalists and business lobbyists alike.

The new CO2 price -- which is still yet to be passed into law -- has sparked outrage among business groups.

The compromise will see businesses pay a starting rate of 25 euros per ton of carbon they use from January, and will be eventually incorporated into an EU-wide carbon trading system.

Holger Loesch, deputy director of the Federation of German Industry (BDI) said that the new rate threatened to "drastically worsen competitiveness" in Germany.

He added that the government's plan to drastically increase the number of electric cars by 2030 was "on the furthest border of what is achievable".

Environmental campaigners and opposition parties however have claimed that the climate package does not go far enough.

Green party parliamentary leader Anton Hofreiter has said the carbon price compromise was "no more than a step in the right direction".

In September, Greenpeace Germany accused the government of "failing to deliver" on climate reform.

"The Merkel era will end as it began: with broken promises and too little action on climate protection," said Greenpeace political advisor Andree Boehling.